blaw chapter 15
Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.
The English Parliament passed the original statute of frauds in 1677 to prevent lying (fraud) in civil lawsuits. At that time, neither the plaintiff nor defendant was permitted to testify at trial. The statute of frauds was passed to provide juries with more reliable evidence as to the existence of a contract by requiring that certain types of contracts be in writing to be enforceable. Parliament and U.S. state legislatures passed statutes of fraud to provide courts with the best possible evidence of whether parties intended to make a contract. An argument for statutes of fraud is that they are a valuable tool for justice. The requirement of a writing cautions people to be careful before making or relying on a promise. An argument against statutes of fraud is that rather than preventing wrongdoing, they help people commit fraud. Someone might orally agree to terms and then, if the terms become unprofitable, walk away from the contract, knowing it would be unenforceable without a writing.
Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions? a.) totally integrated contracts b.) Incomplete contracts. c.) Ambiguous contracts. d.) all of the above
a.) totally integrated contracts
Which of the following would suffice for a signature on a writing under the statute of frauds? a.) A stamped signature. b.) A retinal scan. c.) A name keyed at the bottom of an e-mail. d.) Any of the above would suffice. Judges define "signature" very broadly.
d.) Any of the above would suffice. Judges define "signature" very broadly.
For statute of frauds purposes, an interest in land includes: a.) a house b.) a real estate mortgage c.) an easement d.) all of the above
d.) all of the above
Under the UCC, which of the following contracts may be enforceable, even without a written memorandum? a.) The seller is specially manufacturing the goods for the buyer. b.) The seller admits in court that there was a contract. c.) The seller has delivered the goods. d.) all of the above
d.) all of the above
Which of the following promises ordinarily must be in writing to be enforceable? a.) Promises made as a part of a prenuptial agreement. b.) The agreement to sell a car for $1500. c.) The promise by an executor of an estate to pay a debt of the decedent. d.) all of the above
d.) all of the above
Any contract involving a sale of goods of $100 or more must be in writing. true/false
false
Either party may demand rescission of a fully executed oral contract that was required to have been in writing under the statute of frauds true/false
false
Hannah orally agrees to sell her house to Brett for $175,000. If she delivers the deed to Brett with the expectation of payment in two weeks and he fails to pay, most courts will not enforce the contract since it was not in writing. true/false
false
Amanda, a recent university graduate, needed a car to get to her new job. To help Amanda secure a loan for the car, Ted, a friend, agreed to pay the loan should Amanda default. Ted's promise to pay the loan is a collateral promise. His promise must be in writing to be enforceable. true/false
true
Bry, Inc. and Gangl Co. entered into an oral agreement for the sale of 3,000 sweaters. Both parties performed as required under the contract. Bry delivered the sweaters and Gangl accepted and paid for them. Since the contract is fully executed, it makes no difference that it was oral. true/false
true
List the types of agreements that are within the statute of frauds and explain the consequences if the parties do not comply with the requirements of the statute of frauds.
Agreements requiring a writing within the statute of frauds include: (a) agreements for the sale of any interest in land, subject to certain exceptions; (b) agreements that cannot be performed within one year from the date of the agreement; (c) a promise to pay the debt of another, subject to the leading object rule exception; (d) a promise made by an executor of an estate to use his personal funds to pay a debt of the decedent; (e) a promise made in consideration of marriage; and (f) a contract for the sale of goods worth $500 or more. If the agreement does not have a writing sufficient to satisfy the statute of frauds, it is unenforceable, but not void or illegal. The parties may still choose to perform the contract
J.T. Tidwell entered into an oral contract with Robert Anthony for the purchase of 100 head of cattle at a price of $500 each. When the oral contract was made, Tidwell gave Anthony a check for $1000 as "earnest money or good faith money towards the purchase of the cattle." Anthony sold the cattle to someone else. Tidwell sued, asking the court to either compel Anthony to perform the contract or to pay damages that Tidwell suffered from the alleged breach of contract. What issues do you see and how would you resolve those issues?
Cattle are goods. The statute of frauds requires all contracts involving the sale of goods with a purchase price of $500 or more to be in writing with the defendant's signature. Here the purchase price is $50,000, so the agreement falls within the statute of frauds and is unenforceable unless one of the exceptions applies. A relevant exception for Tidwell is the "Goods delivered or paid for" exception. As Tidwell paid $1000 towards the purchase price he is entitled to two head of cattle.
