Business Law Midterm Exam PDF

CHAPTER ONE A constitution sets forth the basic principles by which a government operates, as well as limitations on its authority. The US Constitution is the supreme law of the nation; a state constitution is the highest law within that state. Federal law is supreme in cases of conflict with state...

CHAPTER ONE A constitution sets forth the basic principles by which a government operates, as well as limitations on its authority. The US Constitution is the supreme law of the nation; a state constitution is the highest law within that state. Federal law is supreme in cases of conflict with state law. limits the power of the government Substantive law creates, defines, and regulates legal rights and duties. ex: contract law has two parts Private Law is that part of Substantive Law which governs individuals and other legal entities in their relationships with one another. ex: civil law, contract law Business law is primarily private. Public Law is the branch of Substantive Law that deals with the government’s rights, duties, and powers and its relationship to individuals and groups. ex: constitutional and criminal law The principle of “Stare Decisis” requires that lower courts stay consistent with prior decisions of higher courts on cases with similar facts. Common Law - Case decisions establish “precedent” in our common law system and must also be consulted when researching a legal question. Equity is a supplementary system of judicial relief separate from Common Law, based upon settled rules of fairness, justice and honesty. remedy by law sought when in court (usually money) Equitable Remedies include specific performance. injunction, rescission and decree. Specific performance orders someone to do something Injunction orders someone not to do something. Restatements of Law are orderly compilations of the general common law of the United States; it is regarded as the authoritative statement of the common law of the United States. covers torts, contracts, agency and property Plaintiff vs. Defendant — Who is Who The plaintiff is the prosecutor. The defendant is the prosecuted. The Purpose of Civil Law is to define duties and deal with rights/duties of individuals among themselves. Criminal Law establishes the duties and involves offenses against citizens and society. CHAPTER FOUR The Bill of Rights is the first ten amendments. The Separation of Powers is the allocation of powers among the legislative, executive, and judicial branches of government to prevent any government branch from overpowering another. It also permits each branch to function without interference from any other branch. Judicial Review described the process by which the courts examine governmental actions to determine whether they conform to the constitution. It extends to legislation, acts of the executive branch, and the decisions of inferior courts. It includes the actions of both the federal and state governments and applies the same standards of constitutionality. The Supreme Court is the final authority as to the constitutionality of any federal or state law. The 10th Amendment declares that “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Legislation enacted by Congress must therefore be based on a specific power granted to the federal government by the Constitution. federal powers - the power to establish laws regarding: bankruptcy, to establish post offices, to grant patents and copyrights, to coin currency, to wage war and to enter into treaties concurrent powers: taxation, spending and the regulation of the public health, safety. and welfare The Federal Commerce Clause grants virtually complete power to Congress to regulate the economy and business. Legislation enacted under the Commerce Clause may only be invalidated A. if it is clear that the activity does not affect interstate commerce B. if it is clear that there is no reasonable connection between the regulation selected and its stated goals Federal Spending Power - The Constitution authorizes the federal government to pay debts. The spending power of Congress is extremely broad and will be upheld so long as it does not violate a specific constitution limitation on federal power. Defamation is a civil wrong or tort consisting of a false communication that injures a persons reputation. Because defamation involves a communication, the protection generally extended to speech by the First Amendment becomes an issue. Public figures who pursue a lawsuit for defamation must prove actual malice or proof the defendant knew the statement was false or acted in reckless disregard for its truth or falsity. A private person does not have to show malice, just negligence. Procedural Due Process requires that a governmental action depriving a person of life, liberty, or property be done through a fair procedure. Liberty generally includes the ability of individuals to engage in freedom of action regarding their personal lives. Property includes all forms or real and personal property and also certain benefits conferred by government, such as social security payments and food stamps. Equal Protection - The Fourteenth Amendment requires that similarly situated persons be treated similarly by state government action. The Supreme Court has interpreted the Due Process Clause of the Fifth Amendment to subject Federal actions