Business Law: Understanding the Statute of Frauds and Written Contracts, Slides of Commercial Law

Download Business Law: Understanding the Statute of Frauds and Written Contracts and more Slides Commercial Law in PDF only on Docsity! Business Law Chapter 7: Putting It In Writing Docsity.com Introduction to Written Contracts • The vast majority of business contracts are in some form of writing. Docsity.com Categories of Transactions That Fall Under the Statute of Frauds • The Statute of Frauds covers the following types of transactions: 1. Contracts involving testamentary transactions (wills, etc.) 2. Contracts to answer for the debt of another. Docsity.com 3. Contracts in anticipation of marriage (prenuptial/antenuptial agreements) 4. Contracts for the sale of land • Contracts that cannot be performed within one year of the date of their creation. Docsity.com 1. Contracts for the sale of goods exceeding $500 in value – Uniform Commercial Code §2-201 2. Contracts for the sale of securities (stocks, bonds) – Uniform Commercial Code §8-319 Docsity.com Prenuptial/antenuptial agreements • When two people are contemplating marriage and enter into an agreement about how their marital estate will be divided in the event of divorce, this agreement is covered by the Statute of Frauds. Docsity.com Live-in Lovers • In recent years many states have amended their Statute of Frauds to include agreements between persons who cohabit but do not marry. Docsity.com Contracts for the sale of land • Requiring a writing in real estate transactions may have been one of the primary reasons for the creation of the original Statute of Frauds. Docsity.com Calculating Time Periods Under the Statute of Frauds • The time period runs from the date of the agreement, not the date that actual performance of the contract begins. • The year expires on the same date the following year, at the conclusion of the day (midnight), unless some other time is expressly provided. Docsity.com What Type of Writing Satisfies the Statute of Frauds? • Under the Statute of Frauds a “writing” must identify the following elements: • The Parties • The Property • The Consideration • The Promises • The Time and Manner of Performance Docsity.com No Particular Contract Form is Required • Under the Statute of Frauds there is no requirement that a specific type of contract form be used. Docsity.com Wording Required Under the Statute of Frauds • Courts have been very liberal in interpreting the language required to create a binding contract under the Statute of Frauds. Docsity.com Signature of the Parties • Before a contract can be enforced against a party, that party must have signed it. Docsity.com Is Delivery of the Writing Required? • There is no delivery requirement under the Statute of Frauds. Docsity.com The Statute of Frauds under the UCC • With the adoption of the Uniform Commercial Code in all states (in more or less complete form), the Statute of Frauds underwent a significant change. Docsity.com Two elements to UCC’s Statute of Frauds 1. When the contract involves the sale of goods for the price of $500 or more, or 2. Contracts for the sale of securities (stocks, security agreements, bonds and other personal property not already covered in other sections) Docsity.com Exceptions to the UCC’s Rule on the Statute of Frauds • A writing is not required for specially manufactured goods, or • When a party admits in a court that an oral contract existed, or • If the goods have been delivered, paid for and accepted. Docsity.com Statute of Frauds Considerations in Drafting Contracts • The first question that should be asked before drafting a contract is: Does the Statute of Frauds apply? Docsity.com Internal Inconsistencies in a Contract • Faced with two possible clauses, one in typed print and the other garbled handwriting, the courts usually opt for the former. Docsity.com The Statute of Frauds and Real Estate Transactions • Almost all types of real estate conveyances require a writing to be enforceable under the Statute of Frauds Docsity.com • The date for the closing • The purchase of any items of personal property inside the home (such as drapes, window treatments, or appliances) Docsity.com • The conditions upon which the sale is predicated, such as obtaining sufficient financing to purchase the home and a passing report on the structure by a building inspector • Particular contract clause provisions, such as “time is of the essence.” Docsity.com Time is of the Essence Contract Clause • When an offer of purchase and contract contains a “time is of the essence” clause, this means that the parties have negotiated a specific date for the closing. Docsity.com