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SECTION 6: FORM OF CONTRACTS

The Statute of Frauds 1stipulates what types of contracts must be in writing to be enforceable. If
one of these contracts is not in writing, it is not void but the Statute of Frauds is a defense to its
enforcement.

KEY VOCABULARY:
Collateral promise:
Ancillary:
Performance:
Admissions:
Pleading:
Lease:
Whereas:
Wholesale:
Convey:
Executor:
Estate:
Debt:
Prenuptial (agreement):

WARM-UP CASES:

Mata Hari earns and loses a fortune in her lifetime. When she dies, the executor of her estate,
Banda, agrees to pay the estate’s debts with her own funds. Must the promise be in writing?

Henry VIII is courting Anne Boleyn. He proposes marriage, and Anne responds, “I’ll marry you if
you promise never to have me beheaded.” Henry responds, “Beheaded? Never, my beloved. I
promise.” On this basis Anne consents. After they’ve been married a year or so, Henry’s roving eye
causes trouble and he decides to have Anne beheaded, to get her out of the way. Can she enforce
their prenuptial agreement?

John orally agrees to sell his country place, Novona, to da Vinci. Da Vinci gives John a down
payment and moves into Novona. He begins to paint a giant mural, “The Last Supper,” on one of
the walls. Da Vinci subsequently denies the existence of the sale contract. Can John enforce the
agreement?

Steve wanted to buy a car from Dealer on credit. Steve did not yet have an adequate credit history.
Therefore, Frank, Steve's father, orally said to Dealer, "Go ahead, sell him the car on credit. If he
doesn't pay, I will." Steve signed a written contract promising to repay the purchase price. Steve
failed to pay the debt, and Dealer has sued Frank. Is Frank liable?

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A statute that in order to prevent fraud and perjury, requires certain contracts to be in writing and signed by
the parties
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SUMMARY:

A. CONTRACTS INVOLVING INTERESTS IN LAND

Land includes all objects permanently attached, such as trees. Contracts for transfer of
interests in land (such as leases) must be in writing.

B. THE ONE-YEAR RULE

1. Performance Objectively Impossible Must Be in Writing
A contract must be in writing if performance is objectively impossible within a year of
the date of the contract's formation.
2. Possibility of Performance Need Not Be in Writing
A contract need not be in writing if performance within one year is possible even if it is
improbable, unlikely, or takes longer.
CASES:
Heathcliff orally agrees to support Catherine, the mother of his illegitimate child, for the rest of her
life. Does the contract violate the Statute of Frauds, since its performance may take longer than a
year?

The Ramm Beau Weaponry Company hires Einstein as its research director. The term of the
employment contract is five years, even though Einstein is terminally ill when the contract is
created, and not expected to live more than nine months. Must the contract be in writing to be
enforceable?

C. COLLATERAL PROMISES
1. What Collateral Promises Must Be in Writing
A promise ancillary2 to a principal transaction and made by a third party to assume the
debts or obligations of the primary party (only if the primary party does not perform).
2. Exception
An oral promise to answer for the debt of another is enforceable if the guarantor3's main
purpose is to secure a personal benefit.

D. PROMISES MADE IN CONSIDERATION OF MARRIAGE

Prenuptial4 agreements must be in writing to be enforceable.

E. CONTRACTS FOR SALES OF GOODS

The Uniform Commercial Code 5(UCC) requires a writing for a sale of goods priced at $500 or
more. The Statute of Frauds requires a writing for the sale of intangible goods with a value
(sought in court) greater than $5,000.

CASES:
Kamp E-Kwipment Inc. agrees to sell fifteen pairs of hip boots to the Our Lady of 115 th Street
Convent for its annual retreat. The contract price is $700 (the merchandise has a wholesale price of
$120). Must the contract be in writing to be enforceable?

