Chapter 8 – Statute of Frauds

Requirement of Writing

• Most contracts are not written, but few are not enforceable without a writing.

Major Categories of Contracts within the Statute of Frauds

• Use the mnemonic device “My Legs” to remember:

Click-Wrap Agreement

• An agreement used in connection with software licenses
• Often found on the Internet as part of the installation process of software packages;
• Usually requires user to manifest assent by clicking an “ok” button on a dialog box or pop-up window

Contracts that Must be Evidenced by a Written Instrument

• Promises in anticipation of marriage
• Contracts not performed within a year
• Contracts involving land (real property)
• Contracts for sale of goods for $500 or more
• Promises to answer for the debts of another

Collateral Promise

• Promise to guarantee the debt of another, made without benefit to the party making the promise.

Review Materials for Chapter 8

• The Original Act for the Prevention of Fraud and Perjuries – England 1677
• Statute of Frauds maybe waived by admission of a written agreement. Or failure to assert it as a defense in court ; may not be raised after the contract has been performed by both parties or if one party has raised it; or when it is admitted that an agreement exists
• Even if its not enforceable, some states allow recovery based on the principle of estoppel or quasi contract
• Formal agreement or an integrated document is not necessary.
• Written evidence other than a written agreement presented by the party being charged is sufficient; writing on a napkin will suffice.
• Need not even be fully signed. Just a mere initial should suffice.
• Should state, the identity of the parties, subject matter and the terms
• Disadvantages of online contracts; better if face to face; reputation involved. Some use third party services like escrow services
• Electronic signature in online contracts
  • Electronic contracts may satisfy the requirement of statute of frauds.
• Contracts involving land – sales, leases for more than a year, mortgages and options on land, and easements
• Sale of goods for $500 or more ; UCC does not cover contracts for services such as employment
• Collateral promises – Estate and Suretyship (MYLEGS)
• An executor is not normally liable for the debts of the estate so a promise to assume debts should be in writing
• Performance bond – surety agreement that guarantees that a contract will be performed
• Payment bond – surety agreement that guarantees that the contractor will make full payment
• Maintenance bond – assures that a project will remain free of defects in workmanship or materials
• If the promise is collateral, liable only if son does not pay – collateral
• If DAD is primarily liable as a co-signer the agreement will not fall under statute of frauds
• Collateral promise – Promise to guarantee the debt of another, made without benefit to the party making the promise.
• Guarantor – Agrees to be responsible for another’s debt or performance under a contract if the other fails to pay or perform; see Surety
• Security Interests – Interest in personal property to secure performance of an obligation; evidence of indebtedness
• Default – Fail to meet obligations
• Co-Signer – One who participates jointly in borrowing
• Surety – Liable for the payment of another’s debt or the performance of another’s obligation; see Guarantor
• Executor – One who carries on the business of an estate; see Administrator
• Waived – Claims have been abandoned
• Party to be charged – Party attempting to avoid contract liability
• Ante-nuptial – Agreement in anticipation of marriage; typically involves a promise to convey property when marriage occurs or concerns division of property in the event of a divorce; see Pre-nuptial
• Pre-nuptial – Agreement in anticipation of marriage; typically involves a promise to convey property when marriage occurs or concerns division of property in the event of a divorce; see Ante-nuptial
• Negotiable Instruments – A promise or order to pay, such as a check; can be passed along like cash
• Collateral – Assets pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default
• Click Wrap Agreement – Agreement used in connection with software licenses; often found on the Internet as part of the installation process of software packages; usually requires user to manifest assent by clicking an “ok” button on a dialog box or pop-up window
• Affirmative Defense – Part of an answer to a complaint in which defendant attempts to limit or excuse liability, based on facts outside those claimed by plaintiff
• Estate – The entity for managing finances of a deceased person, or an incompetent
• Integrated Agreement – Agreement that is intended to be final and complete
• Easement – Limited right to use real property
• Administrator – One who carries on the business of an estate; see Executor