Contracts II Outline
I. Statute of Frauds: UNENFORCEABLITITY.Must be specifically pleaded as an Affirmative Defense to enforcement or it is waived. S/F renders the contract unenforceable at the option of the party to be charged.Certain agreements must be evidenced by writing signed by the parties sought to be bound.
a. Agreements Covered
1) Executor or Administrator Promises Personally to pay Estate Debts: a promise by an executor or administrator to pay the estate’s debts out of his own funds must be in writing.
2) Suretyship Promises: Promises to pay the debt of another: Must be a collateral promise, main purpose must not be pecuniary interest of promisor
3) Promises in consideration of marriage
4) Interest in land
5) Performance not w/in one year: A promise that by its terms CANNOT be performed w/in a year is subject to S/F; the effective date runs from the date of the agreement and not from the date of the performance. (period btwn making the contract and end or perf.)
Fully performing w/in a year: implicates S/F
Terminating w/in a year: NO S/F
· Possible to complete w/in a year= NO S/F
· Right to terminate w/in a year=NO S/F (majority)
· Life time contracts: NO S/F
· Something w/ a time provision greater than a yr; ie. 2 yr: S/F
6) Goods priced at $500 or more
· Requirements of the Writing: Any writing will suffice under the S/F, as long as it contains every essential term of the agreement it memorializes. Must contain: 1) Identity of the party sought to be charged, 2) identification of the contract’s subject matter, 3) terms and conditions of the agreement 4) recital of consideration (in most states) 5) signature of party to be charged or his agent
· It is okay that the memorandum denies the existence of a contract, and that the subject matter is different/isn’t for that purpose, looking for something w/ sufficient detail to convince a court that a contract is not a sham
· Flexible concerning timing can be signed before or after the deal
· Several writings brought together is fine for sufficient memorandum
· Difference btwn. A written contract and a written memorial sufficient to estab. The existence of a verbal contract only the latter is required.
· Symbols, initials are fine for your signature
· Must be signed by the party getting charged (sued)
· If memorandum is lost or destroyed no big deal for S/F, hard to prove-evidentiary problem
· Parole evidence cannot be used to estab. Sufficient memorial
· Restatement 144; Interference w/an unenforceable contract may still be tortuous
· Evidence offered to establish that the contract as a whole was subject to a cond. precedent
· Writing Doesn’t have to be delivered to anybody
· Can’t use parol evidence to establish sufficient memorial-would elim S/F
· Revised Article 2 (2-201)- is not the law and probably will never be the law: how it will change S/F change the word “writing”—to “record—so email/ electronic” is fine, and raise threshold limit to 5K
· Part Performance Exception: following an oral contract, the parties may begin performance, which may provide reliable evidence that a contract was made. Courts usually require a very clear showing that the conduct does in fact refer to and demonstrate the existence of a contract. Also requires some degree of prejudice to have been suffered in reliance on the agreement by the party seeking enforcement.
· Restatement 129 Action in Reliance; Specific Performance- a contract for an interest in land may be enforced even w/ failure to comply w/S/F, if there has been reasonable reliance (useable only for an interest in land/and only where remedy sought is specific performance)
· Restatement Second 139 Enforcement by Virtue of Action in Reliance (Promissory Estoppel Plus) More stringent standard (Definite/substantial forebearance): (1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise and which does induce the action or forbearance is enforceable notwithstanding the S/F if injustice can only be avoided by enforcement of the promise. Remedy for breach is to be limited as justice requires. More stringent b/c it specifically stresses the need for reliance of a substantial character, reasonableness by the promise, and foreseeability of the reliance by the promisor. Additional element:whether the promisee’s conduct in reliance or other available evidence corroborates the existence of a contract; part performance is a relevant factor on deciding whether to grant promissory estoppels relief.
· Merchant’s exception(2.201.2) recognizes one situation in which writing can be enforced against the party who did not sign it. 1) Both parties are merchants 2)within a reasonable time of the oral contract, one of the parties sends a written confirmation to the other, 3)which is signed by the sender and otherwise satisfies the S/F against the sender 4)the recipient has reason to kno
valuate contextual evidence related to meaning of language
Greatest Weight to: actual words, contract as a whole-context
· Express terms of the parties (1): (Spoken or written)ordinary meaning is always the primary indicator of intent
· Course of Performance(2)(After) their conduct in performing the contract after it was formed. Must be pertinent to the meaning of the controvercial term. Performed w/o a protest or reservation of rights,
· Course of Dealing(3)(Before) their conduct in prior comparable transaction w/eachother
· Trade usage(4): the customs and usages of the market in which they are dealing w/ each other. i.e. particular market, specialized trade or industry. Modern approach is more flexible: UCC test: whether usage is currently observed by the great majority of decent dealers. 1) must define the trade or maket w/ which the transaction is associated, both parties are sufficiently connected to the trade to make the usage fairly attributable to the contract (Nanakuli: whether the party reasonably should have know the usage to apply);2)pertinent to the disputed term 3) usage actually exists 4)not be inconsistent w/ the express terms of the agreement.
· Gap Fillers that supply General Obligations (Lucy): Best Efforts (reasonable efforts):when a contract doesn’t clearly specify a level of performance but it is clear that the parties’ purpose can only be achieved if the obligor puts some energy and dedication into the performance, the law implies an obligation to make best efforts. Obligation of good faith and fair dealing.
· Good faith, perform the contract reasonably is a general/mandatory obligation not excluded by the agreement (implication in law irrespective of the intent of the parties)
Misunderstanding: Total Ambiguity; Raffles: (No basis for accepting one interp over another interp b/c both are reasonable, only conclusion is there was no contract.): Restatement 20,201: A material misunderstanding precludes contract formation when the