Chapter 5. The Statute Of Frauds (110-150)

Question 1

A and B agree by an unsigned writing that A will sell Blackacre to B for $5,000. B pays the price to A as agreed, and A accepts the payment but refuses to transfer the land as agreed. What recourse does B have?

Answer 1

B is not entitled to specific performance, but can recover the amount of the payment. Restatement 2d of Contracts § 129(b)

Question 2

A orally leases A’s farm to B for five years, agreeing that B will repair the premises at prevailing wages to be credited on the rent. B takes possession of the farm and does $1,000 worth of repair work, using material furnished by A. A then seeks to evict B. What recourse does B have?

Answer 2

B is entitled to $1,000 less the fair rental of the farm for the period of his occupancy, but is not entitled to specific performance or damages. Restatement 2d of Contracts § 129(b)

Question 3

A orally promises to make a gift of Blackacre to his son B and puts B in possession. With A’s consent B builds a dwelling house on the land and lives in it for twenty years until A dies, paying all taxes on the land. What recourse does B have?

Answer 3

B may obtain a decree of specific performance against A’s heir or personal representative. Restatement 2d of Contracts § 129(b)

Question 4

A owns an unsightly vacant lot adjoining B’s home in a residential suburb. A’s agent and B orally agree that A will sell the lot to B for $1,500. B, a lawyer aware of the doctrine of part performance, expends $1,000 in grading and planting on the lot, but makes no payments and does not communicate with A for two years. A observes the grading and planting, but later denies concluding a contract or knowing that B claimed under a contract. What recourse does B have?

Answer 4

B is not entitled to specific performance, since his actions are not unequivocally referable to a contract for sale and recovery of the value of the improvements is an adequate remedy. Restatement 2d of Contracts § 129(d)

Question 5

A leases a residence to B for $9 per month. After four months A and B agree to a written contract for sale of the premises for $1,000 in monthly installments of $12.89, but the contract is not signed. B pays $12.89 each month for thirteen months and pays for taxes and insurance. Then the land increases in value because an air base is located nearby, and A repudiates the contract. What recourse does B have?

Answer 5

B is entitled to specific performance. Restatement 2d of Contracts § 129(d)

Question 6

A orally agrees to lease shop space in a new hotel to B for five years and to give B an option to renew the lease for another five years. At A’s request B moves in before formal execution of a lease, deposits $5,000 with A, and expends $50,000 on fixtures and improvements. Later A and B agree on pencil corrections to a written lease and return it to A’s attorney for redrafting, but no redrafted lease is submitted or executed. B occupies the premises and pays rent for five years, and notifies A of B’s election to renew, but A denies the existence of an option to renew. What recourse does B have?

Answer 6

B is entitled to specific performance. Restatement 2d of Contracts § 129(d)

Question 7

A leaves 1,000 acres of land to his cousin B by will. A’s heirs contest the will, and B retains his uncle C, an attorney, agreeing orally that C is to receive as his fee, contingent upon success, a specific 180 acres of the land. C successfully defends the will, but B refuses to convey the land as agreed. In C’s suit for specific performance, B admits the making of the contract, but defends under the Statute of Frauds. What recourse does C have?

Answer 7

Specific performance may be granted. Restatement 2d of Contracts § 129(d)

Question 8

A promises to give C, an adjoining landowner, first refusal in the event that A sells a tract of land. Later B and C agree orally that C will consent to a sale by A to B and that B will then convey to C a fifteen-foot strip adjoining C’s land, C paying a proportionate part of the price. C notifies A that C consents, and A conveys the tract to B, but B repudiates his promise to convey the strip to C. What recourse does C have?

Answer 8

C is entitled to a decree of specific performance against B. Restatement 2d of Contracts § 129(d)

Question 9

A, aged 55, orally promises B, his adopted daughter, that if B will quit school, live with A and his sick wife and refrain from marrying until B is 25, help A run his farm, and take care of the wife until the wife dies, A will leave B all his property by will. B performs as requested until the wife dies 12 years later, except for an eight-month trip with A’s consent. After the wife’s death, B at age 28 marries a man of whom A disapproves. A thereafter refuses to have anything to do with B, revokes a will carrying out his promise, and makes a new will leaving his property to others. Four years after the marriage A dies. What recourse does B have?