Lassie tires of his career in films and TV, and decides he’d rather be an author. He scouts the local
bookstore for potential ideas for a book, paying particular attention to the books on decorating. He
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Subordinate
3
One who makes a guaranty or gives security for a debt
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Before marriage
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A uniform law, adopted in whole or in part by most states, that governs commercial transactions
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scans titles like “Country Style,” “Dutch Modern Style,” and “French Provincial Style.” This gives
Lassie an idea: He’ll take advantage of his own expertise and write a book called “Doggie Style.”
He orally agrees to surrender all of his royalties to his friend Rin-Tin-Tin in return for $4,000. The
agreement isn’t in writing. “Doggie Style is a big success, earning over $200,000 in royalties. When
Rin-Tin-Tin offers his $4,000 as his part of the bargain, Lassie backs out. Can Rin-Tin-Tin enforce
the contract?

F. EXCEPTIONS TO THE STATUTE OF FRAUDS

1. Partial Performance
a. Contracts for the Transfer of Interests in Land
If a buyer pays part of the price, takes possession, and makes permanent
improvements and the parties cannot be returned to their pre-contract status quo, a
court may grant specific performance.
b. Contracts Covered by the UCC
Under the UCC, an oral contract is enforceable to the extent that a seller accepts
payment or a buyer accepts delivery of the goods.
2. Admissions6
In some states, if a party admits in pleadings7, testimony, or in court that a contract was
made, the contract will be enforceable.
3. Promissory Estoppel
An oral contract may be enforced if (1) a promisor makes a promise on which the
promisee justifiably relies to his or her detriment, (2) the reliance was foreseeable8 to the
promisor, and (3) injustice can be avoided only by enforcing the promise.
4. Special Exceptions under the UCC
Oral contracts that may be enforceable under the UCC include those for customized9
goods and those between merchants that have been confirmed in writing.

CASES:

O’Hara orally agrees to sell Butler her estate, Tara, if Butler promises to pay her $2,000
annually for the next twenty years. Butler moves into possession of Tara, makes improvements
on it, has his magazine subscriptions sent there, and pays the $2,000 every year for three years.
If O’Hara now wants to evict Butler so she can sell Tara to Wilkes, can Butler successfully
resist?

Minnie Mouse decides her husband, Mickey, is a rat. She leaves him and falls for his friend,
Goofy. She and Goofy decide to get married. The Etty-Kette Paper Goods Companies agrees to
make 350 doilies that say “Minnie and Goofy “TQM” for their wedding. The contract price is
$675. Once Etty-Kette has begun manufacture, must the agreement be in writing to be
enforceable?

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A voluntary acknowledgement of the existance of facts
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The document containing the factual allegations that each party is required to commuicate to the opponent
before the trial
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predictable
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Made to order
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Paula orally agrees with Next Corporation to work in New York City for Next for two years.
Paula moves her family to New York and begins work. Three months later, Paula is fired10 for
no stated cause. She sues for reinstatement11 or pay. Next argues that there is no written
contract between them. What will the court say?

SYSTEM COMPARISON: How is Chilean contract law different for merchant-

merchant relations than for merchant-client ones?

THE STATUTE OF FRAUDS: SUFFICIENCY OF A WRITING

There must be at least a memo, confirmation, invoice, sales slip, check, fax, or several
documents stapled together or in the same envelope that include:

A. SIGNATURE OF THE PARTY TO BE CHARGED

The writing must be signed (initialed) by the party who refuses to perform. The signature
can be anywhere in the writing.

B. ESSENTIAL TERMS
1. Contracts Covered by the UCC
The writing must include a quantity term. Other terms need not be stated exactly, if
they adequately reflect the parties' intentions.
2. Other Contracts
The writing must name the parties, subject matter, consideration, and quantity. In
some states, a sale of land must include the price and a description of the property.

SYSTEM COMPARISON: What contracts must be in writing in Chile?

