Contemporary Business Law

ByRichard A. Mann&Barry S. RobertsBusiness Law and the Regulation of Business, 11th ed. Chapter 15: Contracts in Writing 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.1Topics Covered in this ChapterI. Statute of FraudsA. Contracts within the Statute of FraudsB. Compliance with the Statute of FraudsC. Effect of NoncomplianceII. Parol Evidence RuleA. The RuleB. Situations to which the Rule Does Not ApplyC. Supplemental EvidenceIII.Interpretation of Contracts 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.2The Statute of Frauds Does not refer to fraud in making a contract; is designed to prevent fraud in the proof of certain oral contractsThe Rule contracts within the statute of frauds must be evidenced by a writing to be enforceable 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.3Electronic RecordsThe Uniform Electronic Transactions Act gives electronic transactions full effect as written transactions.The Electronic Signature in Global and National Commerce (E-sign) makes electronic signatures valid. 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.4Contracts within the Statute of Frauds Suretyship Provision applies to promises to pay the debts of othersOriginal Promise if promisor undertakes to become primarily liable, statute does not applyMain Purpose Doctrine if primary object is to provide an economic benefit to the surety, then the promise is not within the statutePromise Made to Debtor suretyship provision has been interpreted not to include promises made to a debtor 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.5Contracts within the Statute of Frauds (contd) Executor-Administrator Provision applies to promises to answer personally for duties of decedentsMarriage Provision applies to promises made in consideration of marriage but not to mutual promises to marryLand Contract Provision applies to promises to transfer any rights, privileges, powers, or immunities in real property

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.6Contracts within the Statute of Frauds (contd) One-Year Provision applies to contracts that cannot be performed within one yearThe Possibility Test if it is possible, (not necessarily likely), for the agreement to be performed within one yearComputation of Time the year runs from the time the agreement is madeFull Performance by One Party makes the promise of the other party enforceable under majority view 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.7Sale of Goods Applies to a contract for the sale of goods for the price of $500 or moreAdmission admission in pleadings, testimony, or otherwise in court makes the contract enforceable for the quantity of goods admittedSpecially Manufactured Goods an oral contract for specially manufactured goods is enforceableDelivery or Payment and Acceptance validates the contract only for the goods that have been accepted or for which payment has been accepted

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.8The Statute of Frauds

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.9Modification or Rescission of Contracts within the Statute of Frauds oral contracts modifying contracts are unenforceable if the resulting contract is within the statute of frauds

Contracts within the Statute of Frauds 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.10Methods of Compliance General Contract Law the writing or writings (or record) must:specify the parties to the contractspecify the subject matter and essential termsbe signed by the party to be charged or by her agent

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.11Sale of Goods Writing/Record Must (1) indicate that a contract has been made between the parties, (2) be signed by the party against whom enforcement is sought or by her authorized agent, and (3) specify the quantity of goods to be soldWritten Confirmation between merchants, a written confirmation that is sufficient against the sender is also sufficient against the recipient unless the recipient gives written notice of his objection within ten days

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.12Effect of Noncompliance Oral Contract within Statute of Frauds is unenforceableFull Performance statute does not apply to executed contractsRestitution available in quasi contract for benefits conferred in reliance on oral contractPromissory Estoppel oral contracts will be enforced where the party seeking enforcement has reasonably and justifiably relied on the promise and the court can avoid injustice only by enforcement 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.13Parol Evidence Rule Statement of Rule when parties express a contract in a writing that they intend to be the complete and final expression of their rights and duties, evidence of their prior oral or written negotiations or agreements of their contemporaneous oral agreements that vary or change the written contract are not admissible

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.14Parol Evidence RuleWritten contract?Integrated contract?Evidence prior or contemporaneous?Evidence varies contract?Evidence provides fraud, misrepresentation, undue influence, mistake, duress, incapacity, illegality, or unconscionability?NoYesNoNoNoYesYesYesYesNoContinues on next slide...Parol Evidence Rule Does Not Apply: Evidence Is Admissible 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.15Evidence of a condition precedent?Evidence explains an ambiguity?Evidence of a clerical error?Parol Evidence Rule Applies:Evidence Is Not AdmissibleYesYesYesNoNoNoParol Evidence Rule Does Not Apply: Evidence Is AdmissibleParol Evidence Rule (contd)No 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.16Situations to Which the Rule Does Not Apply A contract that is not an integrated documentCorrection of a typographical errorShowing that a contract was void or voidableShowing whether a condition has in fact occurredShowing a subsequent mutual rescission or modification of the contract

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.17Supplemental Evidence May be admitted:Course of Dealing previous conduct between the partiesUsage of Trade practice engaged in by the trade or industryCourse of Performance conduct between the parties concerning performance of the particular contractSupplemental Consistent Evidence

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.18All the circumstances are considered and the principal purpose of the parties is given the greatest weight.A writing is interpreted as a whole.Commonly accepted meanings are used unless the parties manifest a different intention.Wherever possible, the intentions of the parties are interpreted as consistent with each other and with course of performance, course of dealing, or usage of trade.Interpretation of Contracts 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.19Interpretation of Contracts (contd) Technical terms are given their technical meaning.Specific terms are given greater weight than general language.Separately negotiated terms are given greater weight than standardized terms or those not separately negotiated.The order for interpretation is: express terms, course of performance, course of dealing, and usage of trade. 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.20Where a term has several possible meanings, the term will be interpreted against the party who supplied the contract or term.Written provisions are given preference over typed or printed provisions, and typed provisions are given preference over printed provisions.If an amount is set forth in both words and differing figures, words control figures.

Interpretation of Contracts (contd) 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.21Contracts within the Statute of FraudsExceptions

Suretyship-a promise to answer for the duty of another Main purpose rule

Original promise

Promise made to debtor

Executor-Administrator-a promise to answer personally for debt of decedent Main purpose rule

Original promise

Promise made to debtor

Agreements made upon consideration of marriage Mutual promises to marry

Agreements for the transfer of an interest in land Part performance plus detrimental reliance

Seller conveys property

Agreements not to be performed within one year Full performance by one party

Possibility of performance within one year

Sale of goods for $500 or more Admission

Specially manufactured goods

Delivery or payment and acceptance