Acc241 Ch13 – Flashcards
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Statute of frauds
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requires contracts relating to 4 things to be in writing. 1. Interest in real estate, 2 collateral contracts to pay debt in even of failure or default of another, 3. long-term (year+) contracts, 4. promises by a personal representative to pay the debts of an estate.
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Interest in real estate
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contracts for sale of interest in real estate will not be enforced unless they are in writing
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Collateral contracts to perform the obligation of another
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contracts in which one person promises to perform the obligation of another, in the event of failure or default, must be in writing.
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Long-term billable contracts
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bilateral contracts that by their terms cannot be performed within on year from date of formation must be in writing.
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Contracts to pay the debts of an estate
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contracts in which the personal representative of an estate promises to personally pay the debt of the decedent must be in writing.
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Parol evidence rule
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parol evidence is evidence introduced at trial for purpose of altering the terms of a written contract. Rule prohibits introduction of contract-altering evidence that relates to the time a contract is signed, or before that time.
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Writing contracts is always good practice, but
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statute of frauds requires four types of contracts to be in writing: 1. Interest in real estate, 2 collateral contracts to pay debt in even of failure or default of another, 3. long-term (year+) contracts, 4. promises by a personal representative to pay the debts of an estate.
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Statute of frauds in 17th century England
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developed because strangers were convinced to falsely testify ("Straw men": professional perjurers) because involved parties could not testify for themselves in English court.
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Interest in real estate
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any interest in real estate, whether actual land, or just purchasing the rights to buy it. Contracts to remove gravel or drill for oil also included.
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Full performance
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full performance by the seller of an oral contract for the sale of real property provides an exception to the statute of frauds. When seller delivers deed on oral contract, this is enforceable
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Part performance
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can be an exception to statute of frauds. Contract will be enforced, despite not being in writing. Reliance on payment by buyer, who makes payments and builds house. Part performance is based on equitable principles nt on legal ones. Two requirements: 1 reliance 2 change of position (party seeking to enforce contract has changed position.
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Hickey v. Green
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G. orally contracts to sell for $15 and accepted check for $500. H. sell old home to build on new land. G. changes position, claims not in writing, therefore not enforceable. Both reliance and change in position exist. G loses.
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Contracts to perform another's obligations
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V. reluctant to work for F because F not has money. P promises to pay if F does not. Must be in writing.
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Conditional promise
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I will do x *if* x does not happen must be in writing
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Main purpose exception
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if the main purpose of P fulfilling contract is to benefit F, then contractmust be in writing. If main purpose is to benefit P, then no writing needed.
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Wilson Floors v. Sciota Park, Ltd
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Sciota part runs out of money 2/3 finished. Bank promises if subcotractors finish, they will be paid. Bank refuses to pay. Was promise to pay collateral (conditional on no one else paying) or was intent to benefit the bank? Court found intent was to benefit bank.
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Long-term bilateral contracts
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contracts for terms stated 1 year+ must be in writing. However "for the rest of life" do not—life may be <1 year.
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Hodge v. Evans Financial group
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Oral agreement to work at E. "till retirement." Fired <1 year in. 1 year provision usually interpreted narrowly and literally. Applies only to contracts that could not conceivably be performed in less than a year. Thus contract should be enforced.
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Contracts fully performed
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if M fully performs and C refuses to pay—regardless of writing, the contract is enforced
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Parol evidence
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assumes parties have written contracts. Prohibits into evidence contemporaneous oral or prior written evidence regarding anything that is not part of written contract or contradictory to written contracts. Will only be accepted if terms of contract are ambiguous.
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Parol evidence objective
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assumes that what is written is agreed to. Why write something that is verbally contradicted and agreed to?
