© 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 14 Contracts: Statute of Frauds Chapter 14 Contracts: Statute of Frauds

© 2004 West Legal Studies in Business A Division of Thomson Learning 2 §1: Origins of the Statute of Frauds 1677 England passed the law “An Act for the Prevention of Frauds and Abuses.” Certain types of contracts must be in writing and signed by the party against whom enforcement is sought to be enforceable. Today, almost every state has a Statute of Frauds England passed the law “An Act for the Prevention of Frauds and Abuses.” Certain types of contracts must be in writing and signed by the party against whom enforcement is sought to be enforceable. Today, almost every state has a Statute of Frauds.

© 2004 West Legal Studies in Business A Division of Thomson Learning 3 §2: The Statute of Frauds To be enforceable, the following types of contracts must be in writing and signed:  Contracts involving interest in land.  Contracts involving “One-Year Rule.”  Collateral or Secondary Contracts.  Promise made in consideration of marriage.  Contracts for the sale of goods priced at $500 or more. To be enforceable, the following types of contracts must be in writing and signed:  Contracts involving interest in land.  Contracts involving “One-Year Rule.”  Collateral or Secondary Contracts.  Promise made in consideration of marriage.  Contracts for the sale of goods priced at $500 or more.

© 2004 West Legal Studies in Business A Division of Thomson Learning 4 Contracts Involving Interests in Land Land includes all physical objects that are permanently attached to the soil: buildings, fences, trees, and the soil itself. All contracts for the transfer of other interest in land: mortgages and leases. Case 14.1: Michel v. Bush (2001). Land includes all physical objects that are permanently attached to the soil: buildings, fences, trees, and the soil itself. All contracts for the transfer of other interest in land: mortgages and leases. Case 14.1: Michel v. Bush (2001).

© 2004 West Legal Studies in Business A Division of Thomson Learning 5 The One-Year Rule A contract that cannot, by its own terms, be performed within one year from the date it was formed must be in writing to be enforceable. One-year period begins to run the day after the contract is made.  Test: Whether performance is possible (although unlikely) within one year. A contract that cannot, by its own terms, be performed within one year from the date it was formed must be in writing to be enforceable. One-year period begins to run the day after the contract is made.  Test: Whether performance is possible (although unlikely) within one year.

© 2004 West Legal Studies in Business A Division of Thomson Learning 6 Collateral Promises Primary v. Secondary Obligations. “Main Purpose Rule” Exception. Estate Debts. Primary v. Secondary Obligations. “Main Purpose Rule” Exception. Estate Debts.

© 2004 West Legal Studies in Business A Division of Thomson Learning 7 Promises Made in Consideration of Marriage Prenuptial agreements must be in writing and signed to be enforceable. Contracts must be supported by some consideration to be enforceable. Prenuptial agreements may not be enforceable if the agreement is not voluntary. Prenuptial agreements must be in writing and signed to be enforceable. Contracts must be supported by some consideration to be enforceable. Prenuptial agreements may not be enforceable if the agreement is not voluntary.

© 2004 West Legal Studies in Business A Division of Thomson Learning 8 Contracts for the Sale of Goods UCC requires a writing or memorandum for the sale of goods priced at $500 or more. Exceptions:  Partial Performance. Case 14.2: Spears v. Warr (2002).  Admissions.  Promissory Estoppel.  Special Exceptions under the UCC. UCC requires a writing or memorandum for the sale of goods priced at $500 or more. Exceptions:  Partial Performance. Case 14.2: Spears v. Warr (2002).  Admissions.  Promissory Estoppel.  Special Exceptions under the UCC.

© 2004 West Legal Studies in Business A Division of Thomson Learning 9 §3: Sufficiency of the Writing Under the Statue of Frauds.  Must name, identify subject matter, consideration, other essential terms, and must be signed by the the party against whom enforcement is sought. Under the UCC.  Need only name the quantity term and be signed by the party to be charged. Case 14.3: Interstate Litho Corp. v. Brown (2001). Under the Statue of Frauds.  Must name, identify subject matter, consideration, other essential terms, and must be signed by the the party against whom enforcement is sought. Under the UCC.  Need only name the quantity term and be signed by the party to be charged. Case 14.3: Interstate Litho Corp. v. Brown (2001).

© 2004 West Legal Studies in Business A Division of Thomson Learning 10 §4: Parol Evidence Rule Oral representations or promises made prior to the contract’s formation or at the time the contract was created, may not be admitted in court. Integrated Contracts. Oral representations or promises made prior to the contract’s formation or at the time the contract was created, may not be admitted in court. Integrated Contracts.

© 2004 West Legal Studies in Business A Division of Thomson Learning 11 Exceptions to the Parol Evidence Rule Contracts subsequently modified. Voidable or Void contracts. Contracts containing ambiguous terms. Prior dealing, course of performance, or usage of trade. Contracts subsequently modified. Voidable or Void contracts. Contracts containing ambiguous terms. Prior dealing, course of performance, or usage of trade.

© 2004 West Legal Studies in Business A Division of Thomson Learning 12 Exceptions to the Parol Evidence Rule [2] Contracts subject to orally agreed-on conditions. Contracts with an obvious or gross clerical error that clearly would not represent the agreement of the parties. Case 14.4: Cousins Sub Systems v. McKinney (1999). Contracts subject to orally agreed-on conditions. Contracts with an obvious or gross clerical error that clearly would not represent the agreement of the parties. Case 14.4: Cousins Sub Systems v. McKinney (1999).

© 2004 West Legal Studies in Business A Division of Thomson Learning 13 Law on the Web UCC on the Statute of Frauds. UCC on the Statute of Frauds Case Involving s and the Statute of Frauds. History of The Statute of Frauds. History of The Statute of Frauds Legal Research Exercises on the Web. UCC on the Statute of Frauds. UCC on the Statute of Frauds Case Involving s and the Statute of Frauds. History of The Statute of Frauds. History of The Statute of Frauds Legal Research Exercises on the Web.