CASES:

1. GamesCo orders $800 worth of game pieces from Midstate Plastic, Inc. Midstate delivers,
and GamesCo pays for, $450 worth. GamesCo then says it wants no more pieces from
Midstate. GamesCo and Midstate have never dealt with each other before and have nothing
in writing. Can Midstate enforce a deal for $350 more?
2. Amanda thought that her friend Barbara would enjoy reading the new nonfiction bestseller,
"The Way to a Man's Heart is Through His Nose." Amanda therefore called Bookstore and
said, "Send 'The Way to a Man's Heart...' to Barbara. If she doesn't pay for it, I will." The
book cost $29.95. Bookstore sent the book to Barbara, Barbara refused to pay for it (she
instead held it for Bookstore to pick up), Amanda refused to pay either, and Bookstore sued
Amanda for breach. May Bookstore recover?
3. Contractor was building a house for Owner on Owner's land. Contractor had fallen behind
on the work, and every day of delay cost Owner $1,000 in indirect damages (e.g., costs of
living elsewhere). Contractor informed Owner that Contractor needed a special pneumatic
drill to continue with the work. The drill cost $400. Contractor went to his local building
supply store, Emporium, and attempted to buy the drill on credit. Emporium refused unless
Owner would guarantee payment for the bill. Owner orally said to Emporium, "Yes, if you
sell the drill to Contractor, I'll be responsible if Contractor does not pay the bill." Contractor
did not pay the bill, and Emporium sued Owner. Is Owner liable?
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Obligated to leave a job
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To return to a previous position
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4. Buyer wanted to buy Blackacre from Seller. They entered into an oral option contract, by
which Buyer paid Seller $10,000, and in return Seller agreed that Buyer could acquire
Blackacre for $90,000 (plus the $10,000 paid for the option amount) at any time during the
next six months. Within five months, Buyer tendered the $90,000, but Seller refused to
accept it or to convey Blackacre. By now, the market value of the land is $130,000. May
Buyer recover damages for breach of contract (putting aside whether Buyer may recover his
option payment in an off-the-contract suit)?
5. Buyer and Seller orally agreed that Seller would convey Blackacre to Buyer on July 1, in
return for Buyer's promise to pay $100,000 on August 1. Seller (stupidly) made the July 1
conveyance12. Buyer refused to pay the money on August 1. May Seller bring a breach of
contract action and recover the $100,000 August 1 payment?
6. Seller and Buyer orally agreed that Buyer would pay Seller $10,000 on July 1, and that on
August 1, at a formal closing, Seller would convey Blackacre to Buyer in return for an
additional $90,000. Buyer made the $10,000 July 1 payment. Seller declined to convey
Blackacre on August 1, even though Buyer tendered the $90,000. May Buyer obtain a
decree for specific performance, ordering Seller to convey to Buyer in return for $90,000?
7. Studio, a movie studio, orally contracted on July 1, 1990, with Star for Star to perform in a
movie being made by Studio. Shooting13 was scheduled to begin on June 1, 1991, and was
certain to take between four and six months. In March, 1991, Star notified Studio that he
would not appear in the movie. If Studio sues Star for breach of contract, will it be able to
recover?
8. Boss and Employee orally agreed that Employee would work for Boss for the rest of
Employee's life. Boss fired Employee after two years on the job. May Employee recover
for breach of contract?
9. Boss and Employee orally agreed that Employee would work for Boss for five years. Their
oral agreement also provided that either party could terminate the arrangement on 30 days
notice at any time. After two years on the job, Employee was fired by Boss without any
advance notice. May Employee recover for breach?
10. Studio, a movie studio, orally agreed with Star that Star would perform in a movie to be
made by Studio. The agreement was made on July 1, 1990, and provided that on June 1,
1991 (before the start of shooting), Star's entire fee of $1 million would be paid. The
contract also provided that Star would be on location for 90 shooting days, beginning July
1, 1991. On June 1, 1991, Studio made the $1 million payment. On July 1, Star refused to
show up for work. Studio has sued Star for breach of contract, and demonstrates that the
movie probably would have made profits, in excess of $2 million (whereas with the
substitute actor that Studio was able to procure14, the movie lost money). May Studio
recover $2 million from Star as damages for breach of contract?
11. Consumer visited a used-car lot operated by Dealer. Consumer and Dealer orally agreed
that Consumer would buy a particular 1977 Ford Fiesta at a price of $1,500, with the actual
purchase to take place within one week. Three days after this agreement, Dealer turned
down a higher offer from someone else in reliance on the agreement. Consumer never
came up with the money and therefore never consummated the purchase. May Dealer
recover from Consumer for breach of contract?
12. Shopper and Jeweler (the owner of a jewelry store) orally agreed that Shopper would buy a
particular antique gold ring for $399. The parties agreed that Shopper would return the next
week with the purchase price, and that they would then consummate the sale. The next day,
Jeweler received an offer of $600 for the ring from another prospective purchaser, Buyer.