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Silvinsky v. Watkins-Johnson Co
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S signed employment agreement agreeing that employement is not for specific time and can be fired any time. S claims orally assured employment was indefinite as long as work was satisfactory. Conclusion: contract was integrated on grounds of two employment agreements, but firing was legal because both documents include phrase "with or without cause"
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Fraud and parol evidence
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evidence establishing fraud, misrepresentation, mistake, duress, undue influence,etc are not prohibited under parol evidence. Can bring these up to prove any misdeeds.
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Parol evidence and prior writings
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When things supercede earlier agreements, then parol evidence prohibits previously written documents from being effectual in court and being received into evidence
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SC13.1Is the statute of frauds a rule dealing with the tort of fraud?
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No. The focus of the statute of frauds is not on the tort of fraud. The objective of the original statute of frauds was to prevent false (perjured) testimony regarding oral contracts.
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SC13.2Suppose that a contract is said to be "without" or "outside of" the statute of frauds. What is meant by such a statement?
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A contract that is not controlled by the statute of frauds (for example, a six-month employment contract) is said to be "without" or "outside of" the statute of frauds. On the other hand, a contract that is controlled by the statute of frauds (for example, a six-year employment contract) is said to be "within" the statute of frauds.
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SC13.3Gary agrees to give Beth an easement over Blackacre for the sum of $500. (An easement is the right to cross over the land of another, but not the right to possess the land.) Beth wants the agreement in writing, but Gary says that because he is selling no part of Blackacre to Beth, their agreement is outside of the statute of frauds. Is Gary correct?
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Gary is not correct. An easement is an interest in land and therefore the easement agreement must be in writing to be enforced.
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SC13.4The following is a quote from the full opinion in Wilson Floors Co. v. Sciota Park, Ltd.: The bank representative . . . testified at trial that he had merely advised the subcontractors that adequate funds would be available to complete the job. However, two representatives of Wilson . . . testified that the bank representative had assured Wilson that if it returned to work, it would be paid. Based on this evidence, the court assumed that this transaction was "within" the statute of frauds, which meant that Wilson would win only if the "main purpose" exception applied. But suppose that you are the lawyer for Wilson Floors. Do the facts allow you to make a reasonable argument that the promise by the bank is without the statute of frauds, thus allowing Wilson Floors to win without reference to the main purpose rule?
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If the promise of the bank is interpreted as an unconditional promise to pay for the flooring work, then the statute of frauds does not apply. On that point one may argue that the bank did not promise to pay in the event of the failure or default of another. The only question was the decision to continue work and thereafter the promise to pay was unconditional and thus outside of the statute of frauds. If the promise of the bank was outside of the statute of frauds, the promise is enforceable without reference to the main purpose rule.
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SC13.5In a telephone conversation on January 1, Gayle hires Max to work for ten months as a caretaker at her country estate in New Jersey starting when she returns from Europe on February 1. Brenda is unexpectedly detained and does not return to New Jersey until July 1. Must this contract be in writing to be enforced?
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The contract is enforceable. The test for long-term contracts deals with what may happen, not what actually does happen. Is the contract hypothetically performable within one year measured from the date of contract performance? The answer is yes. Measuring from the date of formation, it was possible for the contract to be performed within one year. The fact that it was not actually performed within one year is irrelevant.
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SC13.6In the text, Zoe dies and Hugh is made the personal representative. When Hugh refuses to pay a claim made by David, David says that Hugh made a promise. Suppose that this was David's testimony at trial: "Remember, you said not to bother filing a claim against the estate. You said if the estate didn't pay it, you'd take care of it yourself." (Note: This statement is different than the statement in the text.) Does this change in the facts make a difference? Must this promise by Hugh be in writing to be enforced?
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Conditional or unconditional, the promise must be in writing to be enforced. The change in facts does not change the result.
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SC13.7Return to Slivinsky v. Watkins-Johnson Co., and suppose that Slivinsky was claiming fraud. Her claim is that she had a good job at another company and that representatives of Watkins-Johnson deliberately lied to her (falsely and intentionally telling her that her job with Watkins-Johnson would be long-term) to get her to come to work for them. Is this oral testimony admissible?
