Select Page

Contracts II
Villanova University School of Law
Gordon, Ruth

Contracts Outline
I. Statute of Frauds
A. Introduction
a. Need to be in Writing: Suretyship contract; Land Contracts; Agreements Performed Not within a Year of Making
b. Documentation: SIGNATURE of the one against whom the agreement is being enforced is required. It can be a typed name, a letter head, doesn’t have to be at the end of the document.
c. 2 Examples

conneticut

california

No agreement unless in writing and signed by parties for the following cases:
§ Executor/Administrator power
§ Debt, default or miscarriage of another
§ Marriage
§ Sale of Property or property agreement
§ Not performed within one year
§ Loan exceeding $50,000
Doesn’t apply to parol agreements for hiring/leasing property for 1 year or less

Fol Following contracts invalid unless in writing
Per formed within a year
§ Debt, default, or miscarriage
§ Leasing for longer than one year
§ Broker
§ Not performed during lifetime of promisor
§ Real estate purchase and mortgage
§ Loan greater than $100,000

B. Statutory Scope
a. Suretyship Clause – Agreements to answer for another’s debt or other obligation, as surety or guarantor. Ex. co-signer
i. Novation – an agreement whereby a creditor releases the debtor and accepts in exchange the obligation of another party, ex. assignment à Doesn’t have be in writing, Statute of frauds does not apply
ii. Power Entertainment v NFL- Power brought suit alleging that NFL orally agreed to transfer a license to sell NFL collectible cards in return for Powers assuming the $800,000 debt owed to NFLP by Pro Set, licensee of NFLP.
1. Holding: DC erred in dismissing Power’s complaint based on the statue of frauds b/c Power may be able to prove through Main Purpose Doctrine.
2. Main Purpose Doctrine – removes an oral agreement to pay the debt of another from the statue of frauds “wherever the main purpose and object of the promisor is not to answer for another, but to subserve some purpose of his own.”
a. 3 Factors to Determine if Apply
1. Promisor’s intent to become liable for debt
2. Consideration for the promise
3. consideration given for the promise primarily for the promisor’s use and benefits
b. One Year Clause – K that are not to be performed (and can’t be performed) within one year from the making thereof need to be in writing. Ex. promise to work for 5 years for an employer.
i. Exception:Does not apply to an agreement that is capable of performance within a year, even if a longer period of performance is probable.
1. ex. promise to pay $250,000 in 10 years, can be paid off in 1 year
ii. Limit: One Side Performance – Contract initially within the one year clause (greater then a year) may be “taken out”, by fact that the person seeking to enforce it has completed performance
iii. Employment Agreements
1. Does not apply to an oral agreement for lifetime employment, for death may end performance within a year of its making. (completes performance)
2. Applies to employment for a period longer than a year (defeats performance)
3. Difference depends on a distinction between termination according to the terms of an agreement and termination by operation of law upon a supervening event.
C. Recording and Signing
a. Full Expression – writing must contain the essential terms of the agreement
i. Does not have to be contained in just one document, can be within multiple
ii. Document establishing relation must be signed but others can be unsigned if they refer to the same transaction
iii. If parol testimony does not convincingly connect the papers, or does not show assent to the unsigned paper à Judge decides if statute has not been satisfied
iv. Restatement §131
1. Evidenced by any writing
2. Signed on or behalf of party to be charged
3. Reasonably identifies subject matter of contract
4. Sufficient to indicate K has been made or offered by signer and other party
5. States with reasonable certainty essential terms of unperformed promises of K
b. Signature
i. Individual – any scratch suffices
ii. Corporation – stamped name, letterhead may suffice
iii. Logo – does not suffice
iv. Subscribing by fax machine or program – does not suffice
v. Sender’s name on a cover sheet might serve
vi. UCC 1-201 (39) -signed includes any symbol executed or adopted by a party within present intention to authenticate a writing
1. under the revised 1-201(37) – … to adopt or accept a writing
c. Missing docs – need to show that sufficient writing could have been produced except that it has been destroyed, or lost, or stolen
d. Electronic Records – e-sign – just because they are in electronic form, don’t want to invalidate the contract.
e. In re: Acadia Co & Irving Edlitz – Edlitz employed by Acadia, w/ arbitration agreement. Prior to its expiration, contract was orally renewed and extended 6 mths. Employment was terminated
i. Holding:By orally renewing the written agreement it was adopted as an integral part of the new arrangement, and still have binding agreement to arbitrate. The contract was modified only by an extension of the time of employment.
f. UCC 2-201 – Formal Requirements; Statute of Frauds
i. Section 1 – Sale of goods greater than $500 has to be in writing;
1. Not insufficient if it incorrectly or doesn’t states a term agreed upon if the quantity is understood (*still need to prove the contract made)
2. Signed – includes any authorization which identifies the party to be charged
a. Benya v. Stephens – a written offer that is orally accepted may constitute a sufficient memo of the contract provided the offeror is the party to be charged. (courts divided)
b. The words “as per our agreement,” “in confirmation of,” or “sold to buyer” would indicate that the parties had reached an agreement
3. Statutory overlap – falls into more than one agreement
a. An agreement is unenforceable if it is wanting in the documentation required for any class of contracts in which it lies à have to satisfy the writing requirements of each
ii. Section 2 – Merchants exception
1. Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.
a. Reasonable Time – Depends on circumstances, nature of the action and industry
b. Writing in Confirmation of a contract – messages were titled confirmation but they called the recipient to sign and return. Not inconsistent with conformation
iii. Section 3 – Contracts which don’t satisfy Section 1 but still are valid
1. Specially manufactured goods
2. Goods which payment has been made and accepted or which have been received and accepted.
3. Part Performance
4. Admission by other party
D. Ameliorating The Operation of the Statute
a. 3 Ways:
i. Part Performance of land contracts (need one)
1. pay contract price
2. take possession of property
3. make improvements
ii. Restitution – if have conferred a benefit upon another party that was not compensated.
iii. Estoppel – R§139 – foreseeable and very substantial reliance
1. (needs to be substantial since there is always reliance)
b. Johnson Farms v. McEnroe – Johnson bought ½ of McEnroe’s property for $9,000 per acre by giving him the Rychart property. Agreement had an option contract for purchase of rest by 4/1/1995. Son told him it would be extended but then sold it to someone el