Tony signed a contract agreeing to purchase a used, high-powered boat for $10,000. Prior to signing the contract, the sales representative explained that the boat motor was guaranteed for six months for all labor and parts. The written contract contained nothing about the warranty; however, it did have an integration clause in it. Tony had problems with the boat motor, causing expensive repairs. Tony returned the boat to the sales representative for the repairs, only to learn the salesman denied knowing anything about a six-month warranty. If Tony sues, discuss the likely outcome.
If the written agreement was intended to be the integrated contract of the parties, which the integration clause would indicate, then neither party may use parol evidence to contradict, vary, or add to its terms. Two exceptions include an incomplete or ambiguous contract; and misrepresentation or duress. Silence may create an ambiguity when it involves a matter naturally within the scope of the contract. Tony may be able to argue that a warranty clause is naturally within the scope of a sales contract and therefore the ambiguity should allow extrinsic evidence to be presented at trial. Also, Tony has an argument to claim that he was induced into entering into the contract because of the misrepresentations of the salesman. Tony may make these arguments; however, he would be arguing exceptions to the basic rule. More often than not, the written contract is all that a court will consider in determining the parties' intentions.
Herb was interviewed for a job on Wednesday. The employer orally offered Herb a job right on the spot. Herb orally agreed to start working the following Monday, to be employed from that Monday, for one year thereafter. Three weeks after starting the job Herb was fired without cause and replaced by the employer's friend. Will Herb be successful in an action brought against the employer for breach of contract?
Probably not. The one-year rule would require the contract to be in writing and signed by the employer. It is impossible to perform the terms of the contract within one year from the date the contract was made. Here the contract was made on Wednesday. The one-year period runs from Wednesday until the corresponding date one year later. The terms of the contract however, require performance of the job to start the following Monday for one year. The terms of the agreement exceed the one-year mark measured from the date the contract was formed by several days. Promissory estoppel might be an exception here.
Thomas Reep, was the president of First National Bank in Clarksville. R.L. Moore approached Reep requesting the bank to open an account in the name of Texas Continental Express, Inc., a corporation owned by his two sons. R.L. had no affiliation with the corporation nor any financial interest in it. R.L. promised Reep that he would open several accounts in First National that would more than amount to the business of his sons. R.L. assured Reep that if anything came up in connection with the sons' account, Reep was to contract him directly. Upon these conditions, First National proceeded to furnish a regular checking account and bank draft services for Texas Continental. Sometime later, First National paid two drafts overdrawing the account by $448,942. When Reep contacted R.L. about the overdrawn account, R.L. assured Reep that money would be deposited in the account. When Reep called back a few days later to find out why the money had not been deposited, R.L. informed Reep that his wife had suffered a nervous breakdown the night before and the deal was off. First National Bank brought suit to enforce R.L.'s promise to pay the debts of Texas Continental. What is the likely outcome?
R.L.'s defense will be the statute of frauds. A promise to pay the debt of another must be in writing with the defendant's signature. A jury found that R.L. did not promise to become primarily liable for the debts. Since this promise violates the statute of frauds, it is unenforceable unless an exception applies. The bank argued the leading object rule or alternatively promissory estoppel. R.L. had no affiliation or financial interest in his sons' corporation. Therefore there was no evidence to support the claim that R.L. made the promise to obtain a benefit for himself. The promissory estoppel doctrine failed as well. The court found that the bank did not rely conclusively on R.L.'s promise. There was sufficient evidence to infer that the bank did not rely upon the promise of R.L. to stand good for his sons' losses, but rather opened the Texas Continental Express account in order to get and keep R.L.'s banking business. If the element of reliance was not established, then the argument of promissory estoppel would fail.
Vicki entered into a written contract to buy a car from Valley Motors. During the negotiations, the sales representative said that the car had a two-year full warranty. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." The written contract did not include a warranty. Two months after Vicki took delivery of the car, she discovered that the transmission needed to be replaced. Vicki claimed that it was covered by the full warranty. Will Vicki be able to present evidence as to the sales representative's statements concerning the warranty? a.) No. The parol evidence rule will most likely exclude any evidence of the discussion of the warranty. b.) Yes. The leading object rule will allow evidence as to the discussion of the warranty. c.) Yes. The evidence is needed because the contract is ambiguous. d.) Yes. The contract was fully executed.
a.) No. The parol evidence rule will most likely exclude any evidence of the discussion of the warranty.
