Table of Contents
I. Statute of Frauds……………………………………. 1
II. Contract Interpretation & Parole Evidence Rule………….. 7
III. Fault-Based Defenses………………………………….18
IV. No-Fault Defenses…………………………………….26
V. Consequences of Breach………………………………..30
VI. Expectation Damages…………………………………..32
VII. Alternatives to Expectation Damages…………………….33
VIII. Table of Scholars…………………………………….36
I. Statute of Frauds
A. Restatement § 110
1. Suretyship: Contract to pay for debts of another.
a. There may be different motives (altruistic vs. business decision)
b. Surety is a favorite of the law. A person who charitably agrees to take on another’s debt is receiving all of the “bad” of the transaction, and none of the good.
c. Prone to being lied about.
2. Marriage: Contract made upon consideration of marriage. (Ex. If you marry X, I’ll give you $10,000.)
3. 1 Year: Contract that cannot be fulfilled within one year of the making of the contract.
a. Restatement § 130: If contract cannot be fulfilled within one year of making contract, SOF applies UNTIL one party to the contract completes his performance, at which point SOF will not prevent enforcement of other party’s promises.
b. If there is ANY possible way that the contract could be completed in one year, the statute of frauds will not apply.
c. Lifetime contract does not implicate SOF because they could pass away within a year.
d. Only contracts that could fall under this section are those that specify a term of a specific period of time for the contract greater than one year.
e. Probably protected because stakes are higher.
4. Land: Contract for sale of an interest in land.
a. Restatement § 129: Specific enforcement of sale of land may be permitted despite failure to comply with SOF if party seeking enforcement reasonably relied upon contract to his detriment.
5. Executor: Contract of an executor or administrator of an estate to answer or a duty of a decedent.
a. Tremendous undertaking to perform.
b. Proof problem: One of the parties is deceased.
B. UCC § 2-201
1. $500: Contract for sale of goods for $500 or more (≥ $500).
C. General Principles: Scope and Application
1. SOF implicated & not met → K is unenforceable (NOT void or voidable).
2. SOF can apply to contract substitutes sometimes as well (i.e. promissory estoppel).
3. Courts are torn sometimes on SOF cases because they do not want to make an honest oral contract unenforceable.
4. Crabtree v. Elizabeth Arden Sales Corp. (1953) – Crabtree and Arden agreed that he would work for Arden as a sales manager for two years with a starting salary of $20,000, with an increase at 6 months to $25,000, and a second increase at one year to $30,000. At the meeting where this was discussed, Arden had her personal secretary write a memorandum detailing the terms (with the phrase “2 years to make good”) on a telephone order blank. This was not a contract because it was not signed, but was probably simply an effort to make a note of the discussion. A few days later, Crabtree called Arden to accept employment, Arden welcomed him, and he started work there. Upon starting, a “payroll change” card, showing the previously-agreed to salary increase schedule, was signed by Robert P. Johns (exec. VP and general manager). The 6-month increase was put in as expected. Upon the one-year mark, Crabtree requested his payroll increase to $30,000, which Ms. Arden refused to authorize. While Mr. Johns and the comptroller tried to straighten the matter out with Ms. Arden, the comptroller filled out another payroll change card noting that the increase was per contractual agreement with Ms. Arden. Court found that the memo could be combined with the signed payroll card(s) to infer a contract.
5. Restatement § 131 – How to satisfy statute of frauds.
a. Check the law of your state – “Unless additional requirements are prescribed by statute.”
b. Contract enforceable if it is…
(1) evidenced by writing
(2) signed by or on behalf of the party to be charged (Δ), which
(3) reasonably identifies the subject matter of the contract,
(4) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party AND
(5) states with reasonable certainty the essential terms of the unperformed promises in the contract
b. Law does not permit every breach of contract into tort action just because it prevents or hinders a Π from fulfilling contractual obligations.
c. Difference between unenforceable contract and no contract.
(1) No Contract – Elements of contract not met.
(2) Unenforceable Contract – Elements of contract met, but some bar to recovery.
(3) One reason for distinction is that an unenforceable contract is likely to implicate third parties.
12. Statute of Frauds and Promissory Estoppel
a. Alaska Democratic Party v. Rice (1997) – Π Kathleen Rice was orally promised a two-year position as executive director of the party by Greg Wakefield, chair-elect of Alaska Democratic Party. Π had worked for party from 1987-1991 in various capacities and then moves to Maryland to work on the Gore VP campaign. While there, Wakefield offers her the position with the Alaska Dem. Party for $36,000 per year for at least two years and $4000 in fringe benefits. Since this contract exceeds one year, it falls under the statute of frauds. She moved back to AK from MD, which constitutes reasonably foreseeable detrimental reliance. The Party then said that she couldn’t have the job and that Wakefield didn’t have authority to extend the offer. She sues under promissory estoppel doctrine. The question is whether promissory estoppels can enforce an oral contract subject to the SOF. The Court, citing the Restatement (2nd) of Contracts §139, holds that promissory estoppel allows enforcement of a promise upon which a Π reasonably relied to his/her detriment, notwithstanding the SOF. The restatement requires that the Π prove the promise’s existence by clear and compelling evidence, which the Court holds is sufficient to balance the concerns addressed by the SOF. The Court found that Rice’s decision to quit her MD job and move to AK constitutes reasonably foreseeable detrimental reliance sufficient to bring a claim of promissory estoppel.