Round 2 Lecture 2 Flashcards
statutes of fraud
- require that certain contracts be evidenced by a satisfactory writing
- came out of early English courts
- made to prevent fraud
- lists specific contracts that must be in writing
general observations about statutes of fraud
- most contracts do not have to be evidenced by a writing
- important contracts should be evidenced by a writing regardless of whether or not a statute requires a writing
- is the writing the contract or proof of an oral contract entered into earlier (did you meet the writing requirement)
what types of contracts must be in writing?
1) guarantee contracts
2) contracts involving real estate
3) contracts incapable of performance w/in one year from the date made
guarantee contract
- “if X does pay, I’ll pay”
- applies to collateral (or secondary promise)- promisor (guarantor) not primarily liable, but only liable if the party whose performance is guaranteed fails to perform
exceptions to guarantee contracts needing to be in writing
-main purpose doctrine (where the object of the guarantor is to obtain an economic benefit that he or she did not previously have)
types of contracts involving real estate
- purchase/sale
- mortgage
- leases
- easements
- licenses
- contracting to build a home
exceptions to real estate contracts needing to be in writing
real estate lease with a term of one year or less (kind of stupid to not have this in writing though)
when does the one year commence? (for contracts in writing)
- the day after the contract is entered into
- could the contract under its terms possibly be performed within one year, however improbably performance within on year may be-if so no writing is required
general thoughts about type of writing required
-writing need not be a formal document nor must all terms be included in single writing (can draw several docs together)
writings must include- the basics
- identification of parties
- identification of subject matter and consideration
- signed by the party against whom enforcement is sought
- other essential terms and conditions (will vary with terms of contract)
what will satisfy the writing requirement?
written agreements, letters, daybook notations, or other writings whether or not the parties intended the writing to have legal consequences
judicial enforcement of a contract
- not available
- the parties cannot sue each other for a failure to perform the contract
can oral contracts be attacked?
if it is fully executed, it cannot be attacked on the basis that it should have been in writing
effect of an under oath admission that contract exists
contract is still not enforceable in a majority of states
equitable recovery based on promissory estoppel …
may be available to avoid an unjust result from a contract being declared unenforceable
partial performance exception
(generally limited to sales of real estate)
- no writing required and an oral contract will be enforceable if:
- buyer has made a partial payment of the price
- buyer has taken possession of the real estate
- buyer has added substantial improvements
Sale of goods and statute of frauds application
sale of goods with a price of $500 or more (should be higher but UCC was written in 1940s) must be in writing
Contracts for services not covered by this UCC rule
-how to deal with mixed contracts, that is where there is a sale of goods along with the services being provided in conjunction with the sale of goods
what is the predominant purpose of the contract?
how much was charged for the goods and how much was charged for the labor? was the primary purpose or thrust of the contract for goods or services? how did the language in the contract describe the subject matter?
writing required under 2-201
- very lenient requirements
- evidence contractual content
- be signed by party to be charged with performance
- specify some quantity of goods even though the quantity may be incorrect
use of confirmations between merchants
- merchant only section (both must be merchants)
- party desiring contract must prove oral contract in fact was formed (risk of perjury and who will jury believe)
- if recipient of confirmation fails to respond to it in writing within 10 days after receiving it, he is bound by the confirmation even though he did not sin it
- receipt of confirmation
merchant confirmation rule
written confirmation = contract
-courts enforce unless other merchant within 10 days of receiving confirmation sends out objection
specially manufactured goods
- the contract does not need to be in writing
- oral contracts are acceptable
- must prove oral contract in fact existed
exceptions of 2-201 contracts (goods) -don’t have to be in writing
- specially manufactured goods
- admission under oath
- partial acceptance or payment by buyer is an installment contract situation
- watch out for the one-year rule
modifications to sale of goods contracts
-If the price is $500 or more after modification the new contract must be in writing (even if it was originally formed orally)
other UCC statutes of fraud
- other personal property (intangible-$5000 limit)
- securities (exception- WI doesn’t require a writing)
- security agreements
- leases of goods ($1,000 or more)
concluding general observations of statutes of fraud
- use of customary forms minimizes risk of failing to comply with a statute of frauds-banking forms, real estate, brokers, comp. generated forms, etc.
- biggest risk-transactions that are not entered into in well-established business environments
electronic contracts (UETA)
- an electronic record satisfies the writing requirement
- an electronic signature satisfies the signature requirement
parol evidence rule
- only important if disputed contract is in writing-this rule does not apply to disputes with respect to oral contracts
- in order for the rule to apply the written contract must have been intended to be complete and final expression of the parties’ agreement (cannot just be part along with various oral arguments)
the contract formation process and the parol evidence rule
generally the product of numerous different types of communications between the parties leading up to “I offer” or “I accept”
parol evidence
refers to anything (other than the written contract itself) that was said, done, or written before the parties signed the contract or as they signed it
exceptions to the inadmissibility of evidence based on the parol evidence rule-you can offer proof of
- a partly written, partly oral contracts (did not intend written portion be integrated)
- collateral errors (typos)
- lack of capacity
- defense of fraud, misrepresentation, duress, mistake or illegality
- existence of conditions which make conditionals a party’s obligations under a contract
- clarify an ambiguity
what does the parol evidence rule really say
if a contract is intended to be the final one, the terms of the contract may not be varied or contradicted by evidence of any prior written or oral agreement in the absence of fraud, duress, or mutual mistake
what did reed vs. king determine
silence constitutes misrepresentation (seller didn’t tell buyer of flooding problems that were not noticeable during tour)