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In general, testimony demonstrating fraud is not barred by the parol evidence rule and is admissible. Here, though, Slavinsky is caught in a tactical dilemma. If her testimony about fraud is believed, it tends to invalidate the contract. It does not tend to amend the contract. That is her dilemma; she wants to enforce the contract after the court allows her to orally amend it. She does not want to invalidate the contract. Thus, getting her oral testimony into evidence by claiming fraud may be counter-productive.
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SB 13.1Which of the following is required to be in writing?(A)An oral agreement in which Andrea promises to work for Jack for the rest of her life.(B)An oral agreement in which Andrea promises to work for Jack for the next five years
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(B)Contract (a) cannot be performed within one year; thus, it must be in writing to be enforced. Contract (b) may be performed within one year and thus is not prohibited by the statute of frauds
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SB13.2Which of the following oral conversations may be introduced to alter the terms of a written contract?(A)a conversation between the parties after the contract was signed(B)a conversation between the parties before the contract was signed(c)a conversation between the parties at the time the contract was signed
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(A)
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SB13.3Which of the following is the most correct concerning the statute of frauds?(A)It permits an injured party to sue based on the common-law tort of fraud(B)A contract in violation of the rule is void(C)It requires certain contracts to be in writing
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(C)
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SB13.4Andrea orally agrees to work for Jack for two years. After she completes her work, Jack refuses to pay the balance owing on the contract because the contract was not in writing and thus not enforceable. Which of the following is correct?(A)The statute of frauds does not prevent payment of the unpaid balance(B)The statute of frauds prevents payment of the unpaid balance
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(A)The statute of frauds required this contract to be in writing. However, there is an exception which allows recovery if one of the parties has fully performed the oral contract
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SB13.5Which of the following is correct?(A)An option to purchase Blackacre, which is a parcel of real estate, is not required to be in writing because it is preliminary to the actual contract to purchase(B)An option to purchase Blackacre, which is a parcel of real estate, must be in writing
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(B)By the exercise of the option, the buyer may purchase Blackacre. This power is an interest related to real property, and it must be in writing.
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SB13.6Which of the following contracts is not controlled by the statute of frauds?(A)unilateral contracts which by their terms cannot be performed within one year from the date of their formation(B)collateral contracts in which one person promises, in the event of failure or default, to perform the obligation of another(C)contracts for the sale of an interest in real estate
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(A)Unilateral contracts are usually formed by performance and not by written acceptance. The requirement applies to bilateral contracts
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SB13.7The opinion in Hickey v. Green in the chapter was based on which of the following?(A)complete performance (B) part performance
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(B)The buyers partially performed and materially changed their position. There was not complete performance, nor was it claimed
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SB13.8Gary agrees in a written contract to sell Blackacre to Beth for $50,000. Thereafter, they orally amend their agreement. This amendment violates which of the following?(A)the parol evidence rule and the statute of frauds(B)only the parol evidence rule(C)only the statute of frauds(D)neither the parole evidence rule nor the statute of frauds
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(C)
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SB13.9Herbert, a business law student, contracts to purchase a new car. His mother, Heather, goes with him and tells the dealer: "Herbert doesn't graduate for another six months, so I will make the first ten payments for him." Relying on this statement, the dealer signs the sales contract. Which of the following is correct?(A)Heather's statement may be enforced even though it is not in writing.(B)Heather's statement must be in writing to be enforced
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(A)Promises to pay in the event of the failure or default of another must be in writing to be enforced. This is an absolute promise to pay, not a promise to pay in the event of failure or default. (The promise will be completed within one year; thus, the one-year requirement is not violated.)
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SB13.10Which of the following does not violate the parol evidence rule?(A)evidence establishing fraud in a transaction(B)evidence eliminating ambiguity in a written agreement(C)neither of the above violates the parol evidence rule
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(C)
