CL-8 - Lecture notes 8 PDF

Preview

Summary

Short summary to the Introduction to Contract (GEORGETOWN UNIVERSITY)...

Description

LECTURE 8- Statute of Frauds

Waddle v. Elrod ● Settlement agreement provided that X would surrender her one half interest in certain land. ● The email from the first lawyer set the terms. ● Reply to the email is “that is the agreement.” ● Held, settlement agreement that requires transfer of any interest in real property is subject to the statute of frauds. ● Exchange of emails satisfied the statute of frauds because of the Uniform Electronics Transaction Act (if law requires a writing, electronic writing satisfies the law) ● There is a deal that says that land will be bought but only if the Planning Commission issues a permit for the use the buyer contemplates. ● While it is pending, an oral agreement was entered into by the buyer that if the permit is denied – easement would be granted in lieu of ownership. ● The permit was denied and the buyers try to enforce the oral agreement. ● Since this pertains to an interest in land and it is not in writing – Statute of Frauds is a proper defense.

● While sale of land was evidenced by a contract, the subsequent oral deal to grant an easement was not in writing. ● However, the party seeking enforcement spent money making financing arrangements and conducted the search and also made a down payment of USD 5,000. ● It was held by the Court that the oral agreement could not be enforced. ● However, some courts take a different view – if a person acts in accordance with an oral contract and performs his part of the bargain – his behavior indicates the existence of the contract. ● Hence, application of Statute of Frauds would be unfair and unnecessary.

Welch v. CocaCola ● 5 year contract to supply vending machines. ● Performs for 18 months. ● Fired and told to remove machines so Coca Cola could come in. ● Since the contract is greater than a year, SOF applies but the fired vendor claims a partial performance. ● Part performance will be sufficient, if denial of performance would amount to virtual fraud on the party seeking enforcement.

● This means that the party seeking enforcement acted in reliance of the contract and has suffered a substantial detriment for which he or she has no adequate remedy, and the other party would reap an unearned benefit if the statute of frauds were applied. ● The part performance must itself constitute persuasive evidence of the existence and terms of the oral contract.

Restatement – Section 139 ● A promise which promisor should expect to induce reliance upon it is enforceable notwithstanding the SOF “if injustice can be avoided only by enforcement of the promise.” ● The remedy granted for breach is to be limited as justice requirement. ● Is the Restatement stating what the law is or recommending what it should be? ● Is the SOF being evaded by partial performance.

Uniform Commercial Code (2-201) ● A contract for sale of goods of USD 500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for

sale has been made between the parties and signed by a party against whom enforcement is sought or his agent or broker.’ ● Between merchants, if confirmatory of transactions and bind the seller, and other merchant has reason to know of its contents, failure to object within 10 days binds merchant who received it.

Bazak case ● Mast offers to sell X to Bazak – no writing. Bazak sends his own purchase orders to Mast at price agreed to; ● Bazak gets confirmations of receipt but nothing more. ● Purchase orders states “as presented by Fedoroko” who works for Mast. ● Bazak

sends

the

purchase

orders

to

Mast

and

gets

acknowledgement of receipt. ● But Mast never sends them and does not ship the goods Breach is then claimed by Bazak. ● Bazak sues Mast. ● Mast claims defense under Statute of Frauds. ● Held, there is a deal. ● Purchase orders sent by sellers were held to be sufficient. ● The purchase orders specified quantities, description of goods, price per unit and payment terms.

● Writing sufficient so long as they afford a basis for believing that they reflect a real transaction between parties. ● Since Bazak did not object within ten days, Mast is bound.

Advertisement case ● Sale of an expensive care but due to a typo the price is USD 12,000 less than intended. ● The seller claims that the ad does not satisfy the Statute of Frauds. ● Statute of Frauds is held to be satisfied by the advertisement. ● Any symbol executed or adopted by a party with present intention to authenticate a writing.

The Statute of Frauds in 21st Century ● Fax transmittal although it imprints name of sender is not in itself a demonstration that the sender intended to authenticate each page. ● However, email is different because signature at the bottom of the email is acknowledgment of intention to authenticate by the sender.

Contract of Indefinite Duration ● An oral contract in which parties do not specifically indicate that performance is to have a specific duration beyond one year is the functional equivalent of a contract of indefinite duration beyond one year for the purposes of the statute of frauds. ● Contract of uncertain or indefinite duration are not within Statute of Frauds no matter how likely it is that performance will take more than a year.