to the same standards of review. When governmental action impacts on the rights of certain classes of people or segments of society, the equal protection guarantee applies. The Supreme Court will use one of the following standards of review (depending on the nature of the right or classification involved). The rational relationship test applies to economic regulations and requires that it is conceivable that the classification bears some rational relationship to a legitimate government interest furthered by the classification. Courts will overturn the governmental action only if clear and convincing evidence shows that there is no reasonable basis justifying the government’s actions. The strict scrutiny test is the most exacting test. Under this test, the courts independently determine  whether the classification is constitutionally permissible. This test is applied when the governmental action affects fundamental rights or involves suspect classification. Fundamental rights include most of the provisions of the Bill of Rights and other rights. ◦ Suspect classifications include those based on race or national origin. The government action will be upheld only if it promotes a compelling state interest. CHAPTER SIX Criminal Law Requirement for Guilt - In a criminal case, the defendant is prosecuted by the government, who, acting as the society’s agent, must prove the defendant’s guilt beyond a reasonable doubt. Essential Element of a Crime – Two elements must be present to define an act as a crime. Actus Reus (wrongful, or overt act) refers to all elements of a crime that are not mental, including the physical act, the circumstances under which it must be performed, and the consequences of the act. Mens Rea (criminal, or mental intent) refers to all mental elements of a crime, either subjective or objective. Most common law and statutory crimes require subjective fault. Some crimes only require objective fault, whereas other statutory crimes require no fault at all. Vicarious Liability refers to liability for another person’s acts. Employers are vicariously liable for their employees’ criminal acts if they have participated in or otherwise authorized the act. For Objective fault to occur, a person must deviate substantially from the standard of care that a reasonable person would be expected to observe under the given circumstances. In criminal statutes, objective fault is defined by such terms as carelessness or negligence. Corporate Liability - Traditionally, corporations were not held criminally liable because of the corporation’s inability to possess criminal intent. Today, corporate liability may exist for the violation of a statute that imposes liability without fault or when a high corporate officer or the board of directors perpetrates the offense. Embezzlement is defined as the fraudulent conversion of the property of another by one who is in lawful possession of it. Burglary is defined as entry into a building with intent to commit a felony in the building. 4th Amendment Exclusionary Rule - The Fourth Amendment prohibits unreasonable search and seizure to obtain incriminating evidence. Evidence obtained in violation of the Fourth Amendment is generally prohibited from introduction in trial by the (*****) in order to discourage illegal (unconstitutional police conduct). In order to obtain a search warrant to conduct a legal search, police must demonstrate probable cause to believe the search will reveal evidence of criminal activity, Defense of Person or Property - Individuals may use reasonable force to protect themselves, other individuals, and their property, Does not include deadly force in the defense of property without threat of bodily harm. Entrapment arises when a law enforcement official induces a person to commit a crime when that person would not have done so without the persuasion of the official. prevents law enforcement from provoking crime and engaging in improper conduct CHAPTER NINE Bilateral Contract - When two promises are exchanged and each party is both promisor and promisee. Unilateral Contract - When a promise is exchanged for an act or refraining from acting. A Contract is not a “thing,” but a “relationship” between its parties. This relationship entails mutual rights and duties contained in what is essentially a set of promises that the courts will enforce. It is important to note that while all contracts are promises, not all promises are contracts. Some promises are unenforceable and therefore, are not contracts. For a promise to be enforced, it must include all essential requirements of a legal, binding contract. Consideration - Each party to a contract must intentionally exchange a Legal Benefit (something of value) or incur a Legal Detriment (obligation to do something). A Breach of Contract is the failure of a party to perform their contractual promises properly. Where performance has been fully completed by all parties, the contract is said to be Executed. Where performance has been only partially completed or not begun, the contract is said to be Executory. Article 2 of the Uniform Commercial Code (UCC or Code) governs the sale of Tangible Personal Property (goods) in all states except Louisiana (Napoleonic Code). Sales of Goods under the UCC - A sale is a contract involving the transfer of title to goods from a seller to a buyer of goods. Personal property is any property other than interest in real property (land). Requirements of a Contract 1. Mutual Assent - The parties show by words or conduct that they have agreed to enter into a contract. The usually method of showing mutual assent is by offer and acceptance. 