Business Law CH. 16 (the writing requirement & electronic records)

contracts involving interests of land

-A contract calling for the sale of land is not enforceable unless it is in writing or evidenced by a written memorandum. - Land is real property and includes all physical objects that are permanently attached to the soil, such as buildings, fences, trees, and the soil itself. -the contract of land must describe the property being transferred with sufficient certainty for it to be identified -also required written evidence of contracts for the transfer of other interests in land, such as mortgage agreements and leases

What Constitutes a Writing?

A writing can consist of any order confirmation, invoice, sales slip, check, fax, or e-mail—or such items in combination -Several documents may form a single contract if they are physically attached, such as by staple, paper clip, or glue. Several documents may form a single contract even if they are only placed in the same envelope.

sometimes does/does not need to be in writing-> Promissory Estoppel

An oral contract that would otherwise be unenforceable under the Statute of Frauds may be enforced in some states under the doctrine of promissory estoppel. An oral contract that would otherwise be unenforceable under the Statute of Frauds may be enforced in some states under the doctrine of promissory estoppel. -if a person justifiably relies on another's promise to his or her detriment, a court may estop (prevent) the promisor from denying that a contract exists. Section 139 of the Restatement (Second) of Contracts provides that in these circumstances, an oral promise can be enforceable notwithstanding the Statute of Frauds.

Statute of Frauds

Every state has a statute that stipulates what types of contracts must be in writing. We refer to such a statute as the Statute of Frauds. The origins of these statutes can be traced to early English law.

Integrated contracts

Fully Integrated: intended to be complete & final embodiment of the terms of the parties' agreement=Parol Evidence INADMISSIBLE (evidence of a prior negotiation that contradicts a term of a written contract) Not Fully Integrated: omits on a agreed-on term that is consistent on a parties' agreement= Parol Evidence ADMISSIBLE (if the contract is incomplete & lacks one or more of the essential terms)

The Parol Evidence Rule

Sometimes, a written contract does not include—or contradicts—an oral understanding reached by the parties before or at the time of contracting. EXAMPLE: For instance, a landlord might tell a person who agrees to rent an apartment that cats are allowed, whereas the lease contract clearly states that no pets are permitted. In deciding such disputes, the courts look to a common law rule governing the admissibility in court of oral evidence, or parol evidence. Parol evidence is testimony or other evidence of communications between the parties that is not contained in the contract itself

does not need to be in writing-> Special Exceptions under the UCC

Special exceptions to the writing requirement apply to sales contracts. Oral contracts for customized goods may be enforced in certain circumstances. Another exception has to do with oral contracts between merchants that have been confirmed in a written memorandum

Contracts for the Sale of Goods

The Uniform Commercial Code (UCC) includes Statute of Frauds provisions that require written evidence or an electronic record of a contract for the sale of goods priced at $500 or more. -need only state the quantity term

marriage promises

prenuptial agreements—agreements made before marriage that define each partner's ownership rights in the other partner's property. Prenuptial agreements must be in writing to be enforceable.

The Statute of Frauds in the International Context

the Convention on Contracts for the International Sale of Goods (CISG) governs international sales contracts between citizens of countries that have ratified the convention (agreement). CISG does not incorporate any Statute of Frauds provisions. Rather, it states that a "contract for sale need not be concluded in or evidenced by writing and is not subject to any other requirements as to form."

What must be contained in writing?

under the UCC, a writing evidencing a contract for the sale of goods need only state the quantity and be signed by the party against whom enforcement is sought. - the writing must also name the parties and identify the subject matter, the consideration, and the essential terms with reasonable certainty. - In addition, contracts for the sale of land often are required to state the price and describe the property with sufficient clarity to allow them to be determined without reference to outside sources.

The One-Year Rule

-Contracts that cannot, by their own terms, be performed within one year from the day after the contract is formed must be in writing to be enforceable. -The reason for this rule is that the parties' memory of their contract's terms is not reliable for longer than a year. -The one-year period begins to run the day after the contract is made. -an oral contract for lifetime employment does not fall within the Statute of Frauds because an employee can die within a year, so the contract can be performed within one year

Exceptions to the writing requirement-> Partial performance

-Courts may grant specific performance of an oral contract to transfer an interest in land that has been partially performed. -When a contract has been partially performed and the parties cannot be returned to their positions prior to the contract, a court may grant specific performance. Specific performance is an equitable remedy that requires performance of the contract according to its precise terms - Under the UCC, an oral contract for the sale of goods is enforceable to the extent that a seller accepts payment or a buyer accepts delivery of the goods

contracts that require a writing

1. Contracts involving interests in land. 2. Contracts that cannot by their terms be performed within one year from the day after the date of formation. 3. Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally—that is, out of her or his own pocket. 4. Promises made in consideration of marriage. 5. Under the Uniform Commercial Code, contracts for the sale of goods priced at $500 or more.

Exceptions to the Parol Evidence Rule

1. Contracts subsequently modified. -Evidence of any subsequent modification (oral or written) of a written contract can be introduced in court. 2. Voidable or void contracts. -Oral evidence can be introduced in all cases to show that the contract was voidable or void 3. Incomplete contracts. -When the written contract is incomplete in that it lacks one or more of the essential terms, the courts allow additional evidence to "fill in the gaps." 4. Prior dealing, course of performance, or usage of trade. --Under the UCC, evidence can be introduced to explain or supplement a written contract by showing a prior dealing, course of performance, or usage of trade. 5. Contracts subject to an orally agreed-on condition precedent - sometimes the parties agree that a condition must be fulfilled before a party is required to perform the contract. This is called a condition precedent. 6. Contracts with an obvious or gross clerical (or typographic) error that clearly would not represent the agreement of the parties. -Parol evidence is admissible to correct an obvious typographic error.

Exceptions to the writing requirement-> Admissions

If a party against whom enforcement of an oral contract is sought "admits" under oath that a contract for sale was made, the contract will be enforceable -If a party admits a contract subject to the UCC, it is enforceable, but only to the extent of the QUANTITY admitted

Collateral promise

a collateral promise is one made by a third party to assume the debts or obligations of a primary party to a contract if that party does not perform. Any collateral promise of this nature falls under the Statute of Frauds and therefore must be in writing to be enforceable. -A primary obligation (DOES NOT NEED TO BE IN WRITING) is a third party's promise to pay another person's debt (or other obligation) that is not conditioned on the person's failure to pay (or perform). As a general rule, a contract in which a party assumes a primary obligation does not need to be in writing to be enforceable. Example 16.5 Nigel tells Leanne Lu, an orthodontist, that he will pay for the services provided for Nigel's niece. Because Nigel has assumed direct financial responsibility for his niece's debt, this is a primary obligation and need not be in writing to be enforceable. -Secondary Obligations (DO REQUIRE BE IN WRITING) A secondary obligation is a promise to pay another's debt only if that party fails to pay. -An Exception—The "Main Purpose" Rule (DOES NOT NEED TO BE ON WRITING) An oral promise to answer for the debt of another is covered by the Statute of Frauds unless the guarantor's main purpose in incurring a secondary obligation is to SECURE A PERSONAL BENEFIT. This type of contract need not be in writing. - Another typical application occurs when one creditor guarantees a debtor's debt to another creditor to forestall LITIGATION.