Select Page

Contracts II
University of Alabama School of Law
Lee, Grace

Subject: Contracts II

Professor: Grace Lee

Semester: Spring 2013

A. Do you have a Contract? (SOF)

1. SOF

A. Does SOF Apply? (MY LEGS)

1. Marriage- ex. pre-nuptial agreement- how assets divided after the dissolution of marriage

a. contracts on the consideration of marriage NOT a promise to marry

b. REAS- parties aren’t going agreeing on much when divorcing/potential for duplicity, stakes are high

2. Year- contract for services that can not be completed within a year,

a. LENGTH of the contract not matter just can’t be done in a year

i. ex. renting a room at a hotel for two nights 16 months from now, IS w/in SOF

b. REAS- ensure that L/T contracts are recorded and terms not forgotten, usually higher value contracts

i. COUNTER- just covers year b/t making and complete so still covers small value contracts like hotel

c. TREND- more leniency/against requiring contracts to be in writing

i. ex. if ANY way that can say that could done in 1 year, don’t need in writing (skipped Bull Riders)

ii. NOT indefinite length contracts if could CONCEIVABLY be done in a year

d. (Crabtree v. Arden)- unsigned offer memo for 2 year manager, signed paystubs bridge to satisfy SOF

3. Land- contract for real estate/sale of land/building OR interest in land (lease, granting use of land)

a. REAS- generally has higher stakes (unique, high value, permanent), measure of wealth in old England

4. Executor (Estate)- contract that deals with a will, the transfer of assets after someone’s death

a. REAS- 1 of the parties is dead, great potential for confusion/chance for living parties to “interpret” terms

5. Goods- contract for the sale of goods MORE THAN $500 (add together ALL of the goods on that contract)

a. REAS- when dealing w/ expensive things want have terms agreed upon & ensure by having in writing

b. if property besides cash being given, must establish the price of that property to see fits w/in SOF

c. predominance test- most courts use for hybrid transaction, are goods predominant in the transaction?

6. Suretyship- when 1 party has agreed to take on the obligations/debt of another party

a. REAS- w/ multiple parties involved, a lot of potential for people to lie

i. prevent a bogus claim of “they said they would cover this for me if I defaulted”

B. SOF Requirements

1. Requires

a. In Writing- not matte if writing intended evid contract OR was subsequent to execution, entire contract not have be written

i. Multiple documents- can be “bridged” together to satisfy the SOF, if 1 is signed (Crabtree v. Arden)

1. Majority (Crabtree) – as long REASONABLY believe ref. same trans/occur REAS- flexible, door too open on “related”

2. Minority- only consider unsigned if signed doc refers to it, REAS- formalistic, danger back out of valid contracts

ii. Unspecified Terms- can fill anything (any “material terms”) BUT the quantity

b. Signed- need ONLY be signed by party against enforcement is sought

i. HOW- “any symbol made w/ intention to authenticate writing” (UCC §1.201(37)) NOT need ink

ii. E-Signature- E-Sign act of 2000 (USC §§7001), generally allows for “electronic signatures” as valid

2. Terminology

a. If an agreement falls “within the statute” it MUST be in writing (or else void)

b. if an agreement is NOT “within the statute” then the contracts may still be valid even if not in writing

3. Affirmative formation defense- Can the contract be avoided because of problems related in formation?

a. Waivable Defense- not all oral contracts that fall w/in SOF are null

b. Contracts w/ Completed Performance are not null, no need to “undo” the transaction

4. Custom Goods Exception

a. Elements

i. Specifically manufactured for the buyer

ii. not suitable for sale to others in the ordinary course of the sellers business

iii. seller had substantially begun the products before received notice from would be buyer

6. SOF applies to contract modifications

a. even if original contract not fall w/in SOF, if modifications does, then must be signed in writing

2. SOF Exceptions

C. SOF Exception1- Part Performance

1. Elements

a. parties did in fact enter into contract (just not have to be in writing)

b. party seeking enforcement partially performed

c. performance induced by misrepresentation of the other party

i. Silence- can be misrepresentation (Sullivan v. Porter)- facts

2. Part Performance Policy

a. unjust enrichment/expectation getting paid for part perform., enforces contract even though not in writing

b. flexibility can help protect people from getting taken advantage of

c. relationship to promissory estoppel- one party relying on existence of contract to detriment

3. (Sullivan v. Porter)- must prove Part Performance Exception by clear and convincing evidence

a. Facts

i. S is manager of P’s stables and pays part of down payment and redoes farm for horse business

ii. P dangling that the lawyer was drafting up the paperwork then was misrep that they relied on

b. REAS

i. REAS- the Porters were stringing them along, does this counter the “should have known” factor of S?

ii. COUNTER- what about the consistency of the law when dealing w/ something like land? take SOF’s power?

D. SOF Exception2- Judicial Admission

1. UCC §2.201(3)(b)- if party admits “in pleading, testimony, or otherwise in court”

2. GR1- to be able to raise the SOF defense, must deny that there was a contract, if admit then can’t raise

3. GR2- once the Df has denied the contract under oath, safety valve of §2-201(3)(b) is closed (DF v. Brown)

4. REAS- if other side admits that there is a contract then no issue over confusion of existence (point of writing)

a. Efficiency- would be a waste of time and resources have trial on OR to litigate issue

enough know, not contract w/ minors (take freedom of contr)

1. still practical rule in age of internet where minors are engaged in online commerce/contracts?

d. NOT matter someone else lent minor for car or helped pick out car, who is ON THE CONTRACT matters (Bowling)

ex. (Bowling) 16 year old void contract for car after having problems and returns to dealer

2. Exception1- if item is “necessary”, still can void BUT then minor pay “reasonable price” for (could be deprec.)

a. “Necessary”- such things as are necessary for the support of/livelihood, burden on appellee, totality of circumstance

ex. car not “so vital to minor’s existence that is necessary for except” EVEN when need for work (Bowling)

b. REAS- so vendors will contract w/ minors for the basics so they’re not penalized, unable to get necessities

3. Exception2- Emancipated Minors, are considered to have the capacity to contract, CANT void after emancipation

a. Emancipated- narrow (married or military) v. broad (minor has own home or not generally supported by parents)

4. Exception3 (ish)- Misrepresentation of age- GR duty to find out age falls on the non-minor

a. Majority (Mestetzko v. Elf Motor)- age misrep. not estop for void contract but will justify tort damages against them

b. MA Approach- minors not liable for tort deceit arising from false age representation

c. Estop (Johnson v. McAdory)- enforce/can’t void, mature enough to misrep= mature enough to be obligated to contr.

5. Ratification of Minor contract as adult- can be through express assent OR silence, after taking the benefit as minor

C. Mental Incompetence (Heights v. Phillips)

1. GR (Cognitive Test)- voidable by party (NOT void) if incapable of reas. understand nature & effect at time of contract

a. Competence assumed, must be overcome by clear and convincing evidience

b. Proving/Consider- subjective mindset proven with objective evidence, consider:

1. prior and subsequent behavior to make this determination

i. generally use psychiatrists, family members observing behavior (Heights)

2. The terms of the contract

i. was it so unfair that only a crazy person would not engage in it?

3. the relationship b/t parties

i. would stranger be more likely to take advantage of them?

ii. would they have known that she was incapable from prior dealings?