1. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C HAPTER 15: C ONTRACTS IN W RITING

2. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. T OPICS C OVERED C HAPTER 15: C ONTRACTS IN W RITING I. Statute of Frauds. A. Contracts Within the Statute of Frauds. B. Compliance With the Statute of Frauds. C. Effect of Noncompliance. II. Parol Evidence Rule. A. The Rule. B. Situations to Which the Rule Does Not Apply. C. Supplemental Evidence. III. Interpretation of Contracts.

3. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. I NTRODUCTION  An oral contract is generally as enforceable as a written contract, unless otherwise provided by statute.  Rule – contracts within the statute of frauds must be evidenced by a writing to be enforceable.  3

4. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Following types of contracts fall under the Statute of Frauds and must in writing to be enforceable: Promises to pay the debts of others (suretyship). Promises of an executor to personally answer for debts of decedent. Agreements in consideration of marriage.  4

5. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Following types of contracts fall under the Statute of Frauds and must in writing to be enforceable: Agreements for the transfer of an interest in land. Agreements not to be performed within one year. 5

6. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Electronic Records.  The Uniform Electronic Transactions Act (UETA) gives full effect to electronic contracts, by considering electronic records to fulfill the writing requirement (state laws).  E-SIGN (federal statute). 6

7. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Suretyship Provision – applies to promises to pay the debts of others. Surety (promisor) to a creditor (promisee) to perform the duties of a third person (principal-debtor) if the principal debtor does not perform, said to be a collateral-promise.  7

8. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Suretyship Provision. Original Promise. R OSEWOOD C ARE C ENTER, I NC. V. C ATERPILLAR, I NC. (2007). Main Purpose Doctrine: promisor seeks to obtain an economic benefit she did not previously have. R OSEWOOD C ARE C ENTER, I NC. V. C ATERPILLAR, I NC. (2007). Promise Made to Debtor: suretyship provision does not include promise to debtor. Promise Made to Debtor: suretyship provision does not include promise to debtor. 8

9. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Executor-Administrator Provision. Applies to the promises of an executor of a decedent’s will, to personally answer for duty of decedent.  Marriage Provision. Does not apply to mutual promises to marry, but only to some other consideration (usually money or property). 9

10. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Land Contract Provision–  Land Contract Provision– applies to promises to transfer any rights, privileges, powers, or immunities in real property. Exception: Part Performance. Exception: Oral promise is enforceable if the interest has already been transferred. 10

11. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  One-Year Provision. Contracts that cannot be performed in one year must be in writing to be enforceable. The Possibility Test: courts ask whether is it possible for the contract to be performed in one year? I ACONO V. L YONS (2000). I ACONO V. L YONS (2000). 11

12. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  One-Year Provision. Computation of Time: clock starts when the agreement is made. Full Performance by One Party: courts hold the contract is enforceable against the other party. 12

13. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Sales of Goods – applies to a contract for the sale of goods for the price of $500 or more. Admission – admission in pleadings, testimony, or otherwise in court makes the contract enforceable for the quantity of goods admitted.  13

14. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Sales of Goods. Specially Manufactured Goods – an oral contract for specially manufactured goods is enforceable. K ALAS V. C OOK (2002). K ALAS V. C OOK (2002). Delivery or Payment and Acceptance – validates the contract only for the goods that have been accepted or for which payment has been accepted. 14

15. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C ONTRACTS W ITHIN THE S TATUTE OF F RAUDS  Modification or Rescission of Contracts within the Statute of Frauds –  Modification or Rescission of Contracts within the Statute of Frauds – oral contracts modifying contracts are unenforceable if the resulting contract is within the statute of frauds. 15

16. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMPLIANCE WITH S TATUTE OF F RAUDS  General Contract Provisions – the writing or writings must: Specify the parties to the contract. Specify the subject matter and essential terms. Be signed by the party to be charged or by her agent. E STATE OF J ACKSON V. D EVENYMS (1995). E STATE OF J ACKSON V. D EVENYMS (1995). 16

17. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMPLIANCE WITH S TATUTE OF F RAUDS  Sale of Goods. Writing Must – (1)­indicate that a contract has been made between the parties, (2)­be signed by the party against whom enforcement is sought or by her authorized agent, and (3)­ specify the quantity of goods to be sold.  17

18. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMPLIANCE WITH S TATUTE OF F RAUDS  Sale of Goods. Written Confirmation – between merchants, a written confirmation that is sufficient against the sender is also sufficient against the recipient unless the recipient gives written notice of his objection within ten days. 18

19. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. E FFECT OF N ONCOMPLIANCE  Oral Contract within Statute of Frauds – is unenforceable.  Full Performance – statute does not apply to executed contracts.  Restitution –available in quasi contract for benefits conferred in reliance on oral contract. 

20. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. E FFECT OF N ONCOMPLIANCE  Promissory Estoppel – oral contracts will be enforced where the party seeking enforcement has reasonably and justifiably relied on the promise and the court can avoid injustice only by enforcement.

21. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. P AROL E VIDENCE R ULE  The Rule – when parties intend a written contract to be the complete and final expression of their rights and duties, evidence of prior or contemporaneous oral or written negotiations are not admissible. J ENKINS V. E CKERD C ORPORATION (2005). J ENKINS V. E CKERD C ORPORATION (2005).

22. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. P AROL E VIDENCE R ULE Written contract? Integrated contract? Evidence prior or contemporaneous? Evidence varies contract? Evidence provides fraud, misrepresentation, undue influence, mistake, duress, incapacity, illegality, or unconscionability? No Yes No Yes No Continues on next slide. .. Parol Evidence Rule Does Not Apply: Evidence Is Admissible

23. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. P AROL E VIDENCE R ULE Evidence of a condition precedent? Evidence explains an ambiguity? Evidence of a clerical error? Parol Evidence Rule Applies: Evidence Is Not Admissible Yes No Parol Evidence Rule Does Not Apply: Evidence Is Admissible No

24. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. S ITUATIONS TO WHICH THE R ULE D OES N OT A PPLY  A contract that is partly written, not an integrated document.  Correction of a typographical error.  Lack of contractual capacity.  A defense of fraud, misrepresentation, duress, undue influence, mistake, illegality, lack of consideration or other defense. 

25. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. S ITUATIONS TO WHICH THE R ULE D OES N OT A PPLY  A condition precedent to which parties orally agreed.  Subsequent mutual rescission or modification of a written contract.  Parol evidence can be used to explain ambiguous terms.  A separate contract.

26. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. S ITUATIONS TO WHICH THE R ULE D OES N OT A PPLY  Course of Dealing: previous conduct that court may consider as common basis of understand.  Usage of Trade: regularly observed and followed in vocation, place, or trade.  Course of Performance: no objection to previous tenders of performance.

27. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. I NTERPRETATION OF C ONTRACTS  All the circumstances are considered and the principal purpose of the parties is given the greatest weight.  A writing is interpreted as a whole.  Commonly accepted meanings are used unless the parties manifest a different intention. 

28. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. I NTERPRETATION OF C ONTRACTS  Wherever possible, the intentions of the parties are interpreted as consistent with each other and with course of performance, course of dealing, or usage of trade. 

29. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. I NTERPRETATION OF C ONTRACTS  Technical terms are given their technical meaning.  Specific terms are given greater weight than general language.  Separately negotiated terms are given greater weight than standardized terms or those not separately negotiated. 

30. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. I NTERPRETATION OF C ONTRACTS  The order for interpretation is: express terms, course of performance, course of dealing, and usage of trade.  Where a term has several possible meanings, the term will be interpreted against the party who supplied the contract or term. 

31. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. I NTERPRETATION OF C ONTRACTS  Written provisions are given preference over typed or printed provisions, and typed provisions are given preference over printed provisions.  If an amount is set forth in both words and differing figures, words control figures.

32. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. I NTERPRETATION OF C ONTRACTS  Where a term has several possible meanings, the term will be interpreted against the party who supplied the contract or term.