Answer 9

B is entitled to specific performance. Restatement 2d of Contracts § 129(d)

Question 10

A and B orally agree that A will sell a house and lot to B for $10,000. A signs a memorandum of the contract but B does not. B pays $1,000 on account of the price. A prepares a conveyance and delivers it in escrow to await payment, delivers possession of the land to B, and sells him the furniture in the house. B lives in the house for six months and plants a substantial garden, but refuses to pay the balance of the price because of defects in A’s title, and finally repudiates the contract shortly after the defects are cured. What recourse does B have? How about A?

Answer 10

Whether or not B would have been entitled to specific performance, A is not. Restatement 2d of Contracts § 129(e)

Question 11

A orally leases a storeroom to B for six years at a rental of $400 per month. In accordance with the agreement A builds a balcony at a cost of $1500 which does not add to the value of the premises. B takes possession and pays rent for three years, and then repudiates the lease at a time when tenants have become scarce. What recourse does A have?

Answer 11

A is entitled to specific performance. Restatement 2d of Contracts § 129(e)

Question 12

A, an insurance company, orally promises to insure B’s house against fire for five years, B promising to pay the premium therefor within the week. Is the contract within the Statute of Frauds?

Answer 12

The contract is not within the Statute of Frauds, since if the house burns and the insurer pays within a year the contract will be fully performed. Restatement 2d of Contracts § 130(a)

Question 13

A orally promises to work for B, and B promises to employ A during A’s life at a stated salary. Are the promises within the Statute of Frauds?

Answer 13

The promises are not within the one-year provision of the Statute, since A’s life may terminate within a year. Restatement 2d of Contracts § 130(a)

Question 14

A and B, a railway, agree that A will provide grading and ties and B will construct a switch and maintain it as long as A needs it for shipping purposes. A plans to use it for shipping lumber from adjoining land which contains enough lumber to run a mill for 30 years, and uses the switch for 15 years. Is the contract within the Statute of Frauds?

Answer 14

The contract is not within the one-year provision of the Statute. Restatement 2d of Contracts § 130(a)

Question 15

A orally promises B to sell him five crops of potatoes to be grown on a specified farm in Minnesota, and B promises to pay a stated price on delivery. Is the contract within the Statute of Frauds?

Answer 15

The contract is within the Statute of Frauds. It is impossible in Minnesota for five crops of potatoes to mature in one year. Restatement 2d of Contracts § 130(a)

Question 16

A orally promises to work for B, and B promises to employ A for five years at a stated salary. Is the contract within the Statute of Frauds?

Answer 16

The promises are within the Statute of Frauds. Though the duties of both parties will be discharged if A dies within a year, the duties cannot be “performed” within a year. This conclusion is not affected by a term in the oral agreement that the employment shall terminate on A’s death. Restatement 2d of Contracts § 130(b)

Question 17

The facts being otherwise as stated in Illustration 5, the agreement provides that either party may terminate the contract by giving 30 days notice at any time. Is the agreement within the Statute of Frauds?

Answer 17

The agreement is one of uncertain duration and is not within the one-year provision of the Statute. Restatement 2d of Contracts § 130(b)

Question 18

The facts being otherwise as stated in Illustration 5, the agreement provides that A may quit at any time. Is the agreement within the Statute of Frauds?

Answer 18

The agreement is within the Statute. Restatement 2d of Contracts § 130(b)

Question 19

A, the maternal grandmother of a new-born illegitimate child, agrees with B, the father, that A will care for the child and B will make support payments until the child becomes 21 years old. Is the agreement within the Statute of Frauds?

Answer 19

The agreement is not within the one-year provision of the Statute. If the child dies within a year, the primary object of furnishing necessaries to the child will be fully “performed.” Rst. 130(b)

Question 20

A sells his grocery business to B, who pays part of the price and promises to pay the balance in a month, A agreeing orally not to engage in the grocery business in the same town for five years. Is the contract within the Statute of Frauds?

