Contracts II - Kearney Statute of Frauds: If the agreement falls under any of the classes below the agreement has

to have some minimum writing to permit the plaintiff to enforce the agreement. If the agreement does not meet the statute of frauds, the plaintiff cannot bring his or her case unless in it falls under one of the exceptions. The Statute of Frauds is an affirmative defense, failure to raise it results in a waiver of your right to waive it.

A contract within the scope of the statute will not be enforced unless a memo of it is written and signed by the party to be charged POLICY: courts construe the Statute of Frauds narrowly; accept more contracts, want to give the benefit of the doubt to oral contracts.

1. Contracts for the sale of land or interest in land a. Contract to sell land or by any act in which land is disposed of as well as transfer of interest: ie mortgage or easement Ask: did you transfer ownership?

b. TRANSFER OF LAND + REAL ESTATE c. d. Hypo: build on neighbors land, ask permission to extend of the property line. If there is no transfer of interest you dont need it in writing

2. Contracts that can not be performed within a year a.

i.

The one year provision is measured by the date that contract was formed. The provision gives the offeree one year from the date of formation of the contract to perform the contract The performance would need to start on the day of formation or the day after to NOT fall within the statute of Frauds. If the performance start 2 or more days after than it DOES fall within the SOF. Ex: On November 30,Levy orally offers Ignatious a one year job starts December 1. No writing is signed. Is this K within the statute of Frauds? NO EX: On Nov, an oral K for one year employment of Ignatius by LP is formed. The contract is to begin December 5. LP cancels K on December 4. Is K within the statute of Frauds? YES Year Period: time between making the contract and end of performance If it is possible that either promise can be performed within a year, then it is NOT within the statute. Both promises must be IMPOSSIBLE to perform within a year

ii.

iii.

b. If the contract can NOT be performed within a year of its execution it must be in writing c. d. AUTO ZONE: Alternative Promises
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ii.

EX: Oral employment contract between LP and Ignatious. Parties agree that Ignatius will be the janitor for a period of 18 months or he will paint the main offices as soon as he can. NOT WITHIN THE STATUTE OF FRAUDS. Year and a Day: courts will stop here. It gets gray when it is a year and 2 weeks. POLICY: Courts want to make sure that longer term contracts are recorded

e. f.

3. Contracts for the Sale of Goods: UCC 2-201 a. Contract for the Sale of Goods falls within the statute if the price of goods is $500 or more.

1) 2:201(1): a. Oral Agreement: Individual Buys car from another individual: oral agreement to purchase the car must be in writing Must have sufficient Connection between the writings: 2 Views

b. Partial Writing: 2 businesses start paper work then one wants to walk away.
i.

a) Narrow Approach: the documents must explicitly refer to one another b) Broad Approach: MAJORITY: reference must be of the same subject matter
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POLICY: courts want to promote and enforce contracts.

2) 2:201(2) EXCEPTION: ie verbal agreement for the sale of Goods over $500- under 2:201 it needs to be in writing, look for EXCEPTION a. Whether the two parties are merchants
ii. Includes not only a person who deals in goods of that kind but also one by following a particular occupation, has or represents having knowledge of skill concerning the goods

b. Whether written confirmation was sent within a reasonable time i. Factors to consider: how does the value of the good increase or decrease c. Person who it is sent to must have reason to know its contents d. Whether person within 10 days of RECEIVING objected. i. If person waits 14 days, SOL. 3) 2:201 (3) EXCEPTION: SPECIAL ORDER RULE: Rare good that buyer wants; the two parties enter into a deal to make the item and the seller wont be able to sell the good to anyone else. Even if it is a verbal agreement over $500 it can still be enforced if a. First Step: always address: are we in 2:201 at all? Sale of goods for $500 and over? Service and good: hybrid. Court will still apply 2-201 if hybrid. b. Whether it is a typical or atypical good i. Ie: would anyone else want to buy the good? c. Whether there has been EITHER a substantial beginning OR commitment for procurement i. Substantial beginning ii. Commitment for procurement: contracting with someone else to make the good in order to complete the contract.

4. Suretyship a. A surety is a person who promises the creditor to pay another persons debt, so if the other fails to pay, the surety is obligated to pay for it. POLICY: insisting that this must be in writing acts as a cautionary measure ( gives alert to the person who is saying they will pay) and also acts as an evidentiary function.

b. Surety must make promise to the CREDITOR not the debtor c.

d. EXCEPTION: MAIN PURPOSE EXCEPTION 1. If leading object of the surety is to benefit himself, then court does NOT need to see the promise in writing to enforce. 2. Elements of Main Purpose Exception: Is there substantial benefit? Can be all three elements or just one. a. c. Personal benefit Pecuniary benefit: ie he is in the ----- business and needs this because-----b. Immediate benefit

5. Contracts of Executors to Answer for the Duty of their Decedents a. If executor assumes personal liability for a debt incurred by decedent before his death it must be in writing.

b. It is different if it is coming from dead persons estate/debt. Executors promise to pay debt is discharging the dead persons pre existing legal obligation its nothing new. BUT when debt exceeds estate and some comes out of own pocket court wants to see that in writing to be enforceable.

