Chapter12sections 1 3

Chapter 12 Written Contracts Business Law Mr. Whisel

SECTION 12.1 OBJECTIVES Describe the statue of frauds Discuss the consequences of failure to comply with the statue Describe what writing satisfies the statue under the common law and the UCC Explain how the signature influences enforcement of contracts. Standards Reading and Writing 1.1.11 CDEFG, 1.2.11 AB, 1.3.11 C, 1.4.11 BCD, 1.5.11 ACE, 1.6.11 ACDF, 1.7.11 AC, 1.8.11 ABC Civics and Government 5.1.12 ABCDEFHIJM, 5.2.12 ABCDEFG, 5.3.12 AB

HOT DEBATE! Anne promised her best friend, Sally, that she would pay for all Sally’s wedding expenses if Sally would pay Anne’s college tuition for a semester. Sally paid the tuition of $3,200. Time passed and the friends fell out of touch. After 12 years, Sally became engaged. When she contacted Anne about paying for the wedding, Anne said that she didn’t remember the promise. 1. Why should Anne be required to pay for the wedding? 2. Why should Anne not have to pay for the wedding?

WHAT’S YOUR VERDICT? While they were playing golf, Haka orally agreed to buy an apartment building form Simon. In a later telephone conversation, Haka promised Simon $100,000 as a down payment on the purchase price with the balance to be paid within five years. Simon promised to deliver the deed to the property at the time the down payment was made. Both parties were satisfied that all the terms had been completely negotiated. Later Haka found a better deal and told Simon he was backing out. Is Haka’s contract with Simon enforceable?

MUST ALL CONTRACTS BE IN WRITING? Certain contracts are not enforceable in court unless a signed writing proves their existence. Ex: Real Property Most contracts are enforceable even if there is no writing, or written proof. Sale of Goods (Transfer of ownership) Riding the bus Does there need to be a signed contract?

WHAT’S YOUR VERDICT? When the general manager of Special-Teas Sales Company hired Bellini as advertising manager for a five year period, the two parties discussed the terms of employment and then they shook hands. As Bellini later recalled, her beginning salary was to be $3,000 a month but it would go up annually as sales rose. At the end of the first year, she expected a pay increase of at least $500 a month, but there was no increase at all. She threatened to quit. The manager admitted that sale were up. However, he claimed that expenses had also risen and therefore profits were down. He threatened to sue Bellini for breach of contract if she left. Can the manager enforce this contract again Bellini?

WHAT IS THE STATUTE OF FRAUDS? Perjury To lie under oath to prove a contract though none existed As a result in 1677 a statute was made to require certain contracts in writing. Contracts in writing fall under the statute of frauds Some sort of writing formal or informal Contracts under the statute of frauds To buy and sell goods for a price of $500 or more To buy and sell real property Contracts that take more than 1 year to complete Promises to pay the debt or answer for a legal obligation of another person Promises to give something of value in return for a promise of marriage.

WHAT IS THE STATUTE OF FRAUDS? Executed contracts Contract that has been fully performed Executory contracts Contract that has not been fully performed Quasi-Contract When some element of an enforceable contract is missing (one persons signature)

WHAT WRITING DOES THE STATUTE REQUIRE? Multiple writings Letters, telegrams, faxed, and any other form of writing Content requirements under the common law All essential terms Names, Subject Matter, Price, Quantity, Essential Terms, and Signature Evidence of a contract Evidence that a contract was going to be held enforceable

WHAT WRITING DOES THE STATUTE REQUIRE? Content requirements under the Uniform Commercial Code Quantity and Created Contract Signature requirement UCC and single signature Signing a receipt for dinner or shopping 10 days to object to charge Form of the signature Written, stamped engraved, or printed Any mark that is intended as a signature or authentication of the writing.

