ACCT 324: Chapter 18 contracts in writing

If the written contract has ambiguous terms, the court allows oral evidence for the purpose of:

clarifying the contract

Secondary obligations are also known as

collateral promises suretyship promises

Which of the following indicates an admission exception to the statute of frauds?

An admission is a statement under oath or as part of a legal process in which a party being sued admits the existence of a contract.

Melinda signs a three-year contract for employment as a legal studies lecturer. Does this type of contract fall within the scope of the statute of frauds?

Yes, because it is a contract whose terms prevent possible performance within one year.

Jacob has car insurance with Big Insurer. Jacob gets in a car wreck with Selena. The adjuster for Big Insurer orally agrees to pay Selena $1,000 for the damage to her car. The adjuster, however, gets in trouble with his boss for agreeing to pay too much. He tells Selena that he is backing out of the deal because the agreement is unenforceable on the basis that the statute of frauds requires that a contract to pay the debt of another be in writing. Is the adjuster correct? Why or why not?

a written agreement is required of $500.

the title "statute of frauds" is misleading because:

there is not one statute; instead, the statute of frauds is a general collection of concepts that has been incorporated at the state level

Judges will typically address an agreement that consists of both written and oral elements by:

treating the contract as not finalized and assuming the parties do not intend to have the written part represent the entire agreement

To be considered exempt from the statute of frauds, a contract:

must be possibly performed in one year, even if the performance is highly unlikely

For promissory estoppel to apply, the agreement must:

not otherwise be an enforceable contract

What are the eight exceptions to the parol evidence rule?

1. contracts have been subsequently modiefied 2. contacts conditioned on orally agreed-on terms 3. contracts that are not final as they are part written and part oral 4. contracts with ambiguous terms 5. incomplete terms 6. contracts with obvious typo errors 7. voidable or void contracts 8. evidence of prior dealings or usage of trade

If oral evidence is being offered to clarify an ambiguous term in a written contract, the court will:

admit the oral evidence

A prenuptial agreement is an agreement made by two parties ______ regarding ownership rights to property.

prior to their marriage

In which of the following situations is parol evidence contradictory to the final terms admissible?

If the oral agreement was made subsequent to the creation of the contract

Which of the following is true regarding what is considered an interest in land within the statute of frauds?

Interests in land within the statute of frauds does not include promises to sell crops annually, agreements between parties for profit sharing from the sale of real property, and boundary disputes that have been settled through the use of land.

What kind of contract has an event or occurrence that must occur before the contract can be executed?

Condition precedent

What must be done in relation to contracts involving an interest in land?

Contracts involving an interest in land are covered by the statute of frauds, and as such, must be in writing.

What are some of the exceptions to the parol evidence rule?

Contracts with ambiguous terms Contracts that have been subsequently modified

Alvin promised Gina that if she would quit her job in California and move to New York, he would have a job for her. Gina sold everything and moved to New York; Alvin, however, did not hire Gina. Under which of the following circumstances would the doctrine of promissory estoppel apply?

Gina relied on Alvin's promise to her detriment and Alvin should have known Gina would rely on it.

Which of the following contracts would fall within the statute of frauds and therefore require a writing to be enforceable?

On June 15, Luigi hires Vela to work for him for one year, starting July 1.

Which of the following is correct regarding partially written and partially oral contracts?

Oral evidence related to the contract is admissible.

A court will allow what type of evidence to prove a subsequent modification of a written contract?

Parol evidence

What is the common law rule that bars the admission of oral testimony to prove agreement to certain terms if there is a written contract between the parties after the oral testimony occurs?

Parol evidence rule

What are the elements of a written agreement under the statute of frauds?

All pertinent terms must be listed in the agreement. The parties to the agreement must be identified. The subject matter of the agreement must be defined.

Promissory estoppel requires what major element to exist?

Detrimental reliance by the injured party

Which of the following are exceptions to the statute of frauds?

In an instance where promissory estoppel has been established Admission by one party to a contract Partial performance on a contract

What type of contract is intended to be a complete and final representation of the parties' agreement?

Integrated

William and Katherine are planning to get married. William's attorney indicated the parties should sign an agreement before the two get married that clearly states the ownership rights each party enjoys in the other party's property. This is known as which of the following?

