13-4 The Writing Requirement

13-4 The Writing Requirement (slide 1 of 2) • To be enforceable, all states require certain types of contracts to be in writing or evidenced by a written memorandum or an electronic record. • The party or parties against whom enforcement is sought must have signed the contract, unless certain exceptions apply. • These state statutes are referred to collectively as the Statute of Frauds. 13-4a Contracts Involving Interests in Land • A contract calling for the sale of land is not enforceable unless it is in writing or evidenced by a written memorandum. • Land is real property and includes all physical objects that are permanently attached to the soil, such as buildings, fences, trees, and the soil itself. 13-4b The One-Year Rule (slide 1 of 2) • Contracts that cannot, by their own terms, be performed within one year from the day after the contract is formed must be in writing to be enforceable. • Time Period Starts the Day after the Contract Is Formed • Must Be Objectively Impossible to Perform within One Year • When performance of a contract is objectively impossible during the one-year period, the contract must be in writing to be enforceable. 13-4b The One-Year Rule (slide 2 of 2) 13-4c Collateral Promises (slide 1 of 2) • Collateral promise: A secondary promise to a primary transaction, such as a promise made by one person to pay the debts of another if the latter fails to perform. A collateral promise normally must be in writing to be enforceable. • Primary versus Secondary Obligations • Primary obligation: A promise to pay another person’s debt (or other obligation) that is not conditioned on the person’s failure to pay (or perform. 13-4c Collateral Promises (slide 2 of 2) • Primary versus Secondary Obligations • Secondary Obligation: A promise to pay another’s debt only if that party fails to pay. • An Exception—The “Main Purpose” Rule • An oral promise to answer for the debt of another is covered by the Statute of Frauds unless the guarantor’s purpose in accepting secondary liability is to secure a personal benefit. 13-4 The Writing Requirement (slide 2 of 2) • 13-4d Promises Made in Consideration of Marriage • A unilateral promise to make a monetary payment or to give property in consideration of marriage as well as prenuptial agreements must be in writing. • 13-4e Contracts for the Sale of Goods • The UCC’s Statute of Fraud provisions require written evidence or an electronic record of a contract for the sale of goods of $500 or more. 13-4f Exceptions to the Statute of Frauds (slide 1 of 3) • Partial Performance • When a contract has been partially performed and the parties cannot be returned to their positions prior to the contract’s formation, a court may grant specific performance. • Case Example 13.21 NYKColl A.B. v. Pacific Fruit, Inc. (2013) • Admissions • If a party against whom enforcement of an oral contract is sought “admits” under oath that a contract for sale was made, the contract will be enforceable. 13-4f Exceptions to the Statute of Frauds (slide 2 of 3) • Promissory Estoppel • Section 139 of the Restatement (Second) of Contracts provides that an oral promise can be enforceable, notwithstanding the Statute of Frauds, if the promisee has justifiably relied on the promise to his or her detriment. • Special Exceptions under the UCC • Oral contracts for customized goods may be enforced in certain circumstances. 13-4f Exceptions to the Statute of Frauds (slide 3 of 3) 13-4g Sufficiency of the Writing or Electronic Record • What Constitutes a Writing? • Any confirmation, invoice, sales slip, check, fax, or e-mail—or such items in combination. • One document may incorporate another document by expressly referring to it. • Several documents may form a single contract if they are physically attached or placed in the same envelope. • What Must Be Contained in the Writing? • The essential contract terms and some indication that the parties voluntarily agreed to the terms.