R5 M2 - Contracts: Part II Flashcards
A minor can effectively disaffirm a contract up until the time of the 18th birthday and shortly thereafter.
Please list the Statue of Frauds: Six Contracts Requiring a Writing?
Note: Contracts for the sale of goods for $ 500 or more,
Service can be contracted orally regardless of price so long as the work is done within a year.
Which of the following oral agreements is enforceable without a writing under the statute of frauds?
A. An agreement to lease a house for $499 per month for two years. B. An agreement to employ a person for $450 a week for 18 months. C. An agreement to employ a person for life. D. An agreement to give a couple $450 if they agree to marry within six months.
Choice “C” is correct. The statute of frauds provides that certain contracts are not enforceable unless they are evidenced by a writing signed by the party sought to be held liable. Among such contracts are contracts that, by their terms, cannot be performed within a year. A contract to employ a person for life is not such a contract, since the person might not live a year. Thus, such a contract is enforceable even absent a writing.
Choice “A” is incorrect. Contracts for the sale of goods for $500 or more are within the statute of frauds and are unenforceable absent a sufficient writing. However, the $500 threshold is relevant only in contracts for the sale of goods. A lease of more than one year is within the statute both because it is a contract that by its terms cannot be performed within a year and a contract for an interest in land. Therefore, such a contract is not enforceable absent a sufficient writing.
Choice “B” is incorrect. A contract to provide services for 18 months by its terms cannot be performed within a year. Thus, it is unenforceable under the statute of frauds absent a sufficient writing. The fact that the rate of pay is $450 is irrelevant—the $500 threshold is relevant only with respect to a contract for the sale of goods.
Choice “D” is incorrect. Although this contract can be performed within a year, a contract the consideration for which is marriage is within the statute of frauds and is unenforceable absent a sufficient writing.
Which of the following contracts must be evidenced by a signed writing reflecting the material terms of the agreement to be enforceable under the statute of frauds?
A. A contract to employ a person for life. B. A contract to employ a person for two years. C. A contract to employ a person to sell goods for more than $500. D. A contract to employ a person for more than $500.
Choice “B” is correct. A contract to employ a person for two years is not enforceable under the statute of frauds unless the material terms of the contract are evidenced by a writing signed by the party sought to be held liable. This is because a contract which by its terms cannot be performed within a year is within the statute of frauds.
Choice “A” is incorrect. As indicated above, a contract which by its terms cannot be performed within a year is within the statute of frauds and is unenforceable absent a sufficient writing. However, a contract to employ a person for life does not fall within this provision because the employee can die within a year.
Choice “C” is incorrect. A contract to employ a person to sell goods for more than $500 is a contract for employment. Such contracts need not be evidenced by a writing to be enforceable.
Choice “D” is incorrect. A contract to employ a person need not be evidenced by a writing merely because the consideration is more than $500—the statute of frauds $500 threshold applies only to contracts for the sale of goods.
A CPA sued a former client for nonpayment of the final bill. Although happy with the CPA’s performance of services, the client claimed that the CPA is not entitled to the final bill payment because the contract between the client and the CPA failed to meet the Statute of Frauds. The client argues that the contract allowed up to 15 months for the CPA to complete the work, the contract price was well over $5,000, and although the client sent signed checks to the CPA, the client did not sign the contract. Which of the following statements about this situation is correct?
A. The Statute of Frauds does not apply, allowing enforcement of the contract terms. B. The Statute of Frauds does apply, but the requirements are satisfied by the client's signing of the checks, allowing enforcement of the contract terms. C. The Statute of Frauds does apply, and the requirements are not satisfied, thereby preventing enforcement of the contract terms. D. The Statute of Frauds does not apply, preventing enforcement of the contract terms.
Choice “A” is correct. Under the Statute of Frauds, certain contracts are unenforceable unless the party against whom enforcement is sought has signed a writing containing the material terms of the contract. There is no such writing here, but the contract is not one within the Statute of Frauds. Contracts that by their terms cannot be performed within one year from the making of the contract are within the statute, and so are contracts for the sale of goods for $500 or more. Here, while the contract allowed the CPA up to 15 months to complete performance, nothing indicates that performance could not be completed within a year. Therefore, that branch of the Statute does not apply. And although the contract price was $5,000, this is a contract for services and so the $500 threshold does not apply, either.
Choice “B” is incorrect. This incorrectly indicates the Statute of Frauds applies, and even if that were true, the checks would not be a sufficient writing because nothing indicates they included the material terms of the contract.
Choice “C” is incorrect. Although it is true that there is no writing here that would satisfy the Statute of Frauds, as explained above, the contract here is not within the Statute, and so the lack of a sufficient writing is irrelevant.
Which of the following statements is correct regarding the effect of the expiration of the period of the statute of limitations on a contract?
A. Once the period of the statute of limitations has expired, the contract is void. B. The running of the statute of limitations bars access to judicial remedies. C. A cause of action barred by the statute of limitations may not be revived. D. The expiration of the period of the statute of limitations extinguishes the contract's underlying obligation.
Choice “B” is correct. The running of the statute of limitations bars access to judicial remedies, i.e., it makes the contract unenforceable, but does not make the contract invalid or void in any way.
Choice “A” is incorrect. Once the period of the statute of limitations has expired, a party cannot be sued, but the contract is valid. The running of the statute of limitations does not make the contract void; it only makes it unenforceable.
Choice “C” is incorrect. A cause of action barred by the statute of limitations may be revived e.g., by sending a written promise to perform under the contract.
Choice “D” is incorrect. The expiration of the period of the statute of limitations does not extinguish the contract’s underlying obligation; it merely bars judicial methods to enforce the contract.
Choice “A” is correct. Prevention of performance results in a discharge for breach of the implied duty of cooperation. A party to a contract will also be discharged through an accord and satisfaction.