SECTION END 12.1 Think About Legal Concepts Think Critically about Evidence

SECTION 12.2 OBJECTIVES Identify those contracts which are within the statute of frauds Describe exceptions where contract within the statute need not be in writing to be enforced. Standards Reading and Writing 1.1.11 CDEFG, 1.2.11 AB, 1.3.11 C, 1.4.11 BCD, 1.5.11 ACE, 1.6.11 ACDF, 1.7.11 AC, 1.8.11 ABC Civics and Government 5.1.12 ABCDEFHIJM, 5.2.12 ABCDEFG, 5.3.12 AB

WHAT’S YOUR VERDICT? Cervante and Joan were good friends. When they graduated from high school, both were 18. they planned to marry, but first they wanted to become financially secure. So they shook hands and agreed to become partners in operating a small restaurant serving Indian cuisine. “This is just the beginning,” Joan said. “til death do us part!” both said. Are they legally bound to remain partner in business until one dies?

WHAT CONTRACTS ARE WITHIN THE STATUTE OF FRAUDS? Contract for the sale of goods for $500 or more Any goods that are tangible personal property Evidence by writing Below $500 no written contract needed UCC exceptions When goods are ordered to be specially manufactured and not suitable for others When goods are ordered and paid for and the seller has accepted payment When goods have been received and accepted by the buyer When the party against whom enforcement is sought admits during legal proceeding that the oral contract was made.

WHAT CONTRACTS ARE WITHIN THE STATUTE OF FRAUDS? Contract to sell an interest in real property Land or Buildings permanently attached to land. Lease- properly signed Most States oral leases of less than a year are enforceable Exceptions to general rule, courts will enforce the oral contract if the seller has delivered the deed or if the buyer has also done all of the following: Made partial or full payment Occupied the Land Made substantial improvements to the land

WHAT CONTRACTS ARE WITHIN THE STATUTE OF FRAUDS? Contracts that require more than one year to complete Year begins when contract is signed, not when performance is to begin What’s your verdict? Agreement does not require more than one year to complete, need not be in writing Either Party could withdrawl at anytime

WHAT CONTRACTS ARE WITHIN THE STATUTE OF FRAUDS? Contract to pay a debt or to answer for the legal obligation of another person Parent Co-signing on a loan Collateral Promise (If you don’t pay, they co-signed that they will) Exception—main purpose rule Contract for which the consideration is marriage

SECTION END 12.2 Think About Legal Concepts Think Critically About Evidence

SECTION 12.3 OBJECTIVES Describe how conflicting oral and written communications are reconciled Explain how conflicts among written elements in a contract are reconciled Standards Reading and Writing 1.1.11 CDEFG, 1.2.11 AB, 1.3.11 C, 1.4.11 BCD, 1.5.11 ACE, 1.6.11 ACDF, 1.7.11 AC, 1.8.11 ABC Civics and Government 5.1.12 ABCDEFHIJM, 5.2.12 ABCDEFG, 5.3.12 AB

WHAT’S YOUR VERDICT? Highman bought a new personal computer from Advance Electronics. She signed the store’s usual contract, which contained a clause stating that it was the complete agreement between the parties. Later, Highman alleged that as part of the bargain, the salesperson orally promised that if the list price were reduced within two months, Highman would be refunded the amount of the reduction. The list price was reduced, but Advanced Electronics refused to pay the refund to Highman. Can Highman recover the refund?

WHAT IS THE PAROL EVIDENCE RULE? Consequences of applying the parol evidence rule Nothing before completion can be used Exceptions to the parol evidence rule Parol evidence is admissible: To clarify ambiguities in the written agreement If the written contract was not intended to be a complete agreement If a condition necessary to the existence of the contract never occurred If fraud, forgery, illegality, mistake, or misrepresentation occurred To show the parties reached another agreement or terminated the contract under consideration after executing the written contract To show that the contract is voidable because a party lacked contractual capacity

HOW ARE CONFLICTS IN WRITTEN TERMS INTERPRETED? Specific rules of construction Specify Specifics Analysis Parties principal objective What were they trying to complete One-Sided or Two-Sided (Courts will wisely complete) Words General Meanings Ambiguous words used the way they were intended Authors of ambiguity Usually held against parties who made the contract Implied reasonableness “ Payment in cash” is the same as “payment with check.”

SECTION END 12.3 Think About Legal Concepts Think Critically About Evidence

CHAPTER END 12 Chapter in Review

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