Examples Susan is hired to work as my research assistant for the next year starting today. But she is not obliged by our deal to work for more than a year – Statute of Frauds does not apply. However, is Samantha is hired to work as a clerk to start on Labor Day 2021 – this contract will be covered.

Duration of Contract ● If the judge insists that Samantha work for him for him for two years – that contract will be covered. ● It would also apply if she works for one day and quits. ● Where a party contracts to work for another for the term of 2 years, for which he is to receive USD 100 or USD 50 a year, and quits the service at the end of 6 months, the contract, not having been

reduced to writing, is within the Statute of Frauds, and an action cannot be maintained for nonperformance. ● In this action upon an oral promise by the defendants to pay the salary of a third party for two succeeding years in monthly installments, judgment for plaintiff is reversed and the complaint is dismissed. ● Since neither the plaintiff nor the third party for whose benefit the contract was made could have compelled the payment of any installment before the day it became due, the agreement was clearly executory. ● It was not to be performed within a year from him promising therefore. ● Since it was oral, it was void under the Statute of Frauds. Illogic of the Statute of Frauds ● If to consider question when things are fresh in the mind – Oral contract that can be performed in one year is not covered even though the lawsuit is brought six years from now. ● However, oral contract that cannot be performed in one year is covered if lawsuit is brought the day after it is broken.

Klewin case ● Conn SOF: Not to be performed within one year from the making thereof. ● There was no time specified in the oral agreement when the work is to be finished. ● The contract is started in March 1987 and the contractor finished first part of the project in October, 1987. ● Owner was dissatisfied with the work and hired a new contractor in March, 1988. ● First contractor argues that the new contractor should not have been hired. ● Held: Statute of Frauds did not apply. ● Possibility that contract cannot be performed within one year does not render it a contract “not to be performed within one year.” ● Statute only applies when performance cannot possibly be completed within a year of express terms

Timber Cutter ● Contract to cut down all the trees that would take several years is a contract of indefinite duration and not within the statute merely because it was not likely to be completed within one year. ● A contract that may take several years is a contract of infinite duration and not within the statute.

Mclerny case ● Mclerny was a hard charging salesman for a golf company. ● Mcklerny promised commission on sales for the rest of his life. ● Illinois Court held that lifetime contemplation of relationship is of a long duration and is within the Statute of Frauds. ● Hence, Courts never agree on this subject. Restatement - Section 30 ● Statute of Frauds only applies to contracts which cannot be performed within one year. ● Does not turn on actual events, or expectations of probabilities. Contracts of uncertain duration are excluded.

Subsequent Developments ● Conn and NY still hold that mere expectation or possibility that contract will not be performed within a year does not invoke Statute of Frauds. ● Illinois – still applies the one year rule to a contract that contemplates a performance that is indefinite in duration, including one for life.

Crabtree Case ● What is a writing? Even payroll cards are sufficient. ● No need for all of it to be in one document if there is a reference in each of them of the same subject matter. ● Held – writing required need not be in a single document. ● There is no universal Statute of Frauds in the US, but there are ones which comes from various states. ● Originated from theories of memory. Rashomon ● It tells the story of a couple which is travelling through a forest and meets a robber. ● The movie is all about how all three of the people involved remember what happened that day differently. ● (what was the point of this analogy?) Variation among the states English provenance – “to prevent frauds” – documents should be in writing. States that adopted the English model.

Kinds of Transactions dealt by Statute of Frauds To answer for debts of descendent. Surety – to answer for debts of another. Marriage as consideration. For the sale of interest in land. Not to be performed within one year of the making of the contract.

UCC 2A-201 Sale of goods that exceed 500 USD or lease of goods where total payments are more than USD 1000.

Fundamental Requirements There must be a writing that; Evidences the existence of a contract and its essential terms; And is signed by the parties bound.

Land Transactions Contract for the sale of an interest in land. Mortgages, leases and purchase agreements.

Dirt Cheap ● A contract under which one party would excavate the land and pay half the market value of soil it collected. ● The deal was to excavate the land and build something. Easement to enter upon the land granted but neither signed the contract.

● When owner changed his mind, the excavator sued. ● Held - earth and gravel are part of soil and hence fall within the Statute of Frauds. ● Hence – any contract that deals with land is subject to the Statute of Frauds. ● Contracts not to be performed in one year from the date of contract. ● Universally it is stated this way – though this is poor phrasing. ● A contract to work starting more than a year from today is covered. ● However, a contract to work everyday for the next year is not....