1. Section 10.1

2. Special Rules and Formalities
Chapter 10
Form of a Contract
Section 10.1
The Statute of Frauds
Section 10.2
Special Rules and Formalities

3. What You’ll Learn
How to explain the purpose of the Statue of Frauds (p. 206)
How to explain the legal status of a contract that is not in writing (p. 206)

4. What You’ll Learn
How to identify the elements that must be included in a written contract (p. 206)
How to deal with contradictory and ambiguous terms in a written agreement (p. 207)

5. What You’ll Learn
How to identify which contracts must be in writing (p. 208)

6. Why It’s Important
Understanding which contracts must be in writing, as well as the elements of a writing, will help you avoid pitfalls associated with the Statute of Frauds.

7. Legal Terms
breach of contract (p. 206)
perjury (p. 206)
Statute of Frauds (p. 206)
memorandum (p. 206)
goods (p. 213)
real property (p. 213)

8. Section Outline Purpose of a Writing Elements of a Writing
Evaluating Contradictory Terms
Evaluating Ambiguous Clauses

9. Section Outline Contracts That Must Be in Writing
Contracts to Pay Debts of Others
Contracts to Pay Debts of Deceased Persons
Contracts Requiring More Than a Year to Perform

10. Section Outline Contracts That Must Be in Writing, continued
Contracts in Consideration of Marriage
Contracts to Sell Real Property
Contracts for Sale of Goods of $500 or More

11. Pre-Learning Question
Why do you think some contracts should be in writing?

12. Purpose of a Writing
In early England contracts did not have to be written to be fully enforceable. Persons could be brought to trial for breach of written or oral contracts.

13. Purpose of a Writing
A breach of contract is a wrongful failure to perform one or more promises of a contract.

14. Purpose of a Writing
Only persons who were not parties to the contract could be witnesses in court. To protect their friends or self-interests, witnesses often made false statements under oath in court.

15. Purpose of a Writing
Making such false statements is called perjury and is a crime.

16. Purpose of a Writing
To discourage such practices, Parliament passed the “Act for the Prevention of Frauds and Perjuries,” which became known as the Statute of Frauds. It required certain contracts to be in writing to be enforceable.

17. Purpose of a Writing
Most states now have a Statute of Frauds, which are state laws requiring that certain contracts be evidenced by a writing.

18. What is a breach of contract?

19. ANSWER
A wrongful failure to perform one or more promises of a contract.

20. Pre-Learning Question
What elements should be present in a written contract?

21. Elements of a Writing
A memorandum is the written evidence of an agreement, need not be formal, and could be:
a letter
a sales slip
an invoice
a telegram
words written on a check

22. Elements of a Writing Elements of a writing should identify the: place
date
parties involved
subject matter

23. Elements of a Writing price and terms intent of the parties
signature of the party who may be charged

24. Evaluating Contradictory Terms
If changes are made to a contract, the court will uphold the most recent terms.
If handwritten changes are made to a typewritten or printed contract, the handwritten terms will prevail.

25. Evaluating Contradictory Terms
Typewriting prevails over printing.
A dollar amount written in words will prevail over the amount written in figures.

26. 10.1
Contradictory Terms

27. Evaluating Ambiguous Clauses
When a written contract can be understood in different ways, the court will lean in favor of the party who did not draft the contract and against the one who drafted it.

28. Pre-Learning Question
What type of contracts do you think should be in writing?

29. Contracts That Must Be in Writing
Every state has a law requiring that certain kinds of contracts be in writing to be enforceable.

30. Contracts to Pay Debts of Others
A contract that one person makes with another to pay the debts of someone else must be in writing to be enforceable.

31. Contracts to Pay Debts of Deceased Persons
An executor uses property from the estate to pay off any debts.
If the estate lacks the money to pay the debt, the executor may promise to pay them with his or her own money.

32. Contracts to Pay Debts of Deceased Persons
Such an agreement, which is actually an agreement to pay another’s debts, must be in writing to be enforceable.

33. Contracts Requiring More Than
a Year to Perform
All contracts must be written if they cannot be performed within one year of the date they are made. The year legally begins when the contract is made, not when performance is to start.

34. Contracts in Consideration
of Marriage
When two persons agree to marry, a written contracts is not required.
The promises they make to one another serve as the consideration for the contract.

35. Contracts in Consideration
of Marriage
However, if one person agrees to marry another person in return for a third person’s promise of money or property, the agreement must be in writing.

36. Contracts to Sell Real Property
Contracts for the sale of real property, which is land and anything permanently attached to it, must be in writing to be enforceable.

37. For contracts requiring more than a year to perform, when does the year legally begin?

38. ANSWER
When the contract is made.

39. Contracts for Sale of goods
of $500 or More
A contract for the sale of Goods for the price of $500 or more must be in writing to be enforceable.

40. Contracts for Sale of goods
of $500 or More
Goods consist of movable items, including specially manufactured items. Furniture, books, livestock, cultivated crops, clothing, automobiles, and personal effects of any kind are considered Goods.

41. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
What is the purpose of the Statute of Frauds?

42. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
To prevent fraud and perjury

43. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
What is the legal status of a contract that is not is writing?

44. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
A contract that is supposed to be in writing, but which is not, is unenforceable.

45. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
What are the elements that must be included in a written contract?

46. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
Place, date, parties, subject matter, price and terms, and intent of the parties.

47. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
How are contradictory and ambiguous terms in a written agreement interpreted by a court?

48. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
With contradictory terms, the court will uphold the most recent terms. The court will interpret ambiguous clauses against the person who wrote the contract.

49. Reviewing What You Learned What contracts must be in writing?
Section Assessment
Reviewing What You Learned
What contracts must be in writing?

50. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
Contracts to pay the debts of others and to pay the debts of deceased persons, contracts requiring more than a year to perform, and contracts in consideration of marriage.

51. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
Contracts to sell real property and contracts for the sale of goods of $500 or more.

52. Critical Thinking Activity Statue of Frauds
Section Assessment
Critical Thinking Activity
Statue of Frauds
Does a writing have to be a formal document to satisfy the requirements of the Statute of Frauds?

53. Critical Thinking Activity Answer Statue of Frauds
Section Assessment
Critical Thinking Activity Answer
Statue of Frauds
No. A writing does not have to be a formal document to satisfy the requirements of the Statutes of Frauds.

54. Legal Skills in Action History of the Law
Section Assessment
Legal Skills in Action
History of the Law
Clark and Fiona believe that the Statute of Frauds was originally intended as a criminal provision designed to catch con artists who prey on innocent, unsuspecting victims.

55. Legal Skills in Action History of the Law
Section Assessment
Legal Skills in Action
History of the Law
Write a report in which you explain the actual historical context in which the Statute of Frauds was first enacted in England.

56. Legal Skills in Action Answer
Section Assessment
Legal Skills in Action Answer
History of the Law
Reports will vary but should recognize that the Statute of Frauds was first enacted to discourage the practice of fraudulent statements in court by witnesses when an oral contract had not be fulfilled.

57. End of Section 10.1