Chapter 16 - Writing
CHAPTER 16
WRITING
LEARNING HINTS
1. There is no general requirement that contracts be in writing and in most cases, an oral contract is enforceable. It’s best, however, to have a writing reflect all of the parties’ intentions, so you can more easily evidence the agreement in the event a dispute arises. Without a written contract,parties may have to rely on their verbal testimony or verbal testimony of witnesses, leaving decisions as to credibility or the existence of a contract to a judge.
2. What is the statute of frauds? Describe its purpose and applicability. What happens if the statute of frauds requires a certain type of contract to be in writing, and the parties to a contract normally covered by the statute of frauds have failed to reduce their agreement to writing?
3. Define collateral contract. Why must a collateral contract be in writing?
4. Under what circumstances does the Restatement (Second) of Contracts suggest that a contract for the transfer of an interest in land need not be in writing? What concept does this bring to mind?
5. Keep in mind that a bilateral contract is formed when a promise is exchanged for a promise. Those promises may be exchanged well before the time for actual performance begins, which may make the contract impossible to be performed within a year. If the contract cannot be performed within a year, the Statute of Frauds requires that it be in writing.
6. Specific performance is an equitable remedy whereby a court orders the breaching party to perform his contractual obligations. It is generally available only in contracts involving the transfer of an interest in land.
7. The writing requirement triggered by the Statute of Frauds does not mean there must be a complete contract in all cases. The Statute can be satisfied by a writing, such as a letter, or a series of writings tacked together that indicate the essential terms of the transaction. In addition, if a party to a contract raises the Statute of Frauds as a defense, the Statute’s requirements will be satisfied if that party has signed a writing or memorandum that confirms the essential terms of the transaction.
8. It is important to remember to include all of the material terms of your agreement in the contract. Failure to include a term could result in that term not being enforceable under the parol evidence rule. It is often wise to include a merger clause in your contract to ensure that terms not expressly included in the written contract will not be admissible in a dispute over the contract.
9. There are many exceptions to the parol evidence rule--give an example of an ambiguous term in a contract and evidence that might be introduced to explain the meaning of the ambiguous
term.
10. Does application of the concept of promissory estoppel circumvent the statute of frauds? Why or why not. Should courts allow proof of promissory estoppel to validate otherwise unenforceable contracts?
CHAPTER OUTLINE AND KEY CONCEPTS
I. Learning Objectives
II. The Significance of Writing in Contract Law
A. Purposes of Writing
1. Describe several reasons why a contract should be in writing.
B. Writing and Contract Enforcement
III. Overview of the Statute of Frauds
A. History and Purposes
B. Effect of Violation of the Statute of Frauds
IV. Contracts Covered by the Statute of Frauds: The following types of contracts are within (covered by) the statute of frauds:
A. Collateral Contracts
1. Exception: Main Purpose or Leading Object Rule
a. Example:Dynegy, Inc. v. Yates, 2011 Tex. App. LEXIS 1272 (Tex. Ct. App. 2011)
B. Interest in Land
1. Exception: Full Performance by the Vendor
2. Exception: Part Performance (Action in Reliance) by the Vendee
C. Contracts that Cannot be Performed within One Year
1.Computing time
2. Example: Schaadt v. St. Jude Medical S.C., Inc., 2007 U.S. Dist. LEXIS 59586 (U.S. Dist. Ct. D. Minn. 2007)
D. Sale of Goods for $500 or More
1. Modifications of Existing Sales Contracts
E. Promise of Executor or Administrator to Pay a Decedent's Debt Personally
F. Contract in Which Marriage Is the Consideration
V. Meeting the Requirements of the Statute of Frauds
A. Nature of the Writing Required
1. Most states only require a memorandum of the parties’ agreement; not all terms need to be included in the writing.
a. Contents of the Memorandum
b. Contents of Memorandum under the UCC
c. Signature Requirement
(1) E-Signatures and the Statute of Frauds (Cyberlaw in Action) d. Memorandum Consisting of Several Writings
B. UCC: Alternative Means of Satisfying the Statute of Frauds in Sale of Goods Contracts
1. A contract for the sale of goods for $500 or more for which there is no written memorandum signed by the party to be charged can meet the requirements of the statute of frauds in any of the following ways:
a. Confirmatory memorandum between merchants
b. Part payment or part delivery
c. Admissions in pleadings or court
d. Specially manufactured goods
(1) Example: Green Garden Packaging Co., Inc. v. Schoenmann Produce Company, Inc., 2010 Tex. App. LEXIS 8887 (Tex. Ct. App. 2010)
C. Promissory Estoppel and the Statute of Frauds
VI. The Parol Evidence Rule
A. Explanation of the Rule
1. Parol evidence means written or spoken statements that are not contained in the written contract.
2. The parol evidence rule provides that when parties enter a written contract that they intend as a complete integration (a complete and final statement of their agreement), a court will not permit the use of evidence of prior or contemporaneous statements that add to, alter, or contradict the terms of the written contract.
B. Scope of the Parol Evidence Rule
C. Admissible Parol Evidence
1. Additional terms in partially integrated contracts
a. Example: Hinkel v. Sataria Distribution & Packaging, 920 N.E.2d 766 (Ind. App. 2010)
b. Does the contract contain a merger clause (integration clause)
2. Explaining ambiguities
3. Circumstances invalidating contract
4. Existence of condition
5. Subsequent agreements
VI. Interpretation of Contracts
A. Parties’ principal objective test
16-1