2. Consideration - Each party to a contract must intentionally exchange a Legal Benefit (something of value) or incur a Legal Detriment (obligation to do something). 3. Legality of Object - The purpose of a contract must not be criminal, tortious or otherwise against public policy. 4. Capacity - The parties must have contractual capacity. Some persons, such as adjudicated incompetents, (placed into guardianship by a court order, their contracts are void) have no legal capacity to contract, while others, such as minors, non-adjudicated incompetent persons, and intoxicated persons, have (limited capacity) to contract. All others have full contractual capacity. 5. In some instances a contract must be evidenced by a writing to be enforceable (*****); but in most cases, an oral contract is binding and enforceable. Unenforceable Contracts are contracts, but are unenforceable as there is no remedy that you can seek in court. ex: statute of limitations Promissory Estoppel is the exception to the rule of 4 Contract Requirements. As a general rule, promises are not enforceable if they do not meet all 4 requirements of a contract. Promissory estoppel is the exception. “Noncontractual Promises” are enforced under the doctrine of Promissory Estoppel in order to avoid injustice, when the promise is made under circumstances that should lead the promisor to reasonably expect that the promise would take a definite and substantial action or forbearance in reliance on the promise and the promisee takes such action for forbearance to their detriment. (Detrimental Reliance) CHAPTER TEN Elements of an Offer - An offer is a definite proposal or undertaking made by one person (offeror) to another (offeree) indicating a willingness to enter into a contract. An offer gives the offeree the power to create a contract by acceptance. An offer must have these elements: (1) communication, (2) intent, (3) definiteness. 1. Communication - Three elements are required: A. The offeree must know about the offer in order to accept it. B. The offer must be communicated to the offeree in an intentional manner. C. The offer must be made or authorized by the offeror. 2. Intent A. To have legal effect an offer must show an intent to enter into a contract. It is not necessary that the terms of the offer be specific, only that the intent to contract is clear. Proposals such as invitations to negotiate, advertisements, and auctions do not constitute an offer, but merely invite another party to make an offer. Acceptance of such a proposal creates an offer only and does not create a contract. B. Preliminary Negotiations – If a communication creates in the mind of a reasonable person in the position of the offeree an expectation that his acceptance will create a contract, then the communication is an offer. If it does not, then the communication is merely a preliminary negotiation. Words such as: “Would you pay?” or “My best price is.” do NOT suggest that an outright offer is being made. On the other hand, words such as “The price I am asking is.” suggest that the offeror intends to and is making an offer. Hesitancy or equivocation indicate that the party may be willing to make an offer rather than confirming that they’re making an offer. C. Advertisements – A public announcement or advertisement generally set forth terms indicating only an invitation to deal. (Does not contain a promise and usually is missing some contract terms). It may, however, set forth an offer where the terms are clearly stated and all that is required of the offeree is some specific action. (Be Careful – cannot advertise a price – then raise the price? false advertising.) D. Auction Sales – With Reserve – The auctioneer may withdraw the goods and the bidder may withdraw her bid at any time. Without Reserve > The auctioneer may only withdraw goods put up for bid if no bid is made within a reasonable time. (Auctioneer merely invites offers to buy.) 3. Definiteness - Although a statement intended to be an offer under the common law need not cover all possibilities, it must be sufficiently clear on the main terms such as 1) subject matter of the contract, 2) price, 3) quantity, (4) quality, (5) terms of payment and (6) duration. A. Open Terms – Under the UCC (?), an offer for the purchase or sale of goods may leave some open terms to be specified later in good faith and within limits set by commercial reasonableness. Where two parties have demonstrated an intent to contract, a court will attempt to fill in any missing term (price, time, place, payment terms) through course of dealing, usage of trade, or by inference. B. Output and Requirements Contracts – A contract term may be left open with Output and Requirements Contracts. An output contract is an agreement of a buyer to purchase a seller’s entire output for a stated period, while a requirements contract is an agreement of a seller to supply a buyer with all his requirements for certain goods. In these types of contracts, the exact quantity of goods is NOT specified. Such agreements are enforceable under the Code