Scott is trying to introduce oral evidence in court to alter the terms of a written contract he had with Bonnie. Bonnie has raised the parol evidence rule as an objection to Scott's testimony. In which of the following circumstances will Scott not be able to introduce the oral evidence? a.) The contract has an integration clause in it and Scott's point of contention is covered in detail in the contract, although not to his favor. b.) There was a mutual mistake of a material fact when the contract was entered into. c.) The oral evidence is introduced to clarify the meaning of an ambiguous term used in the written contract. d.) Scott claims that he was defrauded into entering into the contract and wants to testify about the intentional misrepresentations of material facts.
a.) The contract has an integration clause in it and Scott's point of contention is covered in detail in the contract, although not to his favor.
Vicki entered into a written contract to buy a car from Valley Motors. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." This is: a.) an integration clause. b.) a statute of frauds clause. c.) parol evidence. d.) an exculpatory clause
a.) an integration clause.
Amy Hudson has been trying to purchase Glen Cappel's antique desk for some time, but Glen has been reluctant to sell. One evening Glen said to Amy, "Okay, I'll sell the desk for $550." Amy replied, "Thank you, Glen. I accept." The agreement was not reduced to writing, but Glen and Amy did shake hands. Two days later, Amy sent Glen a letter outlining the terms of the agreement, and stating that she would deliver $550 cash according to the agreement within ten days. The letter was signed, "Best regards, Amy." Later, Amy had second thoughts, and refused to go through with the purchase. Nothing had been exchanged at this point. Glen: a.) can enforce the contract against Amy because the statute of frauds is satisfied under this situation. b.) cannot enforce the contract against Amy because her signature was inadequate without her last name under the statute of frauds. c.) cannot enforce the contract against Amy because he did not sign the letter. d.) can enforce the contract because they shook hands on the agreement.
a.) can enforce the contract against Amy because the statute of frauds is satisfied under this situation.
The Uniform Electronic Transmission Act (UETA): a.) declares that a contract or signature may not be denied enforceability just because it is in electronic form. b.) was passes by congress in 2002 c.) creates a safe cyberspace environment in which business communications cannot be intercepted or fraudulently altered. d.) all of the above
a.) declares that a contract or signature may not be denied enforceability just because it is in electronic form.
Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $4,500 per acre. Transfer of title, payment, and possession to take place on May 1, 2008." Abyan signed the napkin. On May 1, 2008, Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan for the price of the land, the most likely result will be: a.) Abyan will win because the writing is not sufficient under the statute of frauds. b.) Derek will win because the writing is sufficient under the statute of frauds. c.) Abyan will win because Derek did not sign the writing. d.) Derek will win because the statute of frauds does not apply to this situation.
b.) Derek will win because the writing is sufficient under the statute of frauds.
Alfred orally promised to pay Robert a salary of $30,000 per year for five years and his moving expenses up to $10,000 if Robert would quit his job and come to work for him at his manufacturing plant. Robert agreed to do so, but requested a written contract. Alfred assured him that the company attorney would prepare such a contract as soon as possible, but Alfred needed Robert to start at once. Accordingly, Robert sold his house, moved his family, and commenced to work for Alfred. He was fired without cause two months later. No written contract was ever executed. Can Robert enforce Alfred's oral promise? a.) No. This was a contract for longer than one year. Without a writing it violates the statute of frauds and is not enforceable. b.) Maybe. Robert should go to court under the theory of promissory estoppel. Alfred made an oral promise that Robert relied upon, and the way to avoid injustice is to enforce the promise. c.) Yes. This is a partial performance of the sale of goods. Robert can recoup the loss he took on the sale of his house. d.) Yes. This involves the special manufacturing of goods. This situation involves an exception to the UCC statute of frauds.
b.) Maybe. Robert should go to court under the theory of promissory estoppel. Alfred made an oral promise that Robert relied upon, and the way to avoid injustice is to enforce the promise.
Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma delivered 20 of the skis on May 1. On June 1, Summer Sports notified Brahma that it will not honor the agreement. Which statement is correct? a.) The contract is void since it was oral. b.) The contract is enforceable for 20 jet skis. c.) The contract is enforceable for the 50 jet skis d.)The contract is obsolete.
b.) The contract is enforceable for 20 jet skis.