Answer 20

The contract is not within the one-year provision of the Statute, since A’s death within one year will give B the equivalent of full performance. Restatement 2d of Contracts § 130(b)

Question 21

Without consideration A promises B that, so long as B buys through A B’s requirements for gasoline and A accepts B’s orders, A will pay B an amount equal to the discount other distributors would allow B. For several years A accepts orders from B. Is A’s promise within the Statute of Frauds?

Answer 21

A’s promise is not within the one-year provision, since a separate contract is made each time A accepts an order. Restatement 2d of Contracts § 130(c)

Question 22

On December 1, 1966, A and B contract orally for A’s employment by B at a stated salary for a year beginning the following day. Is the contract within the Statute of Frauds?

Answer 22

The contract is not within the one-year provision, since the promised performance will be fully rendered before midnight of December 1, 1967. Restatement 2d of Contracts § 130(c)

Question 23

On December 1, 1966, A and B enter into an oral contract for the employment of A at a stated salary for the calendar year 1967. On the first working day in 1967, A presents himself for work, says “I understand these are the terms on which I am to be employed,” and restates the terms. B replies, “That is right.” Is the contract within the Statute of Frauds?

Answer 23

Though the original contract was within the Statute of Frauds, the subsequent restatement makes a new contract performable within a year. Restatement 2d of Contracts § 130(c)

Question 24

A sells and delivers goods to B in return for B’s promise to pay $1,000 in six months, $1,000 in a year and $1,000 in eighteen months. Are B’s promises within the Statute of Frauds?

Answer 24

B’s promises are not within the one-year provision of the Statute. Restatement 2d of Contracts § 130(d)

Question 25

A promises to pay B $5,000 in two years in return for B’s promise to render a stated performance for five years. A pays the $5,000 as agreed. B then refuses further performance. Is the promise withdrawn from the operation of Statute of Frauds?

Answer 25

The contract is withdrawn from the operation of the Statute. Restatement 2d of Contracts § 130(d)

Question 26

A and B contract orally for A’s employment by B at a stated salary for the ensuing two years. A works under the contract for 15 months when B discharges him without cause. Is the promise withdrawn from the operation of Statute of Frauds?

Answer 26

The contract is not withdrawn from the operation of the Statute, and A may not recover damages for wrongful discharge. But A may recover any unpaid salary. Restatement 2d of Contracts § 130(e)

Question 27

A and B agree on the sale of the output of A’s creamery to B for five years at stated prices. After four years B refuses further deliveries. Is the promise withdrawn from the operation of Statute of Frauds?

Answer 27

The contract is not withdrawn from the operation of the Statute, but A may recover the contract price of goods delivered and accepted. Restatement 2d of Contracts § 130(e)

Question 28

A makes an oral contract with B to devise Blackacre to B, and executes a will containing the devise and a recital of the contract. The will is revoked by a later will. Is the revoked will a sufficient memorandum to charge A’s estate?

Answer 28

The revoked will is a sufficient memorandum to charge A’s estate. Restatement 2d of Contracts § 131(d)

Question 29

A publishes in a newspaper an offer to buy certain goods, stating the terms of his proposal, and his name is printed under the advertisement. B accepts the offer. Is the advertisement a sufficient memorandum to charge A?

Answer 29

The advertisement is a sufficient memorandum to charge A. See § 136. Restatement 2d of Contracts § 131(d)

Question 30

A writes and signs in pencil a receipt for $1,000 which recites that the money is received from B as part payment of the price of $5,000 for a parcel of land. Is the receipt a sufficient memorandum to charge A?

Answer 30

The receipt is a sufficient memorandum to charge A on the agreement recited. Restatement 2d of Contracts § 131(d)

Question 31

A Company executes a written contract with B by which B purchases certain accounts owned by A Company. As part of the same transaction, C, the president of A Company, signs a contract of guaranty printed at the foot of the same paper: “In order to induce B to enter into an agreement dated ______ with ______ (hereinafter referred to as the client), the undersigned agrees to be liable for due performance of all the client’s agreements with B.” The blanks are not filled in. Are the quoted words sufficient to identify the obligation guaranteed?

