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Statute of frauds

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									     Statute of Frauds

How the form of a contract may
  affect its enforceability... if K is
 not in the proper form, it may be
      denied enforceability...
          Statute of Frauds –
          What do you think?
   Three examples of three different types
    of Ks which need to be in writing in
    order to be enforced (not the types, give
            Statute of Frauds
   Requirement:
    – some Ks must be in writing or evidenced
      by a written memo signed by the party
      against whom enforcement is sought
   Purpose:
    – enforceability (emphasizes importance of
      certain Ks)
    – evidentiary
        What Kinds of Ks?
 K involving an interest in land
 K which by its terms can’t be
  performed w/in one year from formation
 Collateral or secondary promises
 Promise made in consideration of
 UCC, Ks for sale of goods > $500
           Interest in land
 sale
 lease (>1 year)
 easements
 liens
 mortgages
 crops, minerals
 Can’t Be Performed Within One
  Year From Date of Formation
 Objective impossibility
 Test: not whether performance is likely
  within one year, but rather, is it possible
  within one year?
    – if possible, K does not fall within SOF, no
      writing is required
   Key language.... “by its terms”
Collateral or Secondary Promises
 Promises to answer for the debt of
 Main Purpose Doctrine
    – who is really benefiting?
       » if facts are such that promisor/guarantor chief
         purpose in making the promise is to further own
         interest, promise does not fall within the statute
         and no writing is required
Collateral or Secondary Promises
 Statute of Frauds applies (and writing is
  required) only if the Guarantor’s
  obligation is contingent upon the
  principal debtors inability or refusal to
 Important difference between Sureties
  and Guarantors...
       Suretyship v. Guaranty
 Surety                          Guarantor
   promise to creditor made        promise to creditor made
    by third party to be             by 3P to pay obligation
    responsible for debtor’s         only after principal has
    obligation                       defaulted
   primarily liable                secondarily liable...
   creditor can hit him up at      creditor must first pursue
    any time                         principal debtor...
   NEED NOT BE IN                   principal must first default
    WRITING                         MUST BE IN WRITING...
   Does not “fall within the        unless MPD applies
    Statute of Frauds”
Promises Made in Consideration
         of Marriage
   Dowry type cases...

   Antenuptial (Prenuptial) agreements

   Must be in writing in order to be
    – that is, they fall within the statute of frauds
      UCC Sale of Goods > $500
 UCC 2-201
 Look to price, not value of goods
 Requirement:
    – any writing that states quantity
    – signed by person to be charged
   Remember evidentiary purpose of
       Exceptions to UCC SOF
   Specially manufactured goods:
    – substantial beginning of performance
    – commitments for procurement
    – obviously meant for a particular buyer
      » e.g., merchandise w/ ND monogram
   Confirm of an oral agreement between
       Sufficiency of the Writing
   Ideally, all terms of K are clearly and
    unambiguously described in writing....
   But what do we know from experience?
     – few will actually be set forth
       » UCC requires quantity term and signature only
       » at minimum, usually need name of parties,
         subject matter, consideration
   Only need signature of the party against
    whom enforcement of the K is sought
              For discussion...
   Purpose of Statute of Frauds
    – ethical ramifications
    – sword or shield?
   How to mitigate the harshness?
    – Effect of Partial Performance
    – Promissory Estoppel
   Electronic Signatures
          Purpose of the Statute
   To provide reliable evidence
    – written form is better than recollection of the
   To prevent frauds
    – because parties to the case could not testify,
      witnesses were sought... and bought
   But if it is used as a technical defense, might
    it do more harm than good?
    Some mitigation of the harm...
   Effect of Partial Performance
    – Land contract.... paid part of purchase
      price, taken possession, permanent
      improvements, but no formal writing...
      seller wants out
    – Admissions in court... satisfy writing
      requirement, to extent admitted
    More mitigation of the harm...

   Reliance on oral K
    – in some states, reliance is enough to
      remove from SOF
   Promissory Estoppel
    – Where else did we use this concept?
          Parol Evidence Rule
   “If a writing that is determined to
    constitute a K includes everything the
    parties intended, no evidence of prior
    oral or written agreements or
    contemporaneous oral negotiations may
    be used to change the terms”
            A Classic Example
   Purchasing a used car... questions as to
    warranty, reliability, etc...
   Seller and Buyer: “Blah, blah, blah, blah, blah,
    blah, blah, blah. Blah, blah, blah, blah? Blah.
    Blah, blah, blah, blah. Blah, blah, blah, blah,
   Written K: “This is the deal. This is the whole
    deal. Includes none of the blah, blah, blah.”
   What’s the deal?
               Parol Evidence
 Refers to that “outside” prior oral or
  written evidence
 The rule:
    – is intended to give effect to the intent of the
    – helps interpretation
       » provides a single source of proof
         Parol Evidence Rule
 Later agreements supersede earlier
 Rule applied only where latest
  expression of the K is in writing... if later
  expression is oral, it is not prior or
  contemporaneous and the jury decides
  if it supersedes
     When Will Extrinsic (Parol)
      Evidence Be Admissible?
   Subsequent modification
    – they are not prior or contemporaneous!!!
    – But what if subsequent modification brings
      the K under the SOF?
   Void or Voidable K
    – Evidence of fraud, deception,
      misrepresentation will always be admitted
       » much like with the IRS....
     Admitting Parol Evidence...
   Ambiguous terms
    – remember, rule refers to a K that is supposed to
      have been agreed upon, so the court will accept
      evidence that clears up something ambiguous
    – Incomplete K... terms are missing
    – same comment.... we are trying to enforce the K
      that was agreed upon
   Prior course of Dealings
    – customs, trade usage are OK, and may have been
      part of the K
     Admitting Parol Evidence...
   K subject to agreed upon conditions
    – if whole contract was conditioned upon an oral
      statement, the oral statement isn’t modifying or
      changing the terms....
       » issue is the enforceability of the contract
   Typographical errors
    – remember, we are trying to enforce the agreement
      the parties intended, not necessarily what the
      secretary may have typed!!!
              Problem 15-1
   Can k be performed within one year
    from the date of being entered into?
    – a: Possible to be performed within one
      year? Yes
    – b: When would k be fully performed? Not
      until May 31 of following year.
    – c: Possible to be performed within one
            Problem 15-5
 Does Agreement fall under the Statute
  of Frauds?
 Is it an agreement to pay the debt of
 Was this promise to pay an original
  undertaking of the son…?
             Problem 15-6
 At what point do/did the obligations of
  the parties become fixed?
 What duties or obligations (if any)
            Problem 15-7
 Could the K possibly be performed
  within one year from formation?
 Prior to August 1985
 One year from date of beginning
 When are obligations under K
  determinable with certainty?

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