and the Restatement by the use of standard based on the good faith of both parties. Neither party  can substantially change his pattern of business after making the agreement. Mutual Assent is often viewed to be the core requirement. Mutual assent is usually made through an Offer and Acceptance. One party proposes an offer to another party who, in turn, accepts the offer. Both the offer and the acceptance generally can take the form of either words or conduct. Thus, even if there is no definite spoken or written offer or acceptance, but there is some action by both parties which indicates that they recognize the agreement, it can be a legal contract. Revocation of Offers is done by the offeror, generally at any time prior to its acceptance by the offeree, by giving notice to offeree using a reasonable means of communication. Terminates offer when notice received. EXCEPTIONS: A. Options Contracts - by which the offeror is bound to hold open an offer for a specified period of time (must comply with all requirements of a contract.) B. Firm Offers Under the (UCC) - A merchant is bound to keep an offer to buy or sell goods open for a stated period if he gives assurance in a signed writing that it will be kept open. C. Irrevocable Offers of Unilateral Contracts - Traditionally, the offeror could revoke an offer for a unilateral contract (promise for an act) up until the offeree “completed” performance. The modern view, codified by the Restatement, holds that the order may not be revoked for a reasonable time once the offeree has begun performance. Duration of Offers - An offer will stay open until it is either “accepted” or until one of the following terminates it: (1) Lapse of time; (2) revocation; (3) rejection; (4) counteroffer; (5) death or incompetence of the offeror or offeree; (6) destruction of the subject matter of the offer; (7) subsequent illegality of the type of contract proposed by the offer. 1. Lapse of Time - A contract offer will remain open for a reasonable time unless a specified time is stated. If an offer is to be held open for a specific period of time, the period begins to run on the day the offeree received it. Any purported acceptance after expiration of time is considered only a new offer. Destruction of Subject Matter of an offer so terminates the offer. For example, a car which has been totaled after an offer was made cannot be sold under the original offer. CHAPTER TWELVE Promises are enforceable only when the parties have exchanged something of value referred to as Consideration. Legal Sufficiency - Consideration is the legal value which supports a promise in a contract relationship; it is the inducement to make a contract enforceable. To be legally sufficient, the consideration for the promise must be either a (legal detriment) for the promisee or a (legal benefit) to the promisor. In other words, the promisor must receive something of legal value or the promisee must give up something of value in return for the promise. Please note that Legal Detriment does not mean “harm”, but rather something which the promisee was under no legal obligation to do. Legal Benefit means the obtaining by the promisor of that which she has no prior legal right to obtain. Does legal sufficiency mean “adequate” consideration? No > The requirement of legally sufficient consideration is not concerned with whether the bargain was fair or either good or bad for either party. The legal sufficiency requirement is simple: A. the parties freely agreed to the exchange and B. the subject matter of the exchange either imposed a legal detriment on promisee or conferred  a legal benefit to the promisor A Bargained for Exchange requires a mutually agreed upon exchange of consideration. (Exchange of promises or performance.) Query? Is a promise to give a gift enforceable in court? No, because it is one sided > no consideration and nothing from other side 1. Past Consideration is an act done before the contract is made, The element of exchange is missing where a promise is given for an act already done. Past consideration is no consideration. Why? No bargain for exchange (before promise) 2. Third Parties - Consideration to support a promise may be given to a person other than the promisor if the promisor bargains for that exchange. Conversely, consideration may be given by > some person other than the promisee. An Illusory Promise is a statement that appears to be a promise. ur that upon close examination, promises nothing real or legally binding. It may contain words such as “desire” or “want” or “wish to buy,” making performance entirely optional! Thus, the buyer is not bound to perform anything. A. Output and Requirements Contracts a. The agreement of a seller to sell her entire production to a particular buyer is called an “output contract.” b. The agreement of a buyer to buy all the materials of a particular kind the buyer needs from a seller is called a “requirements contract.” Both of these contracts are not illusory because they are for a provable quantity. B. Conditional Promise - The obligation to perform depends upon the happening (or no happening) of a stated event. However, if the promisor knows that the conditional event cannot occur, the conditional promise will not be sufficient. Pre-existing Obligation - The law does not regard the performance of (or promise to