Contract Writings and Interpretations CHAPTER 12: STATUTE OF FRAUDS West Legal Studies. Chapter 13 3 Components of Illegality. Bargain is illegal if its performance is criminal, tortious, or otherwise opposed to public policy. Both subject matter and realization of its objectives must be permissible under both state and federal statutes. REQUIREMENTS OF LEGALITY OF SUBJECT MATTER AND PROPER FORM West Legal Studies. Chapter 13 4 STATUTE OF FRAUDS Also known as Title 33, statute of frauds (n. law) in every state which requires that certain documents be in writing, such as real property titles and transfers (conveyances), leases for more than a year, wills and some types of contracts. The original statute was enacted in England in 1677 to prevent fraudulent title claims. California CIVIL CODE SECTION bin/displaycode?section=civ&group= &file= West Legal Studies. Chapter 13 5 Chapter 13 6 A Bakersfield couple is suing their own son for taking their lottery winnings. Etta May Urquhart says she bought the Mega Millions lottery ticket that turned out to be worth $51 million, but her son took control of the loot. A lawsuit filed in Kern County Superior Court claims Ronnie Orender has bought ten cars, four homes and put millions of dollars into bank accounts that Etta May and her husband can't touch. Etta May says when she redeemed the winning ticket she was too emotional to sign the back, so she had her son sign it instead. Now, she says, he won't let them touch the dough. KMJ 5/9/12 DOES YOUR SIGNATURE COUNT? West Legal Studies. Chapter 13 7 STATUTE OF FRAUDS Once a contract is entered into, it is now subject to the Statute of Frauds. Should there be a dispute arising from the agreement, the Statute of Frauds is used as a safeguard of protection for both the buyer and seller. The Statute however can only be enacted through a written form of contract. West Legal Studies. Chapter 13 8 REQUIREMENTS OF LEGALITY OF SUBJECT MATTER AND PROPER FORM Subject matter and purpose of the contract must be legal at the time the contract is entered into to be valid. If not contract is void and unenforceable. Legality is under the Statute of Frauds. West Legal Studies. Chapter 13 9 THE REQUIREMENT OF REALITY OF CONSENT Law has to ascertain whether consent given by parties is real or whether the facts differ from those to which the parties have agreed. Law requires reality of consent as a prerequisite to form a contract. Sometimes, Inaction IS Action or to put it another way, Sometimes, doing nothing is in fact, doing something! West Legal Studies. Chapter Elements of Fraud Hallmark Card, 2008 West Legal Studies. Chapter FRAUD Deliberate misrepresentation of a material fact with the intent to induce another person to enter into a contract that will be injurious to that person. West Legal Studies. Chapter FRAUD Elements of Fraud. Misrepresentation of a fact. Fraud by concealment Intent to deceive. Plaintiff relied on the deception. Injury or detriment. Silence as misrepresentation West Legal Studies. Chapter FRAUD Silence Mere silence is not fraud. Fraud necessitates some sort of overt communication. Cannot be liable for fraud unless said or done something. West Legal Studies. Chapter Not saying anything and allowing others to rely on fraudulent information is committing fraud! htm Or in writing. West Legal Studies. Chapter Identify the type fraud: Geraldine wants to sell her house and tells a potential buyer that the foundation is in excellent condition. In fact, a contractor had told her it needed $3,000 worth of repair. Geraldine wants to sell her house and tells a potential buyer that the foundation is in excellent condition. In fact, a contractor had told her it needed $3,000 worth of repair. Chap. 11 QuickQuizQuickQuiz West Legal Studies. Chapter Identify the type fraud: Geraldine wants to sell her house and tells a potential buyer that the foundation is in excellent condition. In fact, a contractor had told her it needed $3,000 worth of repair. Fraud by concealment Geraldine wants to sell her house and tells a potential buyer that the foundation is in excellent condition. In fact, a contractor had told her it needed $3,000 worth of repair. Fraud by concealment Chap. 11 QuickQuizQuickQuiz West Legal Studies. Chapter Identify the type fraud: Geraldine knows a dangerous gas leak is in the house, but doesnt repair it nor mentions it to the prospective buyer. Geraldine knows a dangerous gas leak is in the house, but doesnt repair it nor mentions it to the prospective buyer. Chap. 11 QuickQuizQuickQuiz West Legal Studies. Chapter Identify the type fraud: Geraldine knows a dangerous gas leak is in the house, but doesnt repair it nor mentions it to the prospective buyer. Silence as misrepresentation Geraldine knows a dangerous gas leak is in the house, but doesnt repair it nor mentions it to the prospective buyer. Silence as misrepresentation Chap. 11 QuickQuizQuickQuiz West Legal Studies. Chapter Identify the type fraud: Geraldine knows a dangerous gas leak is in the house, but doesnt repair it nor mentions it to the prospective buyer. Silence as misrepresentation Geraldine knows a dangerous gas leak is in the house, but doesnt repair it nor mentions it to the prospective buyer. Silence as misrepresentation Chap. 11 QuickQuizQuickQuiz West Legal Studies. Chapter UNINTENTIONAL MISREPRESENTATION Lacks the element of scienter and intent to deceive. West Legal Studies. Chapter INTENTIONAL MISREPRESENTATION Element of scienter and intent to deceive. Deliberate acts of deception on the part of one party, or both parties. Bad faith Contract signed or rendered in bad faith West Legal Studies. Chapter MISTAKE Occurs when the parties are wrong about the existence or absence of a past or present fact that is material to their transaction. Parties must be wrong about material facts. Legal mistake not synonymous with ignorance, inability or