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The transfer of an interest in real property by means of an instrument such as a deed
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Filming
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Obtain
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Jeweler gave into temptation and sold the ring to Buyer for this amount. Shopper has sued
Jeweler for breach of contract. May Shopper recover?
13. Customer orally ordered 2,000 sheets of customized stationery to be printed for Customer
by Printer. The parties agreed that the price would be $900. Printer set the type for the
stationery and then made a "plate" (a metal representation of the type, which is used on the
printing press and cannot be used for any other printing job). He was about to put the plate
on the press when Customer called and canceled the order. May Printer recover from
Customer for breach of contract?
14. On July 1, Buyer telephoned Seller and ordered 1,000 widgets from Seller at a price of $6
per widget. The parties agreed that shipment would be made on July 15. No writing was
ever signed or exchanged between the parties. On July 13, before Seller had shipped the
goods, Buyer called up again and said, "Cancel any order," Seller sued Buyer for breach of
contract. Buyer raised a Statute of Frauds defense. At trial, Seller's lawyer asked Buyer on
cross-examination, "On July 13, did you cancel an order for 1,000 widgets you had made
on July 1?" Buyer responded, "No. I did place an order on July 1, but it was only for 100
widgets, not 1,000. Anyway, my understanding is that all agreements for the sale of goods
over $500 are not enforceable except by a signed writing." The trial judge has concluded
that Buyer is lying, and that Buyer actually ordered 1,000 widgets on July 1. May Seller
recover any damages for breach of contract from Buyer? If so, based on what quantity of
widgets?
15. On November 1, Toy Store ordered (by telephone) 10 Wiz Bang home entertainment
centers from Distributor, for sale during the Christmas season. The wholesale price to Toy
Store was $80 per unit. The goods arrived on November 5. Toy Store put them in the
basement, intending to put them up for display but never getting around to doing so. No
writing was exchanged between the parties. On December 27, Toy Store discovered the
goods in the basement and sent them back to Distributor with a note saying, "We never
ordered these." Distributor has sued Toy Store for breach of contract. May Distributor
recover?
16. Owner and Buyer orally agreed that Buyer would buy Blackacre from Owner at a total
price of $100,000. Buyer made a $10,000 down payment15. Owner wrote out and signed
the following document: "Received from Buyer, $10,000 as down payment on Blackacre.
Balance to be paid when deed and proof of marketable title are presented to Buyer. [Signed,
Owner]" Owner then refused to consummate the transaction, and Buyer has sued for breach
of contract. Owner raises the Statute of Frauds as a defense. May Buyer recover on the
contract?
17. Toy Store orally ordered 100 Onion Patch dolls from Distributor, at a price of $15 per doll.
The only writing exchanged between the parties was a letter marked "Confirmation" sent by
Toy Store to Distributor, which said, "This confirms our order for 50 Onion Patch dolls."
This letter was received by Distributor only after Distributor had sent 100 dolls. Distributor
billed Toy Store for all 100 dolls sent. Toy Store sent back the 100 dolls, saying, "We
never ordered these." Assume that Distributor can get all the Onion Patch dolls it has
customer orders for, and that it makes a profit of $2 per doll. May Distributor recover on
the contract against Toy Store, and if so, how much?
18. Same basic fact pattern as prior question. Now, however, assume that Toy Store never sent
any writing to Distributor. However, Distributor sent Toy Store a document marked
"Confirmation," which said, "This confirms your order of 100 Onion Patch dolls from us at
a price of $15 per doll." (The terms stated were the ones actually agreed to between the
parties orally.) Toy Store received this confirmation on November 6, and received the dolls
on November 10. On November 18, Toy Store orally asserted that it had never ordered the

