Chapter 14 Flashcards
Statute of Frauds
A state statute that requires certain types of contracts to be in writing.
Statute of Frauds for Common Contracts-writing requirement
1) contracts involving interest in real property. 2) contracts that by their own terms cannot possibly be performed within one year.
3) collateral contracts in which a person promises to answer for the debt or duty of another.
4) promises made in consideration of marriage.
5) contracts for the sale of goods for $500 or more.
6) contracts for the lease of goods with payments of $1,000 or more
7) real estate agents’ contracts.
8) agents’ contracts where the underlying contract must be in writing.
9) promises to write a will.
10) contracts to pay debts barred by the statute of limitations or discharged in bankruptcy.
11) contracts to pay compensation for services rendered in negotiating the purchase of a business.
12) finder’s fee contracts
* if an oral contract that should have been in writing under the statute of frauds is already executed, neither party can seek to rescind the contract.
Contracts involving interests in real property
under the statute of frauds any contract that transfers an ownership interest in real property must be in writing to be enforceable.
Real property includes: the land itself, buildings, trees, soil, minerals, timber, plants, crops, fixtures, and things permanently affixed to the land or buildings.
Contracts that transfer an ownership in land that must be in writing under the statute of frauds:
1) mortgages: an interest in real property given to a lender as security for the repayment of a loan.
2) lease: the transfer of the right to use real property for a specified period of time.
3) life estate: an interest in real property for a person’s lifetime; upon that person’s death, the interest will be transferred to another party.
4) easement: a right to use someone else’s land without owning or leasing it.
One-Year Rule
according to the statute of frauds: an executory contract that cannot be performed by its own terms within on year of its formation must be in writing.
Guaranty Contract
a promise in which one person agrees to answer for the debts or duties of another person. It is a contract between the guarantor and the original creditor. *required to be in writing under the SOF
Guarantor
a person who agrees to pay a debt if the primary debtor does not.
Main purpose exception (leading object exception)
an exception to the statute of frauds that states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced.
Equal Dignity Rule
a rule that says that agents’ contracts to sell property covered by the Statute of Frauds must be in writing to be enforceable.
Section 2-201(1) of the Uniform Commercial Code (UCC)
a section of the UCC that states that sales contracts for the sale of goods costing $500 or more must be in writing.
Section 2A-201 (1) of the UCC
states that lease contracts involving payments of $1,000 or more must be in writing.
Equitable Exception: Part Performance
an equitable doctrine that allows the court to order an oral contract for the sale of land or transfer of an other interest in real property to be specifically performed if it has been partially performed and performance is necessary to avoid injustice.
Required signature
The SOF and the UCC requires a writen contract, whatever its form, to be signed by the party against whom enforcement is sought.
- the signature of the person who is enforcing the contract is not necessary. Thus, a written contract may be enforceable against one party but not the other party.
- the person’s last name, first name, nickname, initials, seal, stamp, engraving, or other symbol or mark (e.g., X) that indicates the person’s intent can be binding.
Integration of Several writings
the combination of several writings to form a single contract.
*both the common law of contracts and the UCC permits several writings to be integrated
Incorporation by reference
integration made by express reference in one document that refers to and incorporates another document within it.
Parol Evidence Rule
a rule that says if a written contract is a complete and final statement of the parties’ agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract.
Parol Evidence
any oral or written words outside the four corners of the written contract.
Merger, or Integration, Clause
a clause in a contract that stipulates that it is a complete integration and the exclusive expression of the parties’ agreement.
Exceptions to the Parol Evidence Rule
Parol evidence may be admitted in court if:
1) it shows that a contract is void or voidable (e.g., evidence that the contract was induced by fraud, misrepresentation, duress, undue influence, or mistake).
2) explains ambiguous language.
3) concerns a prior course of dealing or course of performance between the parties or a usage of trade.
4) fills in the gaps of a contract (e.g., if a price term or time of performance term is omitted from a written contract, the court can hear parol evidence to imply the reasonable price or time of performance under the contract).
5) corrects an obvious clerical or typographical error. *the court can reform the contract to reflect the correction.
Promissory Estoppel (equitable estoppel)
an equitable doctrine that permits enforcement of oral contracts that should have been in writing. It is applied to avoid injustice.
- the version of promissory estoppel in the restatement of Contracts provides that if parties enter into an oral contract that should be in writing under the SOF, the oral promise is enforceable against the promisor if three conditions are met
1) the promise induces action or forbearance of action by another,
2) the reliance on the oral promise was foreseeable,
3) injustice can be avoided only be enforcing the oral promise.
