Ch15 Written Contracts

Written Contracts The Statute of Frauds In certain cases an agreement (or some memorandum of it) has to be in written form and be signed in purpose to be enforceable. These agreements are: For any interest in land That cannot be performed within one year To pay the debt of another Made by the executor of an estate Made in consideration of marriage, and For a sale of goods over $500 Unenforceable, but not Void Once the contract is fully executed, it makes no difference that it was unwritten. Contracts That Must be in Writing Agreements for an Interest in Land A contract for a sale of any interest in land must be written to be enforceable. Exception: Full Performance by the Seller If the seller fully performed his part of the contract, the court is likely to enforce the agreement even if it is oral. Exception: Part Performance by the Buyer The buyer of land may be able to enforce an oral contract if he paid part of the purchase price and either entered upon the land or made improvements to it. Exception: Promissory Estoppel If an oral promise should reasonably cause the promisee to rely on the promise, and the promisee does rely on it, the promisee may be able to enforce the promise. Agreements That Cannot be Performed within One Year Contracts that cannot be performed within one year are unenforceable unless they are in writing. Example 1: An offer for employment for 3 years. Cannot be performed in 1 year and must be in writing. Example 2: “As long as you work in our company you may have Fridays off.” Might be performed within one year, although could take many years – employment contract can be terminated at any time. It is enforceable whether it is oral or in writing. Promise to Pay the Debt of Another When one person agrees to pay the debt of another as a favor to that debtor, it is called a collateral promise and must be in writing to be enforceable. Exception: The Leading Object Rule If the leading object of the promise is some benefit to the promisor himself, then the contract will be enforceable even if unwritten. Promise Made by the Executor of an Estate This is a special application of the “Promise to Pay the Debt of Another” rule. An executor’s promise to use his own funds to pay the debts of the deceased must be in writing to be enforceable. Promise Made in Consideration of Marriage A promise made in consideration of marriage must be in writing to be enforceable. What the Writing Must Contain There’s no specifically requested form. There are general requirements though. The contract or memorandum: Must be signed by the defendant, AND Must state with reasonable certainty the name of each party, the subject matter of the agreement, and all the essential terms and promises Sale of Goods The UCC requires a writing for the sale of goods over $500. UCC §2-201(1) – The Basic Rule A contract for sale of goods worth $500 or more is not enforceable unless: There is some writing, Signed by the defendant, and Indicating that the parties reached an agreement Example 1: “Confirming phone conversation today, I will send you 1,000 reams of laser printer paper, usual quality & price. [signed] Seller.” This memorandum satisfies UCC §2-201(1), and the contract may be enforced against seller. Quantity is set. The buyer may testify as to the “usual” quality and price. Example 2: “Confirming phone conversation today, I will send you best quality laser printer paper today, $3.25 pear ream, delivery date next Tuesday. [signed] Seller.” Not enforceable – no quantity stated. UCC §2-201(2) – The Merchant’s Exception Within a reasonable time of making an oral contract, if one merchant sends a written confirmation to the other, and the confirmation is definite enough to bind the sender himself, then the merchant receiving the confirmation is also bound by it unless he objects in writing within 10 calendar days. UCC §2-201(3) – Special Circumstances An oral contract may be enforceable even without a written memorandum, if: The manufacturer is specially manufacturing the goods for the buyer, or The defendant admits in the court proceedings that there was a contract, or The goods have been delivered or they have been paid for.