A prenuptial agreement

The statute of frauds does not apply to which of the following contracts?

A professional services agreement

Which of the following is not a valid exception to the statute of frauds?

A contract that is unprofitable to both parties

According to which of the following does "land" encompass not only the land and soil itself, but also anything attached to the land?

the statute of frauds

A prenuptial agreement involves a contract before marriage

dealing with property rights

One of the benefits of the statute of frauds is that it: Blank

makes contractual negotiations easier by ensuring all the specific terms of a contract are written and aware to all parties

Mortgages and leases are not considered within the statute of frauds because they are not considered transfers of interests in land.

False Mortgages and leases are considered within the statute of frauds because they are considered transfers of interests in land.

Secondary obligations are also known as third-party beneficiary contracts.

False Secondary obligations are also known as secondary promises, collateral promises, or suretyship promises.

Which of the following transfer of interests in land fall within the statute of frauds

Mortgage contracts Lease contracts

What section of the Uniform Commercial Code (UCC) requires contracts for the sale of goods in excess of $500 to be in writing?

Section 2-201

Which of the following is correct regarding a signature on a document falling within the statute of frauds?

So long as it is meant as a signature, a party required to sign may sign at any place on the document.

Which of the following must sign a document coming within the statute of frauds?

The party against whom action is sought

A main purpose of which of the following is to prevent unreliable oral evidence from interfering with a contractual relationship?

The statute of frauds

the statute of frauds is found in what federal code?

The statute of frauds is not found in any federal code, but is instead encompassed in state statutes and state common law.

Identify a true statement about integrated contracts

They are considered complete. They are in written form.

The partial performance exception to the statute of frauds covers contracts involving:

a property interest

According to the Uniform Commercial Code (UCC), oral contracts for Blank______ are enforceable even if they would ordinarily have to be in writing.

customized goods

According to the statute of ______, if a contract can possibly be performed within one year, the contract does not need to be in writing to be enforceable.

frauds

When a contract is based on a future event occurring first, that future event is called a condition

precedent

When a contract consists of both written and oral elements, judges tend to

treat it as nonfinalized contract

How many recognized exceptions are there to the parol evidence rule?

8

What are the reasons why the partial performance exception to the statute of frauds could be applied?

A buyer has taken possession of a land interest as part of a contract Partial payment for a contract involving an interest in land

Which of the following is not a type of contract within the statute of frauds that concerns a promise to pay a debt?

A collateral estoppel

Gianni hires Dolton to work as his driver with an annual salary of $100,000 for the rest of Dolton's life. After two years, Gianni decides to fire Dolton. Dolton claims they have a valid contract, but Gianni says it is barred by the statute of frauds because they never put anything in writing. Who is correct?

Dolton, because the contract can be completed in one year since Dolton could die within a year of the contract's creation.

Which of the following promises would not need to be in writing to be enforceable?

Jonie and Kiel promise to marry each other.

Which of the following contracts would fall outside the statute of frauds and therefore not require a writing?

Lani offers to paint Ry's house for $1,000.

Which of the following is an exception under which a secondary obligation need not be in writing?

The main-purpose rule

Which of the following is correct regarding secondary obligations?

They fall within the statute of frauds. They involve a party outside the primary agreement.

According to the ______, parol evidence is admissible for the sake of clarification if it addresses prior dealings between the parties or usages of trade in the business they are in.

Uniform Commercial Code

According to the Uniform Commercial Code (UCC), which of the following contracts is enforceable even if it is an oral contract?

When a merchant sells goods to another merchant

A(n) ______ is a statement made in court, under oath, or at some stage in a legal proceeding in which one party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing.

admission

Contracts made in consideration of marriage ______ subject to the Statute of Frauds.

are

Whenever a written agreement contains a serious and obvious typographical error, Blank______evidence is admissible to demonstrate it was an error, as well as to set forth the proper term.

parol

Courts can allow ______ evidence to ______ the missing parts, while not modifying the written agreement in any substantial way.

parol; fill in

Regarding the circumstances in which the Statute of Frauds applies, contracts involving secondary obligations are included under

suretyship

Identify the contracts that are subject to the statute of frauds writing requirement.

