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C H APIER O U T I.Il{E lE A RI{II{G O B I E CI I V E S 651would

sooner
.THEREQUIREMENT
OFAWRITINCAFTER READINC
TOANSWER THE
THISCHAPTER,
FOLLOWING
YOUSHOULD BEABLE hustthe
.THESUFFICIENCY QUESTIONS:
OFTHEWRITINC What contractsmust be in writine to be
smallest
slipof
.THEPAROLEVIDENCE
RULE enforceable? paperforhuth,
If it is possiblefor a contractto be performed thanthe
within one year,must it be in writing?
strongest
and
When will an oral promiseto pay another
persor-r's
debt be enforced?
mostretentive
If a written contract is required,what terms are
memory ever
consideredessentialand must be contained in bestowed
on
the written docr-rment?
mortal
man,r,
What is parol evidence?When is parol evidence
HenryLunrpkir,
Joseph '
admissibleto clarifi, the terms of a written 1799-1867
(Anericanjurist)
contract?

contractthat is otherwisevalid may still be unenforceableif it is not in the proper

form. As the iudge observesin the chapter-openir-rg quotation, most people truit a
written document more than an individual'smemory of the terms of an agreementinto
which they entered.For this reason,the law requirescertain typesof contractsto be in
writing. If a contract is required by law to be in writing and there is no written evidence
of the contract,it may not be enforceable.
In this chapter,we examinethe kinds of contractsthat require a writing r,rnderwhat is
called the Statuteof Fraudsand what must be contained in the writins. The chaptercon-
cludeswith a discrrssion o[ the parol evidencerule, under which courtsdelerrrrirre the
admissibilityat trial of evidenceextraneous(external)to written contracts.

Today,everystatehas a statutethat stipulateswhat typesof contractsmust be in writing

or be evidencedby a record. In this text, we refer to such a statute as the Statute of STATUTE OFFRAUDS
Frauds.The primary purposeof the statuteis to ensurethat, for certain typesof contracts, A statestatuteunderwhich certain
typesof contractsmust be in writing
there is reliable evidenceof the contractsand their terms. These tvpes of contractsare
to be enforceable.
those historicallydeemed to be especiallyimportant or complex. Alihougll the statutes
vary slightly from stateto state,the following typesof contractsare norn-rallyrequired to
be in writing or evidencedby a written memorandum:
527EilEME
THESTATUTE
OFFRAUDS
528I[SfiUil
CONTRACTS
nGIfiIIIIftfAlir Althoughonly certain
typesof contractsmustbe in
writingto be enforceable,it is good
practiceto put othercontracts in
writingaswell to preventdisputes
over contractterms.
Foran interesting
discussion of the history
andcurrentapplicability of the
Statuteof Frauds,both internationally
and in the UnitedStates,go to
rauds.
en.wikipedla.org,/wiki/Statute-of-f
I Contractsinvolving interestsin land.
2 Contractsthat cannot by their terms be performed within one year from the date of
formation.
5 Collateral contracts,such as promisesto answerfor the debt or duty of another.
4 Promisesmade in considerationof marriage.
5 Contractsfor the saleof goodspriced at $500 or more (under the Uniform Commercial
C o d e ,o r U C C -see C hapter1B ).
Agreementsor promisesthat fit into one or more of these categoriesare said to "fall
under" or "fall within" the Statuteof Frauds.(Certain exceptionsare made to the Statute
of Frauds,howevet,as you will read later in this section.)
The actual name of the Statute of Fraudsis misleadingbecauseit doesnot apply to
fraud. Rather, the statute denies enforceabilityto certain contractsthat do not comply
with its requirements.The name derivesfrom an English act passedin 1677, which is pre-
sentedas this chapter'sLandmark in the Law feature.
( o n t r a c ts
In vo lvinIn in [a n d
g te te sts
Land is a form of real properly,or real estate,which includesnot only land but all physical
objectsthat arepermanentiyattachedto the soil,such asbuildings,plants,trees,and the soil
itself.Under the Statuteof Frauds,a contractinvolvingan interestin land mustbe evidenced
by a writing to be enforceable.lItExAMPtTl5.ll If Carol contractsorally to sell Seaside
Shelterto Arel but laterdecidesnot to sell,Arel cannotenforcethe contract.Similarly,ifAxel
refuses to close the deal, Carol cannot force Axel to pay for the land by bringing a lawsr-rit.
The Stahrteof Fraudsis a defenseto the enforcementof this tlpe of oral contract. El
A contract for the sale of land ordinarily involvesthe entire interestin the real prop-
erty, including buildings, growing crops,vegetation,minerals,timber, and anyihing else
affixed to the land. Therefore, a fixture (personalproperty so affixed or so used as to
become a part of the realty-see Chapter 44) is treatedas reai property.
The Statute of Fraudsrequireswritten contractsnot just for the sale of land but also
for the transferof other interestsin 1and,such as mortgagesand leases.We describethese
other interestsin Chapter 44.
T h e0 n e - Ye Ru
a r le
Contractsthat cannot,by their own tetms,be performedwithin one yearfrom the day after
the contract is formed must be in writing to be enforceable.Becausedisputesover such
contractsare r,rnlikelyto occur until sometime afterthe contractsare made, resolutionof
thesedisputesis difficult unlesstl-recontracttermshavebeen put in writing. The one-year
period beginsto rr:n the day after the contractis made.
trEiFMFiErarl SuperiorUniversityformsa