Bài giảng Business Law - Chapter 16: Writing

Learning Objectives List contracts that must be written to satisfy the Statute of Frauds Identify exceptions to the Statute of Frauds Compare UCC with the Statute of Frauds under common law Describe the Parole Evidence Rule

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Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin3Introduction to ContractsThe Agreement: OfferThe Agreement: AcceptanceConsiderationReality of ConsentContractsPART3Capacity to ContractIllegalityWritingRights of Third PartiesPerformance and RemediesContractsPARTWritingPAETRHC16A verbal contract isn’t worth the paper it’s written on.Samuel Goldwynquoted in The Great Goldwyn by Alva Johnson, 1937Learning ObjectivesList contracts that must be written to satisfy the Statute of FraudsIdentify exceptions to the Statute of FraudsCompare UCC with the Statute of Frauds under common lawDescribe the Parole Evidence RuleIn general, a writing is not required to create a legally enforceable contractHowever, a writing is preferable to an oral contract for several reasons: more definite, use as evidence, and signature provides authentication Sometimes, a writing is requiredBasicsIn 17th Century England, the Statute of Frauds was enacted to prevent fraud by requiring written evidence before enforcing certain types of contractsAmerican states adopted similar statutesThe Statute of FraudsHouse of Lords, EnglandIf a covered contract does not satisfy the requirements of the statute of frauds, the contract is unenforceableA person injured by the unenforceable contract may pursue an action based on quasi-contract or promissory estoppelConsequencesCollateral contractsContracts for real estateContracts for more than one yearContracts for sale of goods over $500Executor’s promiseMarriage as considerationSee the list on page 435 of the textCovered ContractsCollateral contracts are those in which a person (guarantor) promises to perform an obligation of another person (principal debtor) to a third person (obligee)Covered Contracts: Collateral ContractsExample: Jason is a personal guarantor on a loan from City Bank to Jason’s sister, Mary The Collateral ContractUnder the main purpose or leading object rule, no writing is required where the guarantor makes a collateral promise for the main purpose of obtaining personal economic advantageException to Collateral Contract RuleContracts for the transfer or sale of an interest in real estateSome states require a writing for leases and certain easements on real propertyException: if vendor fully performed on the contract or vendee reasonably relied on the contract to his/her detrimentThen statute of frauds does not apply Covered Contracts: Real EstateBilateral contracts that cannot be performed within a year from the date of their formation (one year rule)Is performance possible within year?Probability of performance irrelevantExample: Jack signs contract to consult with Company X for 13 months, so the contract must be in writingCovered Contracts: One Year RuleUCC 2-201: contracts for the sale of goods for a price of $500 or moreIncludes agreements to modify existing sales contracts if contract as modified is for a price of $500 or more [UCC section 2–209(3)]Example: Pam buys a refrigerator for $501, thus a writing is required to be enforceableNo writing required for <$500 refrigeratorCovered Contracts: $500+ in GoodsThough uncommon, the statute of frauds requires a writing to evidence (a) contracts in which an executor or administrator promises to be personally liable for debt of an estate, or (b) contracts in which marriage is the considerationOther Covered ContractsMost states require only a signed memorandum of the parties’ agreement stating the essential terms:(a) identity of parties, (b) subject matter identified with reasonable certainty, and (c) signed by the party to be chargedThe memorandum need not be made at the same time the contract comes into beingSatisfying the Statute of FraudsUCC 2–201: writing must be sufficient to indicate a contract for sale has been made between the parties, but must indicate the quantity of goods to be soldA sales receipt may satisfy the requirementSufficient writing includes: (a) confirmatory memorandum between merchants, (b) part payment or part delivery, (c) admission in pleadings or court, and (d) specially manufactured goodsSatisfying the Statute of FraudsParol evidence rule provides that, when parties enter a written contract that they intend as a complete integration (final statement of agreement), a court will not permit evidence of contemporaneous or prior statements to contradict, add to, or alter the terms of the written contractExample: Hinkel v. Sataria Distribution & PackagingThe Parol Evidence RuleMore on Parol EvidenceUCC 2-202 includes parol evidence ruleAdmissible parol evidence: Additional terms in partially integrated contractsExplaining ambiguitiesCircumstances invalidating contractExistence of conditionSubsequent agreementsParol Evidence ChartThought QuestionDo the Statute of Frauds and parol evidence rule – legal principles from the 1600s – still make sense in today’s commercial world?
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