by some sharp practice, misrepresentation, or mistake
c. McKinnon v Benedict – P helps D buy 80 acrs resort w/ $5,000 loan & promise to promote business in exchange for D promising not to cut trees and make no improvements “closer to his property than the present buildings” for 25 years. D repays loan 7mths later but after 4yrs of resort business not working, D invests 9,000 to add trailer park and tent camp.
i. Holding: Court did not invalidate contract but held no specific performance b/c
1. Inadequacy of Consideration – D only save $125 w/ loan and only got 1 guest;
2. Small benefit afforded to P – only spent summers there and cant see camp from view;
3. Oppressive conditions imposed upon D – sacrifice the right to make lawful & reasonable use of their property.
d. Tuckwiller v Tuckwiller – In May,Tuckewiller quit her job b/c Morrison says if she take care of her for the rest of her life she’d give her the farm. Morrison hospitalized day of appt to change will so put date & signatures of 2 ambulance attendants as witnesses. Morrison died June 14 and will was never changed from providing the farm be sold and proceeds donated to Davidson College.
i. Holding: Contract fair, not unconscionable, supported by adequate consideration
1. Sufficiency of Consideration – Tuckwiller gave up her job for unknown and uncertain duration, hard duties & not unfair to Morrison who appreciated care from plaintiff
2. Although past services cannot provide consideration for binding contract, past services and past relation of parties may properly be considered in connection with the fairness of the contract and the adequacy of consideration.
e. Intermediaries – Informational/search function – bring together buyers and sellers who would otherwise be ignorant of others needs; Risk-shifting – taking on risks of market fluctuations that would otherwise be borne by buyer or sellers
f. Black Industries, Inc. v Bush – (intermediary) Black signed 2 contracts w/ Bush for the supply of items that it had contracts to sell to 2 other companies for the to fulfill US govt contracts for defense effort in the Korean War. Bush then backs out b/c the huge profits Black was to make for simply contracting it
i. Holding: Contract not void for public policy b/cboth neither P or D had direct dealings with the US and the only affect was that the govt was the ultimate purchaser. Holding otherwise would void all contracts that allow for compensation for middlemen.
ii. Rule: 3 types of illegal contracts void against public policy: inducing public official; contract to do an illegal act; collusive bidding on a public contract
D. Over Reaching
a. Law of Equity – No advantage should be gained through gross unfairness in the process of bargaining à if the contract is the result of duress, fraud and mistake, the ordinary remedy is to allow the victim to rescind or avoid it.
i. Duress – impermissible pressure exerted by one party over another during initial bargaining or renegotiation
ii. Fraud, Misrepresentation (innocent or not)– obligation of one party to disclose information to the other in the bargaining context
iii. Non-disclosure
iv. Mistake