Abby dies, and her good friend, Claire is appointed to administer Abby's estate. Abby's house was in poor condition, so Claire orally hired a contractor to make repairs. Claire also orally promised that if the estate could not pay the repair bill, he would pay it even though he does not live in the house and has no entitlement under Abby's estate. The estate does not pay the repair bill. Who can the contractor collect from, if anyone? a.) The contractor can collect from either the estate or Claire. b.) The contractor can collect from the estate only. c.) The contractor can collect from Claire only. d.) The contractor must collect from the estate first, and then collect any deficiency from Claire.
b.) The contractor can collect from the estate only.
The main difference between the UCC requirement for a writing for a contract for the sale of goods and the common law is that the: a.) UCC requires only the signature of both parties. b.) UCC does not require all the terms of the agreement to be in writing. c.) common law requires only an indication that the parties reached an agreement d.) common law requires only the signature of the defendant and the quantity of goods being sold.
b.) UCC does not require all the terms of the agreement to be in writing.
In order to satisfy the statute of frauds, a writing must: a.) be a formal written document drafted by an attorney. b.) be signed by the defendant and contain the name of each party, the subject matter of the agreement, and the essential terms and promises. c.) be notarized d.) all of the above
b.) be signed by the defendant and contain the name of each party, the subject matter of the agreement, and the essential terms and promises.
Claude agrees to lease his house to Irvin for nine months, the lease to begin six months from the signing of the contract. Under the statute of frauds: a.) the lease is not required to be in writing b.) the lease is required to be in writing because of the one-year rule. c.) the parol evidence rule renders the lease voidable. d.) the lease is a collateral promise which must be in writing.
b.) the lease is required to be in writing because of the one-year rule.
When a contract falls within the statute of frauds but is not reduced to a writing, the contract is: a.) illegal b.) unenforceable c.) void d.) voidable
b.)unenforceable
Ethel's Exercise World plans to order three weight machines from Pete's Push, Pedal and Pull, Inc. for a total of $15,000. Pete's demands that Ethel's friend, Moneybags, a wealthy independent businesswoman (not connected with Ethel's business in any way) promise to pay Pete's for the three machines if Ethel's Exercise World does not. Which of the promises in this problem must be in writing to be enforceable? a.) The promise made by Ethel's Exercise World to buy the weight machines. b.) Moneybag's promise to pay if Ethel's Exercise World doesn't. c.) Both Moneybag's promise and Ethel's Exercise World's promise. d.) None of the promises in this problem need to be in writing.
c.) Both Moneybag's promise and Ethel's Exercise World's promise.
Martin, Human Resources Director for Spring Co., sent Lynn the following signed letter: "This letter confirms our offer to you. We will pay for your moving expenses, up to $1,500. Your starting date will be February 1, and you will become eligible for health care benefits as of May 1. You will receive a starting salary of $36,500 annually, with reviews and eligibility for increases at six months, 12 months, and annually thereafter. Vacation will be for two weeks a year after one year." Spring fired Lynn eight months after she started to work, and Lynn sued arguing the letter constituted a memorandum of an oral contract for employment for five years. Is the letter sufficient to satisfy the statute of frauds? a.) Yes, to satisfy the statute of frauds, a memorandum is sufficient if it evidences an oral contract between the parties and is signed by the defendant. b.) Yes, the memorandum is signed by the defendant and states with reasonable certainty the subject matter and essential terms of the agreement. c.) No, to satisfy the statute of frauds, the memorandum must contain all essential terms of the contract. d.) No, the letter was not formal enough to satisfy the statute of frauds.
c.) No, to satisfy the statute of frauds, the memorandum must contain all essential terms of the contract.
Sonny, a college student, places a telephone order for a new computer from Computers, Inc. The price of the computer is $1500. The clerk who takes the order sends Sonny a copy of the invoice. The next week, Sonny calls back and tries to cancel his order. a.) Sonny cannot cancel the order because Computers, Inc. accepted his order. b.) Sonny cannot cancel the order if he has received the invoice. c.) Sonny can cancel the order; the invoice is unenforceable against him, as he did not sign the invoice. d.) Sonny can now cancel the order but only if he does so in writing within ten days.
c.) Sonny can cancel the order; the invoice is unenforceable against him, as he did not sign the invoice.
