STATUTE OF FRAUDS

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STATUTE OF FRAUDS

• SOME CONTRACTS MUST BE EVIDENCED BY A WRITING TO
  BE ENFORCEABLE
• DESIGNED TO PREVENT PERSON FROM FALSELY CLAIMING
  THE EXISTENCE OF A CONTRACT IN COURT

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CONTRACTS THAT FALL WITHIN THE STATUTE OF FRAUDS

• REAL ESTATE
• GOODS WERE PRICE IS 500 OR MORE
• SURETYSHIP CONTRACTS PROMISE TO ANSWER FOR DEBT
  OF ANOTHER
• LONG TERM CONTRACTS CONTRACTS THAT CANNOT BE
  PERFORMED WITHIN A YEAR

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CONTRACTS THAT FALL WITHIN THE STATUTE OF FRAUDS

• REAL ESTATE CONTRACTS
• CONTRACTS FOR THE TRANSFER OF ANY INTEREST IN
  REAL PROPERTY
• LEASES LONGER THAN ONE YEAR

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CONTRACTS THAT FALL WITHIN THE STATUTE OF FRAUDS

• SURETYSHIP CONTRACTS - PROMISES TO ANSWER FOR THE
  DEBT OR DEFAULT OF ANOTHER
• INCLUDES PERSONAL GUARANTEES OF A LOAN AND BONDS
  TO ENSURE PERFORMANCE OF A CONTRACT
• DOES NOT INCLUDE CONTRACTS WHERE PRIMARY PURPOSE
  OF CONTRACT IS TO BENEFIT THE PROMISOR, NOT THE
  DEBTOR

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CONTRACTS THAT FALL WITHIN THE STATUTE OF FRAUDS

• CONTRACT THAT CANNOT BE PERFORMED WITHIN ONE YEAR
  OF ITS MAKING
• POSSIBILITY RULE IF UNDER THE TERMS OF THE
  CONTRAT IT IS POSSIBLE TO PERFORM THE CONTRACT
  WITHIN A YEAR, NEED NOT BE IN WRITING
• MEASURE TIME FROM THE DATE THE CONTRACT IS SIGNED
  OR ENTERED INTO UNTIL THE DATE WHEN THE CONTRACT
  WILL BE PERFORMED

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CONTRACTS THAT FALL WITHIN THE STATUTE OF FRAUDS

• A CONTRACT FOR THE SALE OF GOODS WHERE THE PRICE
  IS 500 OR GREATER
• 500 RULE APPLIES ONLY TO TRANSACTIONS IN GOODS
  TANGIBLE, PERSONAL PROPERTY
• 1,000 RULE FOR PERSONAL PROPERTY LEASES

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CONTRACTS THAT FALL WITHIN THE STATUTE OF
FRAUDS

• CONTRACTS BY A PERSONAL REPRESENTATIVE, EXECUTOR
  OR ADMINISTRATOR OF AN ESTATE TO PAY ESTATE
  CLAIMS FROM PERSONAL FUNDS
• PROMISES IN CONSIDERATION OF MARRIAGE

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REQUIREMENTS OF THE WRITING

• WRITTEN MEMORANDUM NEED NOT BE A FORMAL DOCUMENT
  
• WRITTEN MEMORANDUM MAY BE TWO OR MORE WRITINGS,
  SUCH AS LETTERS OF OFFER AND ACCEPTANCE EXCHANGED
  BETWEEN BUYER AND SELLER

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COMMON LAW REQUIREMENTS FOR THE WRITING

• CONTENT REQUIREMENT
• ESSENTIAL OR MATERIAL TERMS OF THE CONTRACT
• SIGNATURE REQUIREMENT
• SIGNED BY THE PARTY TO BE CHARGED
• CANNOT ENFORCE A CONTRACT WITHIN STATUTE AGAINST
  A PARTY WHO HAS NOT SIGNED A WRITING

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UCC REQUIREMENTS FOR THE WRITING

• CONTENT REQUIREMENT
• MUST INDICATE THERE IS A CONTRACT BETWEEN THE
  PARTIES AND
• CONTAIN QUANTITY OF GOODS (NEED NOT CONTAIN
  PRICE)
• SIGNATURE REQUIREMENT
• MUST BE SIGNED BY THE PARTY TO BE CHARGED UNLESS
  THERE IS A BINDING CONFIRMATORY LETTER

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CONFIRMATORY LETTER RULE

• APPLIES ONLY TO A SALE OF GOODS
• PARTIES MUST BE MERCHANTS
• MUST BE CONFIRMATORY LETTER SENT BY ONE PARTY AND
  RECEIVED BY ANOTHER THAT IS NOT REPUDIATED IN
  WRITING IN TEN DAYS

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EXCEPTIONS NO WRITING IS NECESSARY

• FULL PERFORMANCE DOCTRINE
• CONTRACT FULLY PERFORMED BY ONE PARTY
• E.G., LENDER MAKES AN ORAL LOAN TO BE PAID BACK
  OVER FIVE YEARS, PURCHASER PAYS TOTAL PURCHASE
  PRICE FOR GOODS (NOT LAND)

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EXCEPTIONS NO WRITING IS NECESSARY

• PART PERFORMANCE DOCTRINE
• (1) Purchaser takes possession of land and
• (2) Makes valuable improvements or substantial
  payments

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QUASI CONTRACT LIABILITY

• PARTY CAN SECURE QUASI CONTRACT RECOVERY IF AN
  ORAL CONTRACT IS DECLARED UNENFORCEABLE
• E.G., DOWN PAYMENT UNDER AN ORAL CONTRACT FOR
  LAND - COURTS WILL COMPEL SELLER TO RETURN
  DEPOSIT IF SELLER REFUSES TO HONOR THE ORAL
  CONTRACT

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PAROL EVIDENCE RULE

• RULE GOVERNS ADMISSABILITY OF EVIDENCE RELATING
  TO A WRITTEN CONTRACT
• GENERALLY, PAROL EVIDENCE IS NOT ADMISSABLE TO
  CHANGE OR ADD TO A WRITTEN CONTRACT

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PAROL EVIDENCE RULE

• RULE APPLIES TO PAROL EVIDENCE ORAL
  DISCUSSIONS, PRELIMINARY WRITTEN AGREEMENTS AND
  UNDERSTANDINGS THAT
• OCCURRED PRIOR TO OR CONTMEPORANEOUS WITH THE
  EXECUTION OF AN INTEGRATED (COMPLETE) WRITTEN
  CONTRACT

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PAROL EVIDENCE RULE EXCEPTIONS

• PAROL EVIDENCE IS ADMISSABLE TO
• INTERPRET A CONTRACT
• PROVE FRAUD, MISTAKE OR OTHER DEFENSE
• ESTABLISH THAT A CONTRACT WAS NEVER ENTERED INTO
  OR SHOW A SUBSEQUENT ORAL MODIFICATION