Written Contracts Flashcards
Statute of Frauds
Requires certain agreements to be in writing to be enforceable; the agreements that must be in writing are those:
-For the transfer of an interest in land
-That cannot be performs within one year
-In which a party promises to pay the debt of another
-Made by an executor of an estate to pay a debt of the estate
-Made in consideration of marriage, and
-For the sale of goods of $500 or more
A plaintiff may not enforce any of these types of agreements unless the agreement, or some memorandum of it, is in writing and signed by the defendant
NOTE: Even if an agreement is unenforceable, it is not void
Prevents the enforcement of an executory contract; that is, one in which the parties have not fulfilled their obligations
Allows a party to cancel future obligations but not undo past actions
Was passed to prevent fraud, not to enable one person to mislead another and benefit at their expense
Agreements for an Interest in Land
A contract for the transfer of any interest in land must be in writing to be enforceable; this means any legal right regarding land
Example:
Presten and Sailer were roommates in a rental apartment in NJ. The lease was in Sailer’s name, but the two split all of the expenses. The building became “cooperative,” which means that each tenant would have the option of buying the apartment.
Sailer mentioned to Preston that he planned to buy the unit, and Preston asked if he could become half-owner. Sailer agreed and Presten borrowed Sailer the $1,000 fee to maintain his rights in the apartment.
When it was time for closing, Sailer realized he could sell the apartment for much more money and then told Presten that their deal was off and that he (Sailer) would be buying the unit alone. Presten filed suit.
Outcome: The agreement could only be enforced if put in writing and signed by Sailer. The parties had put nothing in writing, and therefore, Presten was out of luck. However, he was entitled to get his $1,000 back but nothing more and the apartment was not Sailer’s.
Exception: Full Performance by the Seller
If the seller completely performs their side of a contract for an interest in land, a court is likely to enforce the agreement even if it was done orally.
Example:
Adam orally agrees to sell his condo to Maggie for $150,000 and delivers the deed to Maggie. After delivering the deed to Maggie, he expects his money a week after, but Maggie failed to pay him.
Most courts will allow Adam to enforce the oral contract and collect the full purchase price from Maggie
Exception: Part Performance by the Buyer
The buyer of land may be able to enforce an oral contract if they paid part of the purchase price and either entered upon the land or made improvements to it
Most claims of part performance fail
A plaintiff seeking to rely on part performance must show partial payment and either entrance onto the land or physical improvements to the land
Agreements That Cannot Be Performed within One Year
Unenforceable unless it is in writing
The one-year period begins on the date the parties make the agreement
If a contract could possibly be completed within one year, it need not be in writing
Example:
Betty gets a job at Burger Brain, throwing fries in oil. Her boss tells her that she can have Fridays off for however long she works there. This oral contract is enforceable whether Betty stays one week or 20 years.
“As long as she works there” could last for less than one year or Betty might quit after six months and therefore, it does not need to be in writing
Promise to Pay the Debt of Another
When one person agrees to pay the debt of another as a favor to that debtor, it is called a collateral promise, and it must be in writing to be enforceable
Exception: The Leading Object Rule
This is an exception to collateral promise
When the promisor guarantees to pay the debt of another and the leading object of the promise is some benefit to the promisor, then the contract will be enforceable even if unwritten
If the promisor makes the guarantee not as a favor to the debtor but primarily out of self-interest, the Statute of Frauds does not apply
General Requirements of Writing
It must be signed by the defendant; and
State with reasonable certainty the name of each party, the subject matter of the agreement, and all of the essential terms and promises
Signature (Statute of Frauds)
A state’s Statute of Frauds typically requires that the writing be “signed by the party to be charged therewith”; that is, the party who is resisting enforcement of the contract
Collateral Promise
Secondary to a principal transaction or primary contractual relationship
Must be in writing
Primary versus Secondary Obligations
Primary: an unconditional promise to pay another person’s debt
Secondary: a promise to pay another persons debt only if that person fails to pay
Main Purpose Rule
A Court can infer from the circumstances whether the promisor’s “leading objective” was to secure a personal benefit
Statute of Frauds (continued)
Minimum requirements:
-must identify all the essential parts of the transaction
-must have been signed by the party being charged in case of dispute
-must identify the other party to the agreement
A Court will permit an agreement to stand if there is reasonable evidence that the written memorandum is adequate
Uniform Electronic Transaction Act of 1999 (UETA)
Procedural statutes that defer to existing substantive law but remove any barriers in those laws that are based upon the method of transaction
