Chapter 16 Form of Contract Twomey, Business Law and the Regulatory Environment (14th Ed.)

(c) 2000 West Legal Studies Chapter 162 Contracts and the Statute of Frauds [16-1]

(c) 2000 West Legal Studies Chapter 163 When the Parole Evidence Rule Does Not Apply [16-2]  Illegality (Proof of Illegal Conduct)  Incomplete Contract  Ambiguity in Contract  Provision Omitted Due to: Fraud Accident Mistake  Modification of Contract Parole Evidence Rule: Prior or contemporaneous spoken words will not be allowed to modify or contradict the terms of a written contract that is complete on its face.

(c) 2000 West Legal Studies Chapter 164 Hurdles in the Path of a Contract WRITING REQUIRED Statute of Frauds Exceptions More than One Year to Perform Sale of Land Answer for Another’s Debt or Default Personal Representative to Pay Debt of Decedent Promise in Consideration of Marriage Sale of Goods for $500 or More Miscellaneous Part Performance Promisor Benefit Detrimental Reliance Parol Evidence Rule Exceptions Incomplete Contract Ambiguous Terms Fraud, Accident, or Mistake To Prove Existence or Nonbinding Character of Contract Modification of Contract Illegality Every Complete, Final Written Contract

(c) 2000 West Legal Studies Chapter 165 Chapter 16 Summary An oral agreement can be a contract unless it is the intention of the parties that they should not be bound by the agreement unless a writing is executed by them. If the parties intend to be bound by the oral agreement, it is a contract. As an exception to this statement, certain contracts must be evidenced by a writing, or else they cannot be enforced. The statutes that declare this exception are called statutes of frauds.

(c) 2000 West Legal Studies Chapter 166 Statutes of frauds commonly require that a contract be evidenced by writing in the case of (1) an agreement that cannot be performed within one year after the contract is made, (2) an agreement to sell or a sale of any interest in real property, (3) a promise to answer for the debt or default of another, (4) a promise by the executor or administrator of a decedent’s estate to pay a claim against the estate from personal funds, Chapter 16 Summary [2]

(c) 2000 West Legal Studies Chapter 167 (5) a promise made in consideration of marriage, and (6) a contract for the sale of goods for a purchase price of $500 or more. Local statutes may expand the above list to include other types of contracts, such as a contract between a landowner and a real estate agent employed to sell the land. Chapter 16 Summary [3]

(c) 2000 West Legal Studies Chapter 168 In order to evidence a contract to satisfy a statute of frauds, there must be a writing of all material terms. This must be signed by the defendant against whom suit is brought for enforcement of the contract or damages for its breach. The signing may be made by printing, stamping, typewriting, or any other means that is intended to identify the particular party. Chapter 16 Summary [4]

(c) 2000 West Legal Studies Chapter 169 Two or more writings can be combined to form a writing sufficient to satisfy the statute of frauds, provided there is an express internal reference in the writings that ties them together. Chapter 16 Summary [5]

(c) 2000 West Legal Studies Chapter 1610 If the applicable statute of frauds is not satisfied, the oral contract cannot be enforced. To avoid unjust enrichment, a plaintiff barred from enforcing an oral contract may recover from the other contracting party the reasonable value of the benefits conferred by the plaintiff on the defendant. To prevent the statute of frauds from being used to defraud a party to an oral contract, the courts by decision have made certain exceptions to the statute of frauds. Chapter 16 Summary [6]

(c) 2000 West Legal Studies Chapter 1611 When there is a written contract, the question arises whether that writing is the exclusive statement of the parties’ agreement. If the writing is the complete and final statement of the contract, parol evidence as to matters agreed to before or at the time the writing was signed is not admissible to contradict the writing. This is called the parol evidence rule. Some courts have liberalized the rule so that parol evidence is admitted when it will aid in interpreting the writing. Chapter 16 Summary [7]

(c) 2000 West Legal Studies Chapter 1612 In any case, the parol evidence rule does not bar parol evidence when (1) the writing is incomplete; (2) the writing is ambiguous; (3) the writing is not a true statement of the agreement of the parties because of fraud, accident, or mistake; or (4) the existence, modification, or illegality of a contract is in controversy. Chapter 16 Summary [8]

(c) 2000 West Legal Studies Chapter 1613 The fact that the parties disagree about the meaning of a contract or that a court decision is required to settle the point does not make the writing ambiguous. Parol evidence may be used to prove that there is in fact no contract because there is a mutual mistake or the writing that has been executed does not correctly set forth the terms of the contract. Chapter 16 Summary [9]