2.5: Written Contracts

What advantages does a written contract have over an oral contract?

-A written contract has advantages over oral contract, provided it includes all the terms and provisions of the agreement -The existence of a contract cannot be denied if it is in writing. If there were no witnesses when an oral contract was formed, one of the parties might successfully deny that any contract was made -The terms of the contract can be ascertained.-One of the parties to an oral contract might die or become incompetent and, therefore, be unable to testify as to the terms of an oral contract Written evidence, composed in clear and unambiguous language, is more reliable than oral evidence

Under what circumstances will courts admit oral evidence to add to or modify a written contract?

-If the omission is due to FRAUD, ALTERATION, TYPOGRAPHICAL ERROR, DURESS, OR OTHER SIMILAR CONDUCT, oral testimony may be produced to show such conduct

How does a memorandum differ from a written contract?

-The chief difference between a memorandum and a written contract is that one may introduce oral testimony to explain or complete the memorandum.-The memorandum need not be made at the time the contract is executed -->It only needs to be in existence at the time suit is brought, so it must have been executed by then -The one who signs the memorandum need not sign with the intention of being bound

The Statute of Frauds provides that the following types of agreements must be in writing:

1. An agreement to sell land or any interest in or concerning land 2. An agreement the terms of which cannot be performed within one year from the time it is made 3. An agreement to become responsible for the debts or default of another 4. An agreement of an executor or administrator to pay the debts of the estate from the executor's or the administrator's personal funds 5. An agreement containing a promise in consideration of marriage 6. An agreement to sell goods for $500 or more

Give three examples of contracts not involving the sale of land, but only an interest in the land, that the Statute of Frauds requires to be in writing

1.) One may wish to sell not the land itself, but only an interest in the land 2.)Joint use of driveways, mineral rights, or timber 3.)A lease or real property for more than one year

Under what circumstances will the courts allow enforcement of an oral contract required by the Statute of Frauds to be in writing?

1.)An agreement to sell land or any interest in or concerning land 2.)An agreement the terms of which cannot be performed within one year from the time it is made 3.)An agreement to become responsible for the debts or default of another 4.)An agreement of an executor or administrator to pay the debts of the estate from the executor's or the administrator's personal funds 5.)An agreement containing a promise in consideration of marriage 6.)An agreement to sell goods for $500 or more

omitted provisions

A contract that appears to be complete may, in fact, have omitted a provision that ought to have been included. If the omission is due to fraud, alteration, typographical errors, duress, or other similar conduct, oral testimony may be produced to show such conduct

An Agreement Containing a Promise in Consideration of Marriage

An agreement by which one person promises to pay a sum of money or to transfer property to another in consideration of marriage or a promise to marry must be in writing. However, this requirement of the Statute of Frauds does not apply to mutual promises to marry

When does an agreement with debt or default occur?

An agreement to be responsible for the debts or default of another occurs when the promisor undertakes to make good the loss that the promisee would sustain if another person does not pay the promisee a debt owed or fails to perform a duty imposed by contract or by law.

All contracts of importance ought to be in writing, but only a few must be written in order to be enforceable

An oral contract is just as effective and enforceable as a written contract unless it is one of the few types specifically required by statute to be in writing

parol evidence rule

Complete, written contract may not be modified by oral testimony unless evidence of fraud, accident, or mistake exists

The five classes of contracts listed by the Statute of Frauds are not the only contracts required by law to be in writing in order to be enforceable

Every state has a few additional types of contracts that must be in writing to be enforceable. The more common ones are contracts for the sale of securities, agreements to pay a commission to a real estate broker, and a new promise to extend the statute of limitations

When a person dies, an executor or administrator takes over all of the deceased's assets

From these assets, the executor or administrator pays all the debts of the deceased before distributing the remainder according to the terms of the decedent's will or, in the absence of a will, to the decedent's heirs

What does the parole evidence rule do?

If a written contract appears to be complete, the parol evidence rule will not permit modification by oral testimony or other writing made before or at the time of executing the agreement. However, an exception is made when the contract refers to other writings and indicates they are considered as incorporated into the contract.

statute of frauds

Law requiring certain contracts to be in writing -In 1677, the English Parliament enacted -Most of our states have adopted this list but with slight variations

If David agrees in consideration of $1,000 to mow his elderly neighbor's lawn "for as long as she lives next door to him," does the contract have to be in writing? Why or why not?

No, the contract does not have to be in writing because there is no certainty David's neighbor will live one year

Parol evidence

Oral testimony

The law states that the memorandum must contain all the essential terms of the contract, yet the memorandum differs materially from a written contract

Probably the chief difference is that one may introduce oral testimony to explain or complete the memorandum

Frequently, oral contracts relative to land are performed before any question of their validity is raised

The building is occupied for that period, and then the rent is not paid on the ground that the oral contract is invalid. The law will compel payment of the rent orally agreed to for the time that the premises were occupied

What must be included in a note or memorandum required by the Statute of Frauds?