perform) a pre- existing obligation, whether public or private, as consideration. A. Modification of a Pre-existing Contract a. Under Common Law, the pre-existing duty rule requires that a contract modification be supported by additional or new consideration. b. Under the UCC (sale of goods), the rule is different. Contract modifications are binding even without new consideration, provided both parties intend to modify the contract and are acting in good faith. B. Substituted Contract - A substituted contract results when the parties to a contract mutually agree to rescind their original contract and enter into a new one. This situation involves three separate contracts: the original contract, the contract stating that they rescind the original contract, the new contract. Settlement of Disputed Debts - A disputed debt is an obligation whose existence or amount is validly contested. The giving up or compromise of a disputed debt constitutes legally sufficient consideration if the dispute is honest and in good faith and thus will be enforced by the court. Settlement of Undisputed Debts - An undisputed debt is an obligation whose existence and amount are not contested by the other party. Under Common Law, the payment of a lesser sum in return for the discharge of a fully matured, undisputed debt is not sufficient to support the promise of a discharge, However > different consideration would be sufficient. CHAPTER THIRTEEN Illegal Objective of an Agreement - An essential requirement for an agreement to be enforceable is that its objective be legal. An unenforceable agreement is one that a court will not compel the parties to perform. If presented with such an agreement, the court will generally leave the parties as it found them. Licensing Statutes require a license for those in certain trades: lawyers, doctors, teachers, brokers, plumbers, contractors. In some cases, a person who has failed to comply with licensing requirements may not sue in court for services rendered and unpaid; this depends on whether the license is for regulatory or revenue, the two types of licensing statutes. A. Regulatory license - is a measure designed to protect the public from unqualified persons; a person who doesn’t have the required regulatory license usually cannot recover in court for services rendered. B. Revenue licenses, on the other hand, are issued by the state to raise money for the state; agreements for unlicensed services are usually enforceable. Usury Statutes are laws establishing a maximum rate of permissible interest for which a lender may charge a borrower of money. This amount varies greatly by state. Lenders violating a usury statute may forfeit both principal and interest or only the interest or in some states, only the interest in excess of the maximum permitted, Proof required in a case: 1) Loan 2) Money 3) Repayable absolutely 4) Rate exceeds statute Violations of Public Policy - This is a judicially crated approach aimed at voiding contracts considered by the courts not to be in the public interest. Courts take a broad view when considering public policy arguments directed at private contract relationships. Restraint of Trade Contract Clauses are allowed because if they are reasonable, the law supports it. The law does not support contracts that unreasonably restrain trade. cannot be the main purpose of the contract secondary provision protects business interest of one party geographic area and time period ◦ usually outside of neighborhood/few miles, usually not longer than a year Contracts Involving Restraint of Trade - Since the public benefits from vigorous competition, contracts that “unreasonably” restrain trade are illegal. However, where restraint is only a secondary provision in the contract and protects the promise’s business interest and is reasonable, it will be allowed and will be enforceable. A. Sale of a Business - Buyers of a business often incorporate into the sales contract a convenant restricting the seller’s ability to compete. If that covenant is reasonable as to geographic area and time period, the courts will generally uphold and enforce it. If not reasonable, it is considered against public policy restraint of trade. B. Employment Contracts - Restrictive covenants in employment contracts will, of course, be upheld where the employee where the employee is still under contract. Upon termination of the contract by the employee, courts will use a reasonableness test in deciding whether the restriction on the former employee is permissible. In such a situation, the employer will have to demonstrate that the restriction on the former employee was necessary to protect their legitimate business interests. Gambling Statutes - Contracts found to be in violation of a state gambling statute are void. Courts usually refuse to enforce gambling agreements, unless part of state sponsored Lotto, etc. Procedural Unconscionability is discovered by scrutinizing the contract for the presence of “bargaining naughtiness.” In other words, was the negotiation process fair? Exculpatory Clauses A. Contractual provisions that excuse a party from liability for their own tortious conduct are generally disfavored by the courts because they violate (public policy.) B. Contractual provisions that excuse one party’s negligent conduct, are carefully scrutinized by the court and are often