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The portion of the purchase price paid in cash (or its equivalent) at the time the sale agreement is executed
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dolls, and sent them back to Distributor. If Distributor sues for lost profits on the dolls,
may it recover?
19. On July 1, 1990, Salesman and Company orally agreed that Salesman would work for
Company for six months at a stated salary and commission. Both parties signed a
memorandum accurately setting out this understanding. On August 1, 1990, the two parties
orally agreed to extend the contract (keeping all of its other terms the same) until August
30, 1991. On January 1, 1991, Company discharged Salesman, noting that their contract
was over, according to the terms of the original written agreement. Assume that Salesman
has not relied in any material way on the oral extension of the contract. May Salesman
recover damages for breach of contract from Company?
20. Buyer and Seller agreed in writing that Buyer would buy Blackacre from Seller for
$100,000, closing to occur one week later, on July 7. The written document also required
Seller to show Buyer written proof of marketable title 16no later than July 5. On July 3,
Seller telephoned Buyer and said, "I can't get proof of marketable title any earlier than July
12. Can I give it to you then, and we'll close on July 14?" Buyer said, "O.K." On July 5
(before Seller had behaved any differently in light of the July 3 conversation), Buyer called
Seller and said, "I've changed my mind. I want to insist on the original written conditions."
Seller was unable to come up with the proof of marketable title by July 5, and Buyer has
sued for breach. Seller shows that he could and would have come up with the proof of
marketable title by July 12. May Buyer recover for breach?
21. Same basic facts as prior question. Now, however, assume that on July 3 Seller telephoned
Buyer to say, "I could get proof of marketable title by July 5, but it would be touch easier if
I could get it by the 12th and we would then close on the 14th." Buyer orally agreed. Buyer
then changed his mind, but did not inform Seller of his intent to insist on the July 5 date,
until the afternoon of July 4. By then, it was too late for Seller to get the proof. Had Buyer
never agreed to the postponement of the date, Seller would have been able to get the proof
of marketability by the originally-required July 5 date. When Seller was unable to come up
with the proof of marketability by July 5, Buyer cancelled the contract. May either party
recover from the other for breach? If so, which one may recover?
22. Buyer and Seller agreed in writing that Buyer would buy Blackacre from Seller for
$100,000, the closing to occur on July 7. On July 5, Seller told Buyer orally, "I don't want
to go through with it. Will you let me out of the contract?" Buyer said, "O.K." The next
day, Buyer had a change of heart, and said to Seller, "I still want to close as originally
scheduled." Seller said, "Sorry, you agreed to cancel our contract." Buyer now sues Seller
for breach. May he recover?
23. Seller and Buyer agreed that Buyer would purchase 1,000 widgets from Seller at a price of
$1 per widget. The parties both signed a memorandum listing the essential terms of the
transaction. Before the date for delivery arrived, Buyer telephoned Seller and said, "Raise
my order to 2,000 widgets." Seller shipped 2,000 widgets. Buyer, whose needs had
decreased in the meantime, took 1,000 and sent the other 1,000 back to Seller. If Seller
sues for damages based on Buyer's refusal to keep and pay for the second 1,000 widgets,
may he recover?

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Title that a reasonable buyer would accept because it appears to lack any defects