The note or memorandum required by the Statute of frauds must include ALL THE ESSENTIAL TERMS OF THE CONTRACT

An agreement to sell any interest in land comes under the Statute of Frauds

The required writing differs from the deed, which will be executed later and by which the seller makes the actual transfer of title to the buyer

debt vs default

The term debt refers to an obligation to pay money; default refers to a breach of any contractual obligation including the payment of money, but also other obligations such as the failure to build a house

One may wish to sell not the land itself, but only an interest in the land. This type of contract also must be in writing

These sales usually involve rights of way, joint use of driveways, mineral rights, or timber. A lease of real property for more than one year must be in writing in order to be binding

The terms of a contract that cannot be performed in one year might easily be forgotten before the contract is completed

To minimize the need to resort to the courts because the parties do not remember the terms of a contract, the law requires all contracts that cannot be performed within one year to be in writing

When a party sues to enforce an alleged contract, what is the requirement of the Statute of Frauds regarding the evidence of an agreement of the parties to an alleged contract?

When a party sues to enforce an alleged contract, the Statute of Frauds requires that the agreement of the parties be evidenced either by a writing signed by both parties, or that there be a note or memorandum in writing signed by the party against whom the claim for breach of contract is made

When will the parol evidence rule permit modification of a written contract that appears to be complete, by another writing made before or at the time of executing the contract?

When the contract refers to other writings and indicates they are considered as incorporated into contract -If the contract is not complete -If the contract is ambiguous and there is no oral evidence that can clear up the ambiguity, the contract is constructed against the party who wrote it

The parol evidence rule assumes that:

a written contract represents the complete agreement. If, however, the contract is not complete, the courts will admit parol evidence to clear up ambiguity or to show the existence of trade customs that are to be regarded as forming part of the contract -If the contract is ambiguous and there is no oral evidence that can clear up the ambiguity, the contract is construed against the party who wrote it

Default

breach of contraction obligation other than money

When a party sues to enforce an alleged contract, the Statute of Frauds requires that the contract be:

evidenced by a writing signed by both parties or that there be a note or memorandum in writing signed by the party against whom the claim for breach of contract is made

The memorandum need not be made at the time the contract is:

executed -It only needs to be in existence at the time suit is brought, so it must have been executed by then. The one who signs the memorandum need not sign with the intention of being bound

With the enactment of the federal Electronic Signatures in Global and National Commerce Act, that signature:

no longer has to be on paper. This law makes electronic signatures legally enforceable

Debt

obligation to pay money

While the Statute requires a written memorandum, it is not necessary that all the information required is on:

one piece of paper -As long as a group of papers together include all the information required, there will be an adequate "memorandum"

An exception to the Statute of Frauds occurs if in fact a promise is an:

original promise by the promisor rather than a promise to pay the debt of another

The executor or the administrator is not obligated to:

pay the debts of the deceased out of the executor's personal funds -For this reason, an executor's or administrator's promise to pay the debts of the estate from personal funds is, in reality, a contract to become responsible for the debts of another and must be in writing to be enforceable

However, if one has paid money or performed a service under an oral contract required by the Statute of Frauds to be in writing, the money or the value of the service may be:

recovered even though the executory part of the contract cannot be enforced. If one party has made part performance of an oral contract and would be hurt if the contract were not enforced, courts will allow enforcement of it -outcomes are based on equitable principles of preventing the unjust enrichment of one party

A written contract has advantages over an oral contract, provided it includes all the terms and provisions of the agreement

the existence of a contract cannot be denied if it is in writing. If there were no witnesses when an oral contract was formed, one of the parties might successfully deny that any contract was made. In addition, the terms of the contract can be ascertained. One of the parties to an oral contract might die or become incompetent and, therefore, be unable to testify as to the terms of an oral contract

With the exception of the case of the sale of goods (Chapter 17), the contract and the note or memorandum required by the Statute of Frauds must set forth all:

the material terms of the transaction -memorandum must contain the names of the parties, the subject matter of the contract, and the basic terms of the contract, including the price and the manner of delivery, and it must be signed by the party against whom it is being enforced

This provision of the Statute of Frauds means that if the terms of the contract are such that, by their nature:

they cannot be performed within one year from the date of formation, then the contract must be in writing

Under what circumstances is the Statute of Frauds requirement of a writing unnecessary when a person agrees to be responsible for the debt of another?

when the main purpose of the promise is to gain some advantage for the promisor