Answer 31

The quoted words are sufficient to identify the obligation guaranteed. Restatement 2d of Contracts § 131(e)

Question 32

A and B make an oral contract for the sale of goods and sign the following memorandum: “Sept. 19th B, 12 mos. (300 bales S.F. drills (71/4) and 100 cases blue do (83/4)). Credit to commence when ship sails. not after December 1––delivered free of charge for truckage. [Signed] A, B.” Is the memorandum a sufficient?

Answer 32

If persons acquainted with the usages of the business would understand its meaning, the memorandum is sufficient. Restatement 2d of Contracts § 131(e)

Question 33

A and B enter into an oral contract by which A promises to sell and B to buy such of A’s iron in his millyard as he may decide to sell. A memorandum describes the subject matter of the contract as “all A’s iron which he may decide to sell.” Is the description a sufficient?

Answer 33

The description is sufficient. Restatement 2d of Contracts § 131(e)

Question 34

A and B enter into a contract by which A promises to sell and B to buy a certain lot of hops belonging to A. A telegram from B refers to the subject matter as “number 13.” This refers to a sample submitted by A to B by mail with a numbered tag attached and referring by trade usage to a specific lot. Is the description a sufficient?

Answer 34

The description is sufficient. Restatement 2d of Contracts § 131(e)

Question 35

A and B enter into an oral contract for the sale and purchase of Blackacre. An otherwise sufficient memorandum, signed by A and B, describes the subject matter as “the land on the corner of X and Y Streets,” omitting any statement as to the city or state. A owns only one of the four lots at the intersection. Is the description a sufficient?

Answer 35

The description is sufficient. Restatement 2d of Contracts § 131(e)

Question 36

A and B enter into a written contract for the employment of B as A’s sales manager for a term of two years. At the end of the two years, A and B orally agree to extend the employment for three more years at an increased salary. A year later A signs the following memorandum: “It is understood that the arrangements made for employment of B in our business on January 1, 1977, for a period of three years from that date at a salary of $30,000 per year, continues in force until January 1, 1980.” Does the memorandum sufficiently identify the nature of B’s employment?

Answer 36

The memorandum sufficiently identifies the nature of B’s employment. Restatement 2d of Contracts § 131(e)

Question 37

A and B are negotiating for the sale of A’s restaurant to B. B gives A a check for $500 bearing the notation “Tentative deposit on tentative purchase of 1415 City Line Ave., Phila. Restaurant, Fixtures, Equipment, Good Will.” Later A and B orally agree on terms of sale. Is the quoted memorandum sufficient to indicate that a contract for sale has been made?

Answer 37

The quoted memorandum is not sufficient to indicate that a contract for sale has been made. Restatement 2d of Contracts § 131(f)

Question 38

C and D make an oral contract for the sale of Blackacre and sign the following memorandum: “C agrees to sell and D agrees to buy Blackacre for $10,000.” C is agent for A, D is agent for B, and each is acting on behalf of his principal. Is the memorandum sufficient to charge A and B?

Answer 38

The memorandum is sufficient to charge A and B. Restatement 2d of Contracts § 131(f)

Question 39

An otherwise sufficient memorandum of an oral contract for the sale of Blackacre states that “the owner of Blackacre” promises to sell it. The memorandum is signed by B, and B is the agent of A, the owner of Blackacre, acting on A’s behalf. Is the memorandum sufficient to charge A?

Answer 39

The memorandum is sufficient to charge A. Restatement 2d of Contracts § 131(f)

Question 40

A, president and principal stockholder of A Company, gives B his personal check for $10,000 and a written offer to buy Blackacre from B on stated terms. The offer, signed by A, states that “the offer to purchase is from a company owned by A.” B accepts the offer by a signed writing. Neither the offer nor the acceptance identifies the purchaser except by the quoted language. Is the identification sufficient?

Answer 40

The identification is sufficient. Restatement 2d of Contracts § 131(f)

Question 41

A and B make an oral agreement for the sale of a parcel of land by A to B. B pays A $50 and A signs and delivers to B a receipt which identifies the parcel and accurately states the terms of payment but does not name or describe B or his agent. In B’s suit for specific performance, A defends on the ground of B’s inequitable conduct in the negotiations. Is the B’s identification sufficient?

