Chapter 10

Form of the Contract

In early England, all contracts could be oral and enforceable.

• Breach of Contract: a wrongful failure to perform one or more promises of a contract.

•  • Perjury: false statements under oath in

court (it is a crime).•  

Memorandum: written evidence of an agreement (sales slip, invoice, letter)

Act for the Prevention of Frauds & Perjuries

• Created in 1677 by English Parliament

• Became known as Statute of Frauds

Contradictory Terms

• When handwriting is on a printed contract and it contradicts the terms, the handwriting prevails.

• Discrepancy in an amount written in both words and figures ~ the written words will prevail (checks).

Ambiguous Clauses

• Ambiguous: can be understood in different ways

• Courts lean in the favor of the person who did not draft the contract.

• Executory Contract: contracts that have not been fully performed.

Contracts Must Be in Writing When...

Contracts to Pay Debts of Others

• The debtor still owes the money; the person promising to cover his or her debt does so only if the debtor fails to pay.

Contracts to Pay Debts of Deceased

• Executor is not personally responsible; all debts are paid from the estate. (Must be in writing)

Contracts Requiring More Than a Year

• The year legally begins when the contract is made, not when performance is to start.

Contracts in Consideration of Marriage

• If one person agrees to marry another person in return for a third person’s promise of money or property

• A promise to adopt a child from another marriage

Contracts Sale of Goods $500 or more

• Goods: movable items, including specially manufactured items.

Contracts to Sell Real Property

• Land and anything permanently attached to it.

• Called a Purchase and Sale Agreement

• Equitable Estoppel: a party is prevented or “estopped” from claiming the statute of frauds when the other party changes his or her position in reliance on an oral promise. (Also called past performance)

Parol Evidence Rule

Parol = Word of Mouth Evidence = anything presented as proof

at a court trial

“Evidence of oral statements made before signing a written agreement cannot be presented in court to change or add to the terms.”

Parol Evidence Rule

• Parol evidence may be used to clarify the written agreement

• Also used to show terms that may have been mistyped

• May be used to prove fraud

Best Evidence Rule

• The courts require that the original copy of a written agreement be submitted into evidence rather than any sort of copy.

• Duplicate Originals: each party receives an original version of a contract