CH 13 Statute of Frauds
Satisfy statute of Fraud
- Contract in writing - signed by party to be charged Modification of agreement and Statue of Frauds : If original oral agreement was not within statute but then modification was made and brought it within statue, - Make agreement into writing If agreement was within statue but then modified to be outside statute, - Can be orally modified.
Sven and Brent entered into an oral agreement under which Sven agreed to sell to Brent 8 used air-conditioners at $200 each, delivery at Brent's place of business ten days later; payment C.O.D. Brent refused to complete the purchase. Assume that Brent pleads the Statute of Frauds. - If Sven sues Brent for breach of contract, judgment for whom? Explain. - Would Sven be entitled to judgment if Sven can prove that Brent made a down payment of $200? Explain. - Would Sven be entitled to judgment if Sven can prove that Brent took 4 air-conditioners at the time the agreement was made? Explain.
- Judgement will be given to Brent, Since there were 8 air conditioners selling for 200 each, the cost of the goods together would be 1600. A contract for the sale of goods $500 and over fall within the statute of Frauds. It must be written. Brent also did not accept the goods, meaning there was no partial performance either. Overall, with no written agreement or partial performance, the contract was never enforceable and Sven won't be able to sue Brent successfully. - Sven will receive judgement. The contract between Sven and Bent fall within the Statute of Frauds. For goods of a price of 500 or more, signed writing is required. However, according to the UCC 2-201, payments made and accepted, takes the requirement for writing away. In this case, since Brent made a payment, the statute became satisfied and the contract enforceable. - Sven would be entitled to judgment. According to the UCC 2-201, the partial performance exception requirements are met when goods are received and accepted. In this case, the contract does not need to be written to be enforceable. However, Brent is only subject to pay for the air-conditioners that he took.
On December 15, Lisa, a landlord, entered into an oral agreement with Tom to lease apartment 5W to Tom for one year starting on January 1, at a rental of $2,000 per month. On the same day Lisa hired Jarvis as superintendent of the building for a period of one year starting January 1 at a salary of $5,000 per month. On December 20, Lisa changed her mind and notified Tom and Jarvis that she would not rent to Tom or employ Jarvis. - In an action by Tom against Lisa, judgment for whom if Lisa pleads the Statute of Frauds as a defense? Explain. - In an action by Jarvis against Lisa judgment for whom if Lisa pleads the Statute of Frauds as a defense? Explain.
- Judgement will be given to Tom. Since the contract between Tom and Lisa deals with the interest in Real Property, the real property provision applies. Having to do with real estate, contracts must be written except if the term of the lease is one year or less. Since the term is for a year, the oral agreement is enforceable. - Lisa would receive judgement. In this case, the one year provision would be applied as it doesn't involve the interest of real property. Based on the one year rule, if the contract can't be fully performed in a year from the date the contract was created to the day it was finished, it must be written. The contract between Lisa and Jarvis was created on December 15th which means that in order for the contract to be enforceable without writing, the act must be completed by December 14th of the next year. However, since the act starts January 1st, it would take a little over a year for the contract to be executed. Being over a year, the contract is within the Statute of Frauds and should have been written. Without the writing, the contract is not enforceable, and Lisa is able to receive judgment.
On December 5, Alvin entered into an oral agreement with Courtney to perform certain advisory services for Courtney for a fee of $15,000 per month. The services were to commence on the following February 15, and to end on December 15. -Is the agreement enforceable? Explain. Also, on December 5, Alvin entered into an oral agreement with Francine for Francine to do some remodeling and rewiring of Alvin's offices. The agreement provided that Francine was to be paid $20,000 and was to complete all work no later than December 15 of the following year. Is the agreement enforceable? Explain.
- The agreement is not enforceable. Within the Statute of Frauds, the one year provision requires contracts that can't be performed in a year, from the day it was formed to the day it was executed, to be written. Alvin and Courtney entered their contract on December 5th, but the contract is not finished until December 15th of the next year. Since it is over a year, the contract falls within the statute. It should have been signed. Without a written contract, the agreement is not enforceable. - The agreement is enforceable. Using the possibility test, it is possible for the remodeling to be completed within a year. By stating that the work can be done no later than December 15, it is implied that the work can be done before the dates. In the case of it being probable, a written agreement does not need to be made to satisfy the statute. Under these circumstances, the oral agreement between Alvin and Francine can be enforced.
