Chapter 15 Contracts: Statute of Frauds— Writing Requirement Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. Jentz Miller Cross BUSINESS LAW Alternate Edition 11 th Ed.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 2 §1: Origins of the Statute of Frauds  1677 England passed the law “An Act for the Prevention of Frauds and Abuses.”  Certain types of contracts must be in writing and signed by the party against whom enforcement is sought to be enforceable.  Today, almost every state has a Statute of Frauds.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 3 §2: Contracts That Fall within The Statute of Frauds  To be enforceable, the following types of contracts must be in writing and signed: –Contracts involving interest in land. –Contracts involving “One-Year Rule.” –Collateral or Secondary Contracts. –Promise made in consideration of marriage. –Contracts for the sale of goods priced at $500 or more.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 4 Contracts Involving Interests in Land  Land includes all physical objects that are permanently attached to the soil: buildings, fences, trees, and the soil itself.  All contracts for the transfer of other interest in land: mortgages and leases.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 5 The One-Year Rule  A contract that cannot, by its own terms, be performed within one year from the date it was formed must be in writing to be enforceable.  One-year period begins to run the day after the contract is made. –Test: Whether performance is possible (although unlikely) within one year. –CASE 15.1 Sawyer v. Mills (2007).

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 6 Exhibit One Year Rule

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 7 Collateral Promises  Primary v. Secondary Obligations.  “Main Purpose Rule” Exception.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 8 Promises Made in Consideration of Marriage  Prenuptial agreements must be in writing and signed to be enforceable.  Contracts must be supported by some consideration to be enforceable.  Prenuptial agreements may not be enforceable if the agreement is not voluntary.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 9 Contracts for the Sale of Goods  UCC requires a writing or memorandum for the sale of goods priced at $500 or more.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 10Exceptions  Exceptions of Applicability of the Statute of Frauds: –Partial Performance. CASE 15.2 School- Link Technologies, Inc. v. Applied Resources, Inc. (2007). –Admissions. –Promissory Estoppel. –Special Exceptions under the UCC.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 11 §3: Sufficiency of the Writing  Under the Statue of Frauds. –Must name, identify subject matter, consideration, other essential terms, and must be signed by the the party against whom enforcement is sought.  Under the UCC. –Need only name the quantity term and be signed by the party to be charged.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 12 §4: The Parol Evidence Rule  Oral representations or promises made prior to the contract’s formation or at the time the contract was created, may not be admitted in court.  Integrated Contracts.  Case 15.3 Yocca v. Pittsburgh Steelers Sports, Inc. (2004).

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 13  Contracts subsequently modified.  Voidable or Void contracts.  Contracts containing ambiguous terms.  Prior dealing, course of performance, or usage of trade. Exceptions to the Parol Evidence Rule

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 14 Exceptions to the Parol Evidence Rule  Contracts subject to orally agreed-on conditions.  Contracts with an obvious or gross clerical error that clearly would not represent the agreement of the parties.  KEY: Is this an “integrated contract”?

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 15 §5: The Statute of Frauds in the International Context  CISG governs sales contracts.  Article 11 does not incorporate statute of frauds provisions.  Relies on legal customs.