1. ©2001 West Legal Studies in Business. All Rights Reserved. 1 Chapter 15: Contracts—The Statute of Frauds

2. ©2001 West Legal Studies in Business. All Rights Reserved. 2 §1: 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.

3. ©2001 West Legal Studies in Business. All Rights Reserved. 3 Contracts Involving Interest 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.

4. ©2001 West Legal Studies in Business. All Rights Reserved. 4 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 Melnerney v. Charter Golf, Inc. (1997).Melnerney v. Charter Golf, Inc

5. ©2001 West Legal Studies in Business. All Rights Reserved. 5 Collateral Promises Primary v. Secondary Obligations. “Main Purpose Rule” Exception. Estate Debts.

6. ©2001 West Legal Studies in Business. All Rights Reserved. 6 Contracts for the Sale of Goods UCC requires a writing or memorandum for the sale of goods priced at $500 or more. Exceptions: –Partial Performance. –Admissions. –Promissory Estoppel. –Special Exceptions under the UCC.

7. ©2001 West Legal Studies in Business. All Rights Reserved. 7 §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.

8. ©2001 West Legal Studies in Business. All Rights Reserved. 8 §4: Parol Evidence Rule If the court finds that the parties intended their written contract to be a complete and final embodiment of their agreement, a party cannot introduce in curt evidence of any oral agreement or promise made prior to the contract’s formation or at the time the contract was created.

9. ©2001 West Legal Studies in Business. All Rights Reserved. 9 Exceptions to the Parol Evidence Rule Contracts subsequently modified. Voidable or Void contracts. Contracts containing ambiguous terms. Prior dealing, course of performance, or usage of trade. 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. Case 15.2: Cousins v. McKinney (1999).

10. ©2001 West Legal Studies in Business. All Rights Reserved. 10 Law on the Web UCC 2-201 on the Statute of Frauds.UCC 2-201 on the Statute of Frauds History of The Statute of Frauds.History of The Statute of Frauds Legal Research Exercises on the Web.