Comprehensive Volume, 18 th Edition Chapter 17: Form of Paper and Electronic Contracts

Oral Agreements An oral agreement can be a contract unless it is the intention of the parties that they should not be bound without a written agreement. As an exception to this, certain contracts must always be written, or else they cannot be enforced. The law that requires this writing is called the statute of frauds.

Statute of Frauds A contract must be in writing in the case of: (1) an agreement that cannot be performed within one year after the contract is made, (2) a sale of any interest in real property, (3) a promise to answer for the debt of another, (4) a promise by the executor of an estate to pay a claim against the estate from personal funds, (5) a promise made in consideration of marriage, (6) the sale of goods for a price of $500 or more. Local statutes may include other types of contracts, such as a contract between a landowner and a real estate agent.

Contracts and the Statue of Frauds Contracts That Must Be in Writing Exceptions Land   Sales   Mortgages   Options Part Performance Payment and Possession Improvement Contracts Not to Be Performed Within One Year Executed Contracts Promise to Pay the Debt of Another   Estates and Personal Representative   Guarantor/Surety Promise to Marry Sales of Goods $500 or More Part Performance Merchant’s Confirmation Memo Specially Manufactured Goods

Signatures The written contract must be signed by the defendant against whom suit is brought in order for a contract to be enforced. The signing may be made by printing, stamping, typewriting, or any other means that is intended to identify that party.

Recovery To avoid unjust enrichment, a plaintiff barred from enforcing an oral contract may recover from the other contracting party the reasonable value of the benefits conferred by the plaintiff on the defendant. To prevent the statute of frauds from being used to defraud a party to an oral contract, the courts by decision have made certain exceptions to the statute of frauds.

Parol Evidence If the writing is the complete and final statement of the contract, matters agreed to orally, but not included in the writing are not allowed to contradict the writing. This is called the parol evidence rule. Some courts have liberalized the rule so that parol evidence is admitted when it will aid in interpreting the writing.

Parol Evidence Exceptions In any case, the parol evidence rule does not bar evidence when: (1)the writing is incomplete; (2) the writing is ambiguous; (3) the writing is not a true statement of the agreement of the parties because of fraud, duress, or mistake; or (4) the existence, modification, or illegality of a contract is in controversy.

When the Parol Evidence Rule Does Not Apply Provision Omitted Due to: Fraud Duress Mistake Parol evidence may be used to show the agreement to be unenforceable.   Modification of contract Parol evidence rule does not prohibit evidence that the contract was later modified.  Ambiguous terms in contract; Parol evidence allowed to clarify meaning Parol Evidence Rule: Prior or contemporaneous spoken words will not be allowed to modify or contradict the terms of a written contract that is complete on its face.