6. Contracts upon Consideration of Marriage a. Contracts in consideration of marriage in which the prospective spouse agrees to a marriage settlement or financial agreement relating to the marriage Hypo: Woman has 2 kids from a previous relationship. The man promises to provide support for them through college. This MUST be in writing because there is no consideration.

b. Anything contingent on marriage; comes up most in support c.

Contracts II -- Prof. Kearney Spring 2010

I.

Statute of Frauds a. 6 kinds of contracts that the law says have to be in writing in order to be valid b. The statute will be construed narrowly to throw out as few contracts as possible, so most contracts will be enforced. c. Reasons for Statute of Frauds i. Memory ii. Fraud iii. No consideration iv. Land transaction 1. Mainly co-ownership d. Types of Contracts Covered i. Made in Consideration of Marriage 1. No action shall be brought to charge any person upon any agreement made upon consideration of marriage 2. Usually a gratuitous promise, and no consideration 3. Anything that is contingent on the marriage a. Ex. If you marry my son, Ill buy you a condo in Florida ii. Executor Contracts 1. No action shall be brought whereby to charge any executor or administrator upon any special promise to answer for any damages out of his own estate. 2. Applies if executor contracts to answer for the debts of a decedent out of his own pocket a. Executor is paying a pre-existing legal obligation- when debt exceeds assets, the executors agreement to pay out of his pocket is new debt and must be in writing iii. Transfer of Interest in Real Estate 1. No action shall be brought upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them 2. Things that are covered a. Refinancing b. Divisions of land c. Assumptions, extensions, and modifications of real estate mortgages d. Anything that deals with transfer of interest 3. Things that arent covered a. Putting an addition on the house i. no transfer of interest b. crops i. because they arent permanently affixed to the land c. boundary line disputes

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Suretyships

1. No action shall be brought whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriages of another person 2. There will be at least 3 parties 3. Elements/ Steps a. There is a valid contract between the creditor and debtor b. Surety must make promise to pay to the creditor i. NOT a promise to the debtor c. Promise from surety to creditor must be in writing 4. Exception a. Leading Object/Main Purpose Exception i. When the main purpose of the promisor is not to answer for the debt of another, but to obtain a substantial benefit to himself which he actually secures as consideration for his promise, then not only is the promise valid, though oral, it is supported by good and sufficient consideration ii. Test- this is a totality of the circumstances test 1. Personal interest 2. Immediate interest 3. Pecuniary interest (financial) iii. Ex. Guy tries to buy tractor but cant get financing. Gets another guy to buy it, and agrees to pay the debt. Because hes getting a benefit, it meets this exception and doesnt have to be in writing to be enforced. v. One Year Rule 1. No action shall be brought upon any agreement that is not to be performed within the space of one year from the making thereof 2. If it is impossible to perform a contract within a year, it has to be in writing to be enforceable. If there is more than one way to perform, and one can be done within a year, it does not have to be in writing. 3. Contemplation of death does not count as a condition that would make the contract performable within 1 year. 4. Ex. Autozone agrees to sponsor bull riding for 2 years, but there option to terminate within the first year. Because the contract could be performed within a year, it didnt have to be in writing. 5. Year and a Day Rule a. If you make an agreement on Nov. 30th to start work for one year beginning Dec. 1st, the courts will enforce an oral agreement. vi. Sale of Goods over $500 - 2-201 1. 2-201(1) a. Formal requirements i. A contract for the sale of goods for $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against enforcement is sought ii. A writing is not insufficient because it omits or incorrectly states a term agreed upon, but it is not enforceable beyond the quantity of goods shown in such writing b. Partial writing i. Usually involves two businesses ii. Can be invoices, letters, confirmations, etc. c. Output / Requirements Contracts

In a output or requirements contracts, the quantity of goods to be delivered under the contract is determined by the good faith output or requirements of a party 1. It does not have to be numerically stated but there must be some writing which indicates that the quantity to be delivered is the partys requirement or output 2. 2-201(2) merchant exception a. Between merchants, if within a reasonable time, a writing and confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received i. You need 1. Written confirmation within reasonable time 2. Receiver has reason to know the contents 3. 10 days for a notice of objection 3. 2-201(3) special order exception a. A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable; i. If the goods are to be specially manufactured for the buyer and are not suitable for sale to others and ii. The seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement 1. Substantial beginning 2. Commitments for their procurement e. Steps of analysis for Statute of Frauds i. Do we have the kind of contract that falls within the Statute of Frauds ii. If yes, what kind of signed writing satisfies the Statute of Frauds 1. One writing 2. More than one writing a. The narrow view is the different writings must explicitly refer to each other b. The majority rule (broad view) is that by reference they clearly refer to the same transaction i. Courts want to enforce contracts iii. What makes a signing 1. Letter head 2. Electronic signature 3. Initials
i.