On September 15, Lubov agreed orally with Tim to lease a store to Tim in Manhattan at $5,000 per month for one year starting the following January 1. -Is the oral agreement enforceable? Explain. Assume that the oral lease was for three years, that Tim moved in on January 1, and paid the monthly rent for six months, and that Lubov then notified Tim to vacate. -Is the oral agreement enforceable by Tim for the balance of the three-year term? Explain. -Is the oral agreement enforceable by Tim for an additional six months? Explain
- The oral agreement is enforceable. The agreement between Lubov and Tim revolves around the lease of real property. For contracts that transfer an interest in real property, there must be writing unless the lease is for a year or less. This is measured from the start to the end of the lease. In this case, the contract is only for one year, allowing it to be enforceable through an oral agreement. - The oral agreement is not enforceable. The contract between both parties falls within the statute of Frauds for real property. According to the real property provisions, contracts for interests in property must be signed or written, especially if they are over a year. Therefore, the agreement between Lubov and Tim is not enforceable since it is for a lease of three years. Lubov is able to ask Tim to vacate. - Since the original contract between Tim and Lubov was not enforceable, adding an additional six months would not make sense. The oral agreement would not be enforceable.
Bo was the owner of Lot No. 1 on which he had built his home. Sadia owned the adjoining Lots No. 2 and 3, which were undeveloped, along with Lot No. 4 on which Sadia's home was located. Bo wished to acquire Lot No. 2 to protect his home site from crowding if Lot No. 2 should be sold to a stranger. Meeting Sadia on the street on January 2, Bo explained his wish to acquire Lot No. 2 and offered to buy it from Sadia for $75,000 cash. Sadia agreed and promised to deliver a deed to Lot No. 2 in 4 weeks. Bo paid Sadia $1,000 as a deposit or down payment towards the purchase price of $75.000. On February 1, Sadia told Bo that she had changed her mind. Bo demands that Sadia perform the contract. Sadia contends that if there is any contract, it is unenforceable. -Was there an offer and acceptance sufficient to constitute a contract between Sadia and Bo? Explain. -In an action by Bo against Sadia for breach of contract, judgment for whom? Explain. -Assume that on January 10, Bo sent to Sadia his check for $1,000 bearing the notation "On account of purchase price of Lot No. 2" and that Sadia cashed the check, but later refused to convey Lot No. 2. Would Bo's payment constitute sufficient part performance to enable Bo to enforce the contract against Sadia? Explain.
- Yes, there was a contract between Sadia and Bo. Bo offered to pay Sadia $75,000 cash to acquire the lot. Upon the offer, Sadia agreed to the terms and stated clearly that she would deliver the deed to the lot in 4 weeks. Right after, Bo gave Sadia a down payment of $1,000, which she also accepted. Overall, there was an offer and acceptance between both parties which would constitute a contract. - Judgement will be given to Sadia. Although there was a contract between both parties, it was not enforceable. The contract between Sadia and Bo was to obtain real property, which falls within the statute of fraud. According to the real property provisions, contracts must be in writing unless the part performance exception has taken place. Under the exception, there must be part payment, possession and substantial improvements. In this case, Bo provided part payment however, there was no possession or improvements made to the property. Therefore, the contract is not enforceable. - Bo's payment would not constitute as sufficient part performance to enforce the contract. An endorsement alone does not satisfy the statute. In order for a check to satisfy the statute, there must be a written note or memo along with it. In this case, although Sadia cashed in the check, the contract is still not enforceable since there is no other contract with it.
Assume that in addition to the payment, Bo, with Sadia's knowledge and consent, entered on Lot No. 2 and had it cleared of brush on January 20 at a cost of $150, but Sadia still refused to convey. Would Bo be entitled to obtain a decree of specific performance to compel Sadia to deliver a deed to Lot No. 2 to Bo upon paying to Sadia the balance of $74,000? Explain.
Bo would not be granted specific performance. The contract is still unenforceable. For partial performance, there must be part payment, possession on the property and improvements made to the property. In this case, Bo placed a down payment of $1,000 and was allowed on the property to clear the bush. however, the requirement for substantial improvements has not been met. Bo made a $150 improvement which is less than 1% of the total cost. Clearing the brush is not enough to be classified as substantial.
Assume in the previous question that the credit manager refused to open the account for Aldo, that he called Franco on the telephone , and Franco said. "I have an account with your store, give Aldo the clothes and charge them to my account. "The clothes were given to Aldo. Is Franco liable for payment if he pleads the Statute of Frauds as a defense? Explain.