inaccurate judgements relating to value or quality. West Legal Studies. Chapter MISTAKE Unilateral Mistake. Only one party is mistaken about a material fact. Bilateral Mistake. Both parties are in error about the essence of the agreement. Reformation. Rewrite the contract to reflect the parties actual intentions. West Legal Studies. Chapter DURESS Other party has forced one into the contract against ones will. Coercion must be extreme that the victim has lost all ability to assent freely and voluntarily to the transaction. Evidence of physical threats. Threats that cause intense mental anguish. West Legal Studies. Chapter UNDUE INFLUENCE Use of relationship of trust and confidence to extract contractual advantages. Use of position or status over another individual to create a desired response, result or outcome. INTERPRETATION OF THE CONTRACT AND THE RIGHTS AND OBLIGATIONS OF PERSONS West Legal Studies. CONTRACTLAW CONTRACT (Written Verbal Implied Assumed) RESPONSIBILITIES OF ALL PARTIES RISK REQUIREMENTS AND ENFORCEMENT When language of the agreement is unclear, interpretation is used to determine the meaning of words and other manifestations of intent that the parties used. Words do not exist in a vacuum! Chapter 14, 365 JUDICIAL INTERPRETATION West Legal Studies. Chapter Justice Holmes A word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used West Legal Studies. JUDICIAL INTERPRETATION Courts must interpret what the contract really says. Interpretation is used to determine the meaning of the words and other manifestations of intent that the parties used. Courts consider intentions of parties through a frame of reference known as reasonable person. West Legal Studies. JUDICIAL INTERPRETATION Standards: Reasonable Person who was aware of all operative uses and who was acquainted with the circumstances involved would attach to the agreement. Limited usage: refers to the way words are interpreted in a specific locale. West Legal Studies. JUDICIAL INTERPRETATION Rules of Interpretation. Courts attempt to enforce the intentions of the contracting parties. Circumstances surrounding a transaction should be taken into account. Courts examine the contract as a whole in determining the intentions. Ordinary and technical words will be given ordinary or technical meaning, unless circumstances indicate otherwise. West Legal Studies. JUDICIAL INTERPRETATION Conduct and Usage of Trade. Course of conduct or the conduct of the parties and usage of trade involved in the agreement will also influence interpretation. Conduct in this case meaning HOW HAS THE COMPANY CONDUCTED THEIR BUSINESS IN THE PAST? WHAT METHODS HAVE BEEN USED, AND IS THEIR AGREEMENT OUTSIDE OR ALTERNATE TO THE WAY THEY HAVE CONDUCTED BUSINESS IN THE PAST? West Legal Studies. UCC Section (1) Rules for Interpretation (1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement. JUDICIAL QUESTIONING Testing the Water A Practical Example West Legal Studies. Chapter Testing the Water Smell Taste Visual Hearing Touch West Legal Studies. Chapter Physical Location of Illegal Zoning Operation Location of Illegal operation West Legal Studies. Chapter Water tested just for volatile Organic Compound s only. West Legal Studies. Chapter Central Hudson Gas & Electric Corporation v. Publ. Serv. Commn test Commercial Speech Is it Lawful? Is it truthful? If yes, then proceed, (if no, then it Is not a free speech issue.) YES on both sides, proceed Is the restriction substantial? Considerable in importance? If no, then no harm is done, if yes, then proceed 1. Does the regulation advance government interest? If no, then rescind or amend. If yes, then proceed 2. Is the regulation more extensive than necessary? Too oppressive? Yes? Then amend. No? leave alone. Used in the Cochran v. Veneman case F2005 West Legal Studies. Chapter GOT MILK? Cochran v. Veneman Hollands BA 18 Mock Trial DECEMBER 7 TH FCC LAW LIBRARY (ON CAMPUS IN THE LIBRARY) 11:00 AM 12:15 PM Admission: Free 7 PRONG TESTS 64 CASES West Legal Studies. To characterize a situation involving judicial interpretation, one should answer the following questions: 1. Do the parties claim competing interpretations? 2. Can general usage resolve the conflict? 3. Can limited usage resolved the conflict? JUDICIAL QUESTIONING West Legal Studies. 4. Which rules of interpretation should the court employ? 5. How should the court resolve any conflicts within the rules of interpretation? 6. Is there any conduct of the parties or any trade usage that should be considered by the courts in interpreting the contract? JUDICIAL QUESTIONING RULES OF INTEGRATION West Legal Studies. THE PAROL EVIDENCE RULE Total Integration. Contracts representing the parties final and complete statement of their agreement. Partial Integration. Contract that is intended to be the final statement but is incomplete. West Legal Studies. THE PAROL EVIDENCE RULE Parties have signed a complete, written contract, oral agreements made prior to or at the same time as the writing are not admissible. An important part of substantive law. Substantive law: portion of the law that regulates rights, in contrast to law that grants remedies or enforces rights. West Legal Studies. THE PAROL EVIDENCE RULE Rules of Integration. Face-of-instrument test, courts examine the four corners of the writing to determine if parties intended for document to be integrated. All relevant-evidence test, courts review the document and extrinsic evidence to determine if parties intended integration. Integration or merger clause, parties declare that the writing is the full and final expression of all the terms in the agreement. West Legal Studies. Voyeurism Tort of Privacy, Chapter 13 50 West Legal Studies. Websites to View Preservation of Consumers Claims and Defenses-16 C.F.R. 433 Preservation of Consumers Claims and Defenses-16 C.F.R. 433 Uniform Commercial Code The American Law Institute