Answer 41

B is sufficiently identified by his possession of the memorandum. Restatement 2d of Contracts § 131(f)

Question 42

A and B enter into an oral contract for the sale of Blackacre by A to B. A memorandum is made and signed which states sufficiently the parties, subject matter and terms of the oral bargain except that, though the parties in fact orally agreed that the price should be payable on delivery of a deed, the memorandum contains no statement as to when the price is payable. Is the memorandum sufficient?

Answer 42

The memorandum is sufficient. Restatement 2d of Contracts § 131(g)

Question 43

A and B enter into an oral contract for the sale of Blackacre by A to B, and both sign a memorandum providing for a “purchase money mortgage in the amount of $18,000 payable for 15 years at 5%.‘ B claims a right to pay $142.35 per month. A claims a payment of $100 a month plus monthly interest at 5%. No usage is shown. Is the memorandum sufficient?

Answer 43

The memorandum is not sufficient to support an action by B for specific performance on his terms. Restatement 2d of Contracts § 131(g)

Question 44

A lends $1,000 to B, and as part of the transaction C orally agrees to guarantee repayment. To evidence the guaranty, C signs a written promise to pay A $1,000. Is the promise a sufficient memorandum?

Answer 44

The written promise is a sufficient memorandum without any statement of consideration. Restatement 2d of Contracts § 131(h)

Question 45

A agrees not to sue B Company on a debt for goods sold and delivered, in consideration of C’s guaranty of payment for past and future deliveries to B up to $3,000. C signs the following guaranty: “I, C, do hereby guarantee to A the payment of any sums due or that may become due up to the sum of $3,000 on such goods as B may have bought or shall buy from A. [Signed] C.” A makes no further deliveries. Is the memorandum sufficient?

Answer 45

The memorandum is not sufficient to charge C, since it omits any mention of A’s return promise. Restatement 2d of Contracts § 131(h)

Question 46

A and B orally agree on the sale of a farm by A to B for $155 an acre. A dates and signs the following memorandum: “Received from B $100 as payment on 84 acres farm, [at $155 an acre] balance to be paid when deed and abstract are presented.” Is the memorandum sufficient?

Answer 46

The memorandum is sufficient to charge A if the bracketed words are included but not if they are omitted. Restatement 2d of Contracts § 131(h)

Question 47

A is lessee of a building for five years at $75 per month and has sublet it for three years at $100 per month. A seeks to induce B to purchase the building, and to that end orally promises to assign to B the lease and sublease and to execute a written assignment as soon as B obtains a deed. B purchases the building in reliance on the promise. What is B entitled to?

Answer 47

B is entitled to the rentals from the sublease. Restatement 2d of Contracts § 139(b)

Question 48

A is a pilot with an established airline having rights to continued employment, and could take up to six months leave without prejudice to those rights. He takes such leave to become general manager of B, a small airline which hopes to expand if a certificate to operate over an important route is granted. When his six months leave is about to expire, A demands definite employment because of that fact, and B orally agrees to employ A for two years and on the granting of the certificate to give A an increase in salary and a written contract. In reliance on this agreement A lets his right to return to his prior employer expire. The certificate is soon granted, but A is discharged in breach of the agreement. What is B entitled to?

Answer 48

The Statute of Frauds does not prevent recovery of damages by A. Restatement 2d of Contracts § 139(b)

Question 49

A orally promises to pay B a commission for services in negotiating the sale of a business opportunity, and B finds a purchaser to whom A sells the business opportunity. A statute extends the Statute of Frauds to such promises, and is interpreted to preclude recovery of the reasonable value of such services. Is the promise enforceable?

Answer 49

The promise is not made enforceable by B’s reliance on it. Restatement 2d of Contracts § 139(c)

Question 50

A renders services to B under an oral contract within the Statute by which B promises to pay for the services. What is A entitled to?

Answer 50

On discharge without cause in breach of the contract, A is entitled to the reasonable value of the services, but in the absence of additional circumstances is not entitled to damages for wrongful discharge. Restatement 2d of Contracts § 139(d)