Tuan is president and sole shareholder of Entertainment, Inc. Entertainment, Inc. wishes to borrow money, but to do so, the bank requires Tuan to orally agree to pay the debt of the corporation if Entertainment, Inc. cannot. Tuan's guarantee to repay is: a.) enforceable under the parol evidence rule. b.) enforceable because there is an insurable interest. c.) enforceable because of the leading object rule. d.) unenforceable because it is a collateral promise.
c.) enforceable because of the leading object rule.
Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred. The buyer, Willis, is to have possession immediately. Willis pays Leslie $25,000, takes possession of the land, and starts building a house. At the time of closing, Willis has made a substantial beginning on the house. However, Leslie refuses to transfer the title, claiming the oral contract is not enforceable. This contract is: a.) enforceable, because the statute of frauds does not apply to this interest in land. b.) unenforceable, because there is no writing signed by Leslie. c.) enforceable, because Willis has partially performed the oral contract and made improvements on the land d.) unenforceable, because the parol evidence rule applies.
c.) enforceable, because Willis has partially performed the oral contract and made improvements on the land
Renita, a merchant, has received a signed, written confirmation from Merchants, Inc. referring to goods she had not ordered. Renita should: a.) ignore the confirmation. b.) call the seller and object to the confirmation as soon as she gets back from her two-week vacation. c.) object to the confirmation in writing within 10 days. d.) return the goods within two weeks of their delivery with a note attached saying she will not pay for the goods.
c.) object to the confirmation in writing within 10 days.
Under a contract for the sale of land, the statute of frauds: a.) does not apply if the purchase price for the land is less than $500. b.) requires that the entire agreement be in one single document. c.) requires the defendant to sign the agreement. d.) requires that the purchase price be fair.
c.) requires the defendant to sign the agreement.
Robin and Bellman, both merchants, orally agree to a contract for the sale of $5000 of accessories. Bellman, the buyer, sends to Robin, the seller, a written confirmation of the sale, which is sufficient against Bellman under the statute of frauds and which Bellman signs. Robin fails to perform the contract and does not ship out the goods. Bellman sues. This contract is: a.) unenforceable, because Robin did not sign any contract. b.) unenforceable, because Bellman did not pay for the goods. c.) enforceable, because Bellman sent the written confirmation of the sale, thereby partially performing the contract. d.) enforceable even without Robin's signature because both parties are merchants.
d.) enforceable even without Robin's signature because both parties are merchants.
Patrick owned an acre of land which was being divided into building lots. Nancy was interested in purchasing the corner lot. In a signed writing, Patrick stated "I will sell Nancy Grimes a lot on Route 70 for $5,500 cash, payable on April 30, 2009." This writing is sufficient under the statute of frauds to make the contract enforceable. true/false
false
Ramona orally agreed to work for Brahma, Inc. for the rest of her life for $50,000 per year. This agreement would not be enforceable since it violates the one-year rule of the statute of frauds. true/false
false
Sweet Plantation, Inc. made a written contract with Candy, Inc. whereby Sweet Plantation agreed to supply all of Candy's sugar requirements for the next year at $.25 per pound. A dispute arose as to how much sugar Sweet is to supply. The parol evidence rule will bar Sweet's introduction of evidence concerning the intent of the requirements of Candy. true/false
false
Whittle sent an order over the Internet for a $1,200 garage door. His name keyed onto the order will only be effective as a signature sufficient to create a "writing" "signed by the party against whom enforcement is sought" if he follows up with a signature on paper. true/false
false
Parol evidence refers to anything (other than the written contract itself) that was said, done, or written before or as the parties signed the contract. true/false
true
Raymond agrees to transfer an easement right to Sandra for $1,000. This contract is within the statute of frauds and therefore needs to be in writing to be enforceable. true/false
true
Rest Well Hotel orally ordered 1,000 blankets monogrammed with its initials, RWH, from TriColor Textiles. TriColor had just finished monogramming the blankets when Rest Well called and canceled the order. TriColor will be able to enforce the agreement even though there was no writing. true/false
true
The Uniform Commercial Code provides that, under certain circumstances, a merchant may be liable on a written contract, even though that merchant has NOT signed it. true/false
true
The original statute of frauds is the English law that began the practice of requiring written evidence of certain kinds of contracts, but now the British government has repealed the writing requirement for most contracts. true/false
true
Under the statute of frauds, the writing must: be signed by the defendant; and must state with reasonable certainty the name of each party, the subject matter of the agreement, and all of the essential terms and promises. true/false
true