not enforced unless conspicuous & clearly written. CHAPTER FOURTEEN Contractual Capacity is the legal ability to enter into contracts. The threshold mental capacity required by law for a party who enters into a contract to be bound by that contract. Minor’s Contract Liability – A minor’s contract, whether executory or executed, is generally voidable at his option. A minor has “Favored” Position to either disaffirm or to enforce the contract. (How Rule for Minor’s Favored Position is) Disaffirmance releases minor from any liability, but they must return any property they may have received from the adult. A minor may disaffirm a contract at any time before reaching the age of majority, and in some cases within a reasonable time after reaching the age of majority, as long as she did not first ratify the contract after she came of age. Exceptions? contracts involving medical care, student loans Minor’s Ratification of Contracts - After a minor becomes of age, she may choose to adopt or ratify the contract which makes the contract binding “ab initio” (from the beginning). But, Under the UCC, the party who bought from a minor, (and thus has voidable title) has the power to transfer valid/good title to a good faith buyer for value (good faith = clean hands/no knowledge of the minor in the prior transaction.) Minor’s right to Disaffirmance - either express or implied, as long as it shows an intention not to be bound, even if the minor is emancipated. Disaffirmance releases minor from any liability, but they must return any property they may have received from the adult. Liability of a Minor Who Misrepresents Her Age - Most states allow a minor who lies about her age to nevertheless disaffirm a contract, but either: A. require restitution to restore the other party in the contract to the position they were in before entering the contract or B. allow the defrauded party to recover damages against the minor in tort ‣ Some states, however, prohibit disaffirmance if a minor misrepresents her age and the adult, in good faith (no reasonable reason to know was a minor), reasonably relies on the misrepresentation. Liability of Intoxicated Person - “Temporary mental incompetence” - defense to a contract action A. A contract entered into by an intoxicated person is voidable, if the unintoxicated party has reason to know that, because of intoxication, the other person is unable to understand the nature and consequences of his actions or is unable to act in a reasonable manner. B. To avoid a contract, the intoxicated, when regains capacity, must: properly disaffirm and return whatever is received. ‣ Like incompetent persons, intoxicated persons are liable in quasi-contract (restitution) for necessaries furnished during their incapacity. Liability of Persons under a Guardianship - Contracts made by a person placed under guardianship by court order are void. A party dealing with an individual under guardianship may be able to recover the fair value of any necessaries provided. The guardian may ratify the contract. CHAPTER ELEVEN Scienter - guilty knowledge Duress - wrongful or unlawful act or threat that overcomes the free will of a party 1. Physical Compulsion - When a party compels another to agree to a contract through actual physical force; renders the agreement void. 2. Improper Threats - Using economic or social coercion, leaving the victim with no reasonable alternative to agreeing with the more powerful party; threat may be explicit or inferred from words or conduct. A subjective test (not objective; not how the average person would react but how the particular person in the particular situation reacted) is used to determine whether the threat actually induced assent on the part of the person claiming to be the victim of duress (often difficult to prove); It makes the contract voidable at the option of the coerced party. Undue Influence (unfair persuasion) - Taking advantage of a person, by reason of a dominant position based on a confidential relationship, renders a contract voidable Mistake in the Meaning of Terms - In some cases, a term of the contract can have different meanings for the seller and the buyer, without either party knowing that the other party has a different understanding. This renders the contract void, If, however, one party knows that the other party has a different understanding, the contract stands with the second party’s (the innocent party) interpretation of terms. Fraud in the Execution - A misinterpretation that deceives the other party as to the nature of a document (the party does not know what they are signing) evidencing the contract; renders the agreement void (extremely rare). (Through deception - the party can not reasonably know - there is no assent and therefore no contract.) Fraud in the Inducement 1. A false representation… (misrepresentation) includes positive assertion of something not true, concealment of a fact, expressly denying knowledge of a known fact, or statement of a misleading half-fact. Silence (non disclosure) alone is not automatically false representation unless the fact cannot be reasonably discovered (hidden) or in the case of a fiduciary who owes duty of trust, loyalty and confidence. 