Unit 3 Town Hall Statute of Frauds

Review  Offer  Acceptance  Revocation  Rejection  Death

What is the Statute of Frauds?  It is completely different from the crime or tort “fraud”.  It states that certain kinds of contracts must be in writing and signed by the parties.  If those “certain kinds” of contracts are not in writing – the agreement is not valid.

New York Statute of Frauds N.Y. Gen. Oblig. Law §5-701 § Agreements required to be in writing. a. Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking: 1. By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime; 2. Is a special promise to answer for the debt, default or miscarriage of another person; 3. Is made in consideration of marriage, except mutual promises to marry; 5. Is a subsequent or new promise to pay a debt discharged in bankruptcy;

New York, Cont’d. 9. Is a contract to assign or an assignment, with or without consideration to the promisor, of a life or health or accident insurance policy, or a promise, with or without consideration to the promisor, to name a beneficiary of any such policy. This provision shall not apply to a policy of industrial life or health or accident insurance. 10. Is a contract to pay compensation for services rendered in negotiating a loan, or in negotiating the purchase, sale, exchange, renting or leasing of any real estate or interest therein, or of a business opportunity, business, its good will, inventory, fixtures or an interest therein, including a majority of the voting stock interest in a corporation and including the creating of a partnership interest.

New York, Cont’d. 4. For purposes of this subdivision, the tangible written text produced by telex, telefacsimile, computer retrieval or other process by which electronic signals are transmitted by telephone or otherwise shall constitute a writing and any symbol executed or adopted by a party with the present intention to authenticate a writing shall constitute a signing. The confirmation and notice of objection referred to in subparagraph (b) of paragraph three of this subdivision may be communicated by means of telex, telefacsimile, computer or other similar process by which electronic signals are transmitted by telephone or otherwise, provided that a party claiming to have communicated in such a manner shall, unless the parties have otherwise agreed in writing, have the burden of establishing actual or constructive receipt by the other party as set forth in subparagraph (b) of paragraph three of this subdivision.

Fact Pattern – New York  Buyer and Seller are negotiating the sale of a home.  The buyers made an offer by .  Buyer and Seller the talk on the phone and agree by telephone.  Seller then sends an that says: “I accept your offer to buy my house at 123 Plain Street for $300,000 dollars, all cash. The closing date shall be no later than August 15, With kind regards, Michael.”  The seller then refuses to go through with the sale.  Has that Statute of Frauds been satisfied?  Are there any other problems with this case? Rosenfeld v. Zerneck, 776 N.Y.S.2d 458, 4 Misc. 3d 193 (Sup. Ct. Kings Co. 2004).

Statute of Frauds – Georgia To make the following obligations binding on the promisor, the promise must be in writing and signed by the party to be charged therewith or some person lawfully authorized by him: (1) A promise by an executor, administrator, guardian, or trustee to answer damages out of his own estate; (2) A promise to answer for the debt, default, or miscarriage of another; (3) Any agreement made upon consideration of marriage, except marriage articles as provided in Article 3 of Chapter 3 of Title 19; (4) Any contract for sale of lands, or any interest in, or concerning lands; (5) Any agreement that is not to be performed within one year from the making thereof; (6) Any promise to revive a debt barred by a statute of limitation; and (7) Any commitment to lend money.

Georgia, Cont’d The provisions of Code Section do not extend to the following cases: (1) When the contract has been fully executed; (2) Where there has been performance on one side, accepted by the other in accordance with the contract; (3) Where there has been such part performance of the contract as would render it a fraud of the party refusing to comply if the court did not compel a performance.

Case Study, Georgia  A doctor enters into a discussion with a hospital about opening a clinic, because she is having trouble with her current boss and wants to work on her own.  The hospital says that if the doctor can’t work things out with the boss, it will loan her $800,000 to start the clinic, pay her $200,000 the first year and $250,000 the second year.  The doctor goes and talks to her boss, as requested by the hospital and the boss fires her.  The hospital refuses to give the doctor the money for the clinic. The doctor sues the hospital.

Case Study, Georgia, Cont’d.  Does this case fall under the statute of frauds? (Answer yes if you think it should have been in writing.) Why or why not?  Does the doctor have any other arguments under Georgia Law? Johnson v. University Health Svcs., 161 F3d 1334 (11 th Cir. 1998)

Unit 3 Questions  Although legislatures cannot interfere with the right to contract, they have, through the Statue of Frauds, put some limits on how contracts can be formed in our private lives. Art. 1, sec. 10 of the Constitution prohibits states from “impairing the obligations of contracts.”  If the Statute of Frauds were challenged on Constitutional grounds as interfering with our right to contract, would just litigation likely be successful?  Also, can you explain the likely reasons why these particular types of contracts were included in the Statute of Frauds? Are there other types of contracts that might have been included in the Statute of Frauds?

Questions?