Contracts related to an interest in land Contracts involving secondary suretyships

What are the types of contracts that fall within the scope of the statute of frauds

Contracts related to an interest in real property Promises made in consideration of marriage

[Kids' debts] Marta agrees to buy Natasha's convertible automobile but Marta may be losing her job, in which case her mother Lottie will pay pursuant to the terms of the contract Lottie signed. Jeb signs an agreement to pay for his son Byron's plastic surgery if his son cannot afford the payments. Lucia agrees to sell her drum set to Marcus because Marcus' father said he will back the deal. Which individuals would be considered to have secondary obligations?

Lottie, Jeb, and Marcus' father

On February 1, publisher Dorian Winn hires Travis to write twenty books of a novel-series, each over a thousand pages long. Travis laughs, saying that it could take a year just to write one of the books. Travis also says that the oral contract for the project would not be valid anyway. Is Travis correct?

No, because even though highly unlikely, the project can theoretically be completed within one year and does not have to be in writing.

Which of the following allows for the use of parol evidence to clear ambiguity in a written contract by looking at past business dealings?

The Uniform Commercial Code

Which of the following are not elements of a written agreement under the statute of frauds?

The agreement must be signed by an agent, not the principal to the contract. The agreement must be profitable for both parties.

Which of the following was the result in Sewing v. Bowman, the case involving the issue of whether an agreement to share in the profits of the land, such as appreciation in the value of the properties and rental income, came within the statute of frauds?

The court ruled that the land constituted an asset of the partnership, so the partnership agreement did not come within the statute of frauds.

What will a court use to determine if a contract is void or voidable?

The court will admit parol evidence to determine if a contract is void or voidable.

Colin and Natalie orally agreed with Medical Center X for an in vitro fertilization procedure that would not result in the birth of an autistic child. They later signed a written contract stating that the medical center could not promise an absence of physical or mental defects and assumed no responsibility for such defects. The child conceived had autism. Which of the following is the most likely result of the parents' suit for breach of the oral agreement if the court follows the decision in Scalisi et al. v. New York University Medical Center discussed in the text?

The medical center will prevail based upon the written contract.

identify a purpose of the statute of frauds.

To ease contractual negotiations by requiring sufficiently reliable evidence to prove the existence and specific terms of a contract

What is a purpose of the parol evidence rule?

To restrict evidence from being admitted that substantially contradicts an agreement in its written form.

Nadia, the president of XYZ Co., and Ramon orally agreed that Ramon would work as a computer programmer for XYZ Co. for a three-year period. Their oral agreement also covered other matters such as his pay and the availability of one week of paid vacation. On the day he talked with Nadia, Ramon signed an employee handbook including a provision that his employment was at-will, meaning that he could quit or the company could discharge him at any time. A month later, Ramon received a three-year contract for employment with XYZ Co. in the mail incorporating the amount of his salary and other issues he had discussed with Nadia. Ramon signed it and mailed it back, but he changed the vacation provision to three weeks instead of one week. Brendan, the human resources manager for XYZ Co., called Ramon after receiving the agreement and told Ramon that the contract was only a draft for discussion purposes and that he was actually firing Ramon because he seemed too focused on vacation. Assuming the court follows the reasoning of the court in the dispute discussed in the text involving Michael Gallagher and Medical Research Consultants, which of the following would be the most likely result in the dispute between Ramon and XYZ Co. if Ramon claims he had a three-year contract of employment?

XYZ Co. will win because even if a three-year oral agreement for employment was made, it would not have been enforceable because the statute of frauds requires that agreements that cannot be completed within one year be in writing. Further, the draft Ramon returned was not signed by XYZ Co.

If there is a an obvious typographical error in a written contract, the court will:

admit parol evidence to correct it

If a written agreement has missing parts, the court will

admit parol evidence to fill in missing parts

Under the parol evidence rule, oral testimony is inadmissible to prove certain terms or agreement if it comes:

before the existence of a written contract. at the same time as the execution of the written contract.

in an agreement for the sale of goods over $500, only the Blank______ needs to be stated.

quantity

Parol evidence is admitted to determine whether a contract is:

voidable void