2. of a fact (not just an opinion) An event that actually took place or something that actually exists, not just a belief or a prediction of a future event. May or may not include a statement of law. If stating what the statute is - fact If stating what the legal consequences will be - opinion. (Sales Puffery of value - not fraud; it’s opinion - not a fact.) 3. that is material (relating to something important to the contract) Must be likely to induce a reasonable person to manifest assent (or the maker must know that the recipient is likely to do so). 4. made with knowledge of its falsity and the intention to deceive (scienter - having guilty knowledge) and can consist of (a) actual knowledge, (b) lack of belief in the statement, or (c) reckless indifference to truthfulness. 5. which representation is justifiably relied on by the other party (victim) If the misrepresentation did not influence the complainer’s decision, he has no right to relief (must complete contract because no fraud), He had to have justifiable relied on the false representation. CHAPTER FIFTEEN The Statute of Frauds Definition - specifies those contracts that must be in writing to be enforceable Types of Contracts within the Statue of Frauds - The following five kinds of contracts are “within” the Statute of Frauds in most states. In these cases, the statute requires a writing by the party against whom the contract is to be enforced. 1. Promises to answer for the duty of another (Suretyship provision) 2. Promises of an executor/administrator to answer personally for a duty of the decedent whose funds he is administering (Executor provision) 3. Agreements upon consideration of marriage (marriage provision) 4. Agreements for the sale of an interest in land (land contract provision) 5. Agreements not to be performed within 1 year (one-year provision) Executor Administrator Provision - Applies to the promises to answer personally for a duty/debt of the deceased person made by the executor of the will or by the administrator of the estate if there is no will. This fall under the Suretyship Provision and therefore, to be enforceable, the promise must be in writing. Suretyship Provision – Applies to a contractual promise by a surety (promiser) to a creditor (promisee) to perform the duties or obligation of a third person (principal debtor) if the principal debtor does not perform. This promise is called a Collateral Promise. A. The Main Purpose Doctrine is an Exception to the Suretyship provision based on the purpose of the Promisor. Where the main purpose or object of the Surety/Promisor is to obtain an economic benefit for yourself, the promise is not within the statute and is therefore enforceable as a verbal agreement. The One-Year Provision - The Statute of Frauds require that a contract be in writing if it cannot be fully performed (both sides) within 1 year of the making of the contract. A. Full Performance by One Party - where a contract has been fully performed by 1 party, the promise of the other party is enforceable even though its performance, by the contract terms, was not possible within the period of a year. Modification of Contracts within Statute of Frauds - Oral Contracts modifying previously existing contracts are unenforceable if the resulting contract is within the statute of frauds. Compliance with the Statute of Frauds - A contract that is within the Statute of Frauds requires evidence of a sufficient writing or record, but does not require any specific form and does not have to be complete and the parties may even view it as having no legal significance, even though it may. 1. Any note, memorandum, or record, which may be formal or informal, must: A. specify the parties to the contract; B. specify with reasonable certainty the subject matter and essential terms (price and quantity) of the unperformed promises; and C. be signed by the party it is to be enforced against or by her agent and the “signature” can be as simple as initials or the full name and it may be typed or written anywhere on the page as long as the party was intending to authenticate the writing. 2. There is an even more lenient requirement under the UCC (Article 2 - Sales) in the case of merchants: A. Some writing or record sufficient to indicate that a contract has been made between the parties B. specifying the quantity of the goods to be sold (price may be missing); and C. signed by the party against whom enforcement is sought UCC - Sale of Goods (Under the Code) x The UCC provides that a contract for the sale of goods (moveable personal property) for the price of $500 or more is not enforceable unless there is sufficient writing or electronic record. (Writing Requirements) *Exceptions where an oral contract is enforceable: A. Admission: The UCC permits an oral contract for the sale of goods to be enforced against a party who admits in their pleadings (papers filed with the courts), testimony (on the stand), or otherwise in court that there was a contract B. Specially Manufactured Goods: Where goods are specially manufactured for a particular buyer and cannot be sold to others in the regular course of business, an oral contract will be enforceable if the seller has substantially begun the manufacturing process prior to receiving the contract repudiation C. Delivery or Payment and Acceptance: Under the UCC, delivery and acceptance of part of the goods or payment and acceptance of part of the price validates the contract for that which was accepted and paid for.