Contracts & the Statute of Frauds

• Contracts must be in writing according to the Statute of Frauds

Statute of Frauds

• Marriage requires contracts to be made in writing when consideration for a contract is the promise to marry
• Suretyship requires a written contract to promise to pay another person's debt
• An Executor's/Administrator's Agreement requires a written contract agreeing to pay personally for a debt
• Contracts regarding Interest in Land covering mortgages, easements, leases, and sales must be written out
• Contract with a performance time longer than a year are Statute of Frauds contracts
• Contracts for goods costing more than $500 must be written according to UCC section 2-201

Statute of Frauds Writing Requirement

• The essential terms of contracts can be proven through writing
• Contracts should be signed by the party to be charged/enforced against

Exceptions to Statute of Frauds

• Promissory Estoppel is an exception to the Statute of Frauds, if the promisor expects their inducement in the contract
• Part Performance is also an exception if it's an agreement between merchants. The buyer sends confirmation
• Merchant's Memo (UCC): If goods are already in production and cannot be sold to another customer, then the oral contract is enforced
• Specially manufactured goods are an exception
• Admittance in court proceedings where a party admits to an agreement in a court document in stipulation or with testimony counts as an exception

Parol Evidence Rule

• A binding integrated agreement is a written document that is the final expression of terms
• Integrated agreements discharge prior agreements inconsistent with them
• Neither party can provide written or verbal statements altering any document

Some Exceptions to Parole Evidence Rule

• Defects in the formation of a contract such as fraud, duress, mistake, or illegality
• The parties' intent regarding ambiguous terms
• Problems with the consideration

Merger, Integration, or Entire Agreement Clause

• This agreement contains exhibits, offer letters and company materials that don't conflict
• This constitutes the entire agreement and supersedes all prior written and oral agreements, discussions, or representations.
• Agreement extends to interview(s) or relocation negotiations, and claims that no one is relying on any statement or representation not contained in this Agreement
• Any subsequent change or changes in duties, salary, or scope will not change the validity of this Agreement

Capacity and Legality

• Capacity and legality must be present for a contract to be valid

Capacity to Contract

• Parties must be of age of majority and have the mental competency
• Minors can disaffirm contract before reaching full legal age
• Minors can disaffirm the contract but is voidable
• Exception: a minor cannot disaffirm necessary goods or services in many states
• If someone's mental capacity is lacking, they can choose to avoid the contract or ratify the terms
• Lack of mental capacity is demonstrated if there is an inability to understand the consequences and nature, and if they cannot act reasonably

Legality

• A contract may adhere from the above two but is not legal and binding if made for an illegal purpose
• An example of this is a contract accepting ivory
• If the nature of the contract is valid, but one element in it is not valid, it is not legal

Contracts: Performance and Remedies

• Conditions are an act or event that must occur, unless excused, before a duty under a contract arises
• A condition is an act or event that must occur, unless excused, before a duty under a contract arises

Conditions Subsequent

• An example of this is hiring I hiring someone as an attorney but terminating the person if they do not pass the state bar exam within 90 days

Express Condition

• An express condition is a condition that, according to the contract's language, performed before the other party's performance is due
• examples of this include; "If and only if", "Provided only that", "Time is of the essence."

Breaches

• A failure to give full performance under a contract
• A material breach happens when a party does not give proper performance
• A material breach happens party fails to comply strictly with an express agreement
• A minor breach occurs happens if the promisor hasn't preformed all the terms of the contract but has given substantial performance

Substantial Performance

• Fulfillment of the obligations agreed to in a contract, with only slight variances from the exact terms and/or unimportant omissions or minor defects
• If they build house build fails to paint the interior the color described in the contract, this is substantially performed will not incur a breach

Material Breach

• Usually excuses the harmed party from further performance and gives rise to suing for damages

Minor Breach

• Gives the harmed party the right to sue for damages but does not excused him from performing the whole contract

Anticipatory Repudiation

• Occurs when one party has reasonable grounds to believe that the other party will materially breach.
• In such a case, the party can demand adequate assurance that performance is forthcoming
• If reasonable, may suspend her own performance

Rescission or Waiver

• A party could choose to waive its right to demand performance by the other party

Substituted Arrangement

• Parties agree to discharge obligations under previous contract , entering a new agreement
• Usually the result is from compromise

Excusable Nonperformance

• Factors include
• Impossibility
• Impracticability
• Commercial Frustration

Impossibility

• Refers to performance that becomes impossible after the contract is made.
• A personal injury results in non-cancellable hours of lessons.

Impracticability

• Definition: Performance becomes extremely burdensome due to some unforeseen circumstance occurring between the timeframe of the agreement
• Burden must not be foreseeable and extreme

Commercial Frustration

• The principal purpose of the contract is substantially affected by the fault of the frustrated party
• An example is if Jack buys real estate to lease it as a commercial enterprise but the government deems it unsavable, and the lease can be terminated

Force Majeure

• A force majeure clause excuses a party from performance
• It only works if the inability to preform the contract is due to extraordinary events
• Any delay/failure in performance by either party is excused if it has an uncontrollable factor
• acts of God, Fire, flood, explosion, riots, war, hurricane, government restraint or injunctions, or labour

Undue Influence

• Vulnerability of the victim include illness, Age, and Emotional Distress
• Influencers authority include Legal Representatives

Duress

• "My father made him an offer he couldn't refuse to sign, Luca Brasi held a gun to his head."

Unconscionable Contractual Conduct

• Substantive Conduct: Terms that shock the conscience.
• Procedural Conduct: Formation process and the alleged lack of meaningful choice.

Remedies for a Breach of Contract

• Monetary Damages is the most frequent

Monetary Damages

• The plaintiff has the burden of providing a reasonable estimate of financial losses
• The plaintiff is only permitted to recover losses that were foreseeable to the other party at the time they came to an agreement
• The plaintiff bears the burden of mitigating financial damages

Types of Compensatory Damages

• Expectation
• Reliance
• Restitution

Expectation Damages

• Compensates the direct economic loss caused by the breach of contract

Consequential/Reliance Damages

• Compensate losses caused by the foreseeable result of a breach of contract
• This can include late fees for delay

Restitution Damages

• Victim of breach is entitled to return or to compensate with whatever that they gave

Liquidated Damages

• Provisions in the contract where parties decide in advance what damages will be in the event of a breach

Liquidated Damage Contract Validation

• The amount is reasonable based on losses caused by the breach
• Actual losses would not be easy to prove
• Amount is large, so it works more like penalty.

Equitable Remedies

• Injunction is a court order requiring someone to do something/refrain from
• Specific Performance is a type of Injunction
• The court orders a party to carry out contractual duties, must be proven that monetary damages will not provide the adequate remedy