Franco is liable for the payment. The Statute of Frauds does not work as a defense for a primary obligation. Franco and the store are the two main parties in the contract, where Franco must pay his own debt and not that of another. It is not a collateral promise. However, the statute of frauds for the cost of goods over 500 can still be used as a defense. Contracts concerning the cost of goods over 500 must be written. With the cost of goods totaling 950, there should have been a written agreement according to the statute of frauds. But, an exception was made under the UCC since the goods were excepted. Since Franco accepted the goods, there was an exception made to having the contract written. With that, Franco is still liable regardless of the agreement being oral.
Aldo, an adult college student, went to Brentwood Department store to buy clothes. He selected two new suits and a coat for $950 and asked to open a charge account. The credit manager was willing to open the account but was concerned about payment. Aldo told the credit manager to call Franco, his father. On the telephone, Franco told the credit manager. "Go ahead, open the account for him. It will teach him to stand on his own feet if he must pay his own bills. But do not worry, if Aldo does not pay you, I will." The clothes were given to Aldo and billed to Aldo. Aldo failed to pay. The store sues Franco who pleads the Statute of Frauds as a defense. Judgment for whom? Explain.
Judgement will be given to Franco. Franco and the store formed an oral agreement where Franco would pay for Aldo's debt if Aldo was unable to. In other words, this is a collateral promise which falls within the statute of Frauds. According to the Statute, contracts made based on secondary promises must be written. the surety is only obligated to take on debt if they sign, otherwise, the statute is not satisfied and the contract is unenforceable. The surety wont be liable. In this case, since the contract was done over the phone and not signed, Franco is free of his obligation
Bonnie, wishing to start her own business, borrowed $15,000 from Laura. Bonnie orally agreed to repay the loan in two years. Bonnie refused to pay when the loan became due. Laura sued Bonnie for breach of contract. Bonnie asserts the oral contract is unenforceable according to the Statue of Frauds. Judgment for whom? Explain.
Judgement will be given to Laura. According to the one year rule, Contracts over a year must be written. Since the agreement is to pay in two years, it falls within the statute of frauds. However, based on the bilateral contract exception to the one year rule, Laura is still able to receive judgement. She fully executed her side of the contract and gave $15,000 to bonnie with no interest in return. Laura is able to receive the exact amount that she borrowed.
Suretyship (Collateral promise)
NY GOL 5-701 Contracts to answer for the debt of ANOTHER person must be WRITTEN. NY requires written contract or other writing with terms
One Year provision
NY GOL LAW 5-701 Contracts (not for real estate) that can not be finished within a year from the day that the contract was made to the execution of it, MUST BE WRITTEN and signed by charged party - If it is POSSIBLE for the contract to be done within a year, it doesn't have to be written Exception: - Can't use statute of frauds defense to avoid payment if bilateral contract is taking place and the other side has already fulfilled their duties. Ex. loans, installment payments Remedies for unenforceable contract: Quantum meruit Restitution
Real Property
NY GOL LAW 5-703 Contracts dealing with interest in real property (Sale, lease, mortgage, land) must be in writing to be enforceable - If TERM of lease is one year or less, contract can be oral - Endorsed check alone can not satisfy, must be accompanied by note or memo signed by charged party Partial performance : - part payment, possession (entry through consent) and substantial improvements to property Remedy for unenforceable contract = restitution
Sale Of Goods over $500
NY UCC LAW 2-201 Contract dealing with goods sold over $500 must be WRITTEN. Must show contract for sale has been made and have signature of party charged. Can only be enforceable by the quantity stated in writing UCC 2-201 Merchant memo - If one merchant sends written confirmation of oral agreement and goods to another merchant and they don't send written objection within 10 days, statue satisfied. Partial performance: Oral agreement enforceable if party: - Received goods and accepts or - makes payment and it was accepted. Only enforceable for goods received or payment made
Assume that on March 1. Bo instituted a suit for specific performance and that Sadia denied she had agreed to sell. At the trial, the court decided that Bo was telling the truth and ordered Sadia to execute and deliver to Bo a deed to Lot. No. 2 upon Bo paying the balance of $74,000. Is Sadia entitled to have the decision reversed on appeal, if on the appeal Sadia raises for the first time the defense that her agreement was not in a writing signed by the party to be charged? Explain.
The decision would not be reversed. When getting an appeal, new defenses can not be brought to the court. On March 1st, Sadia should have brought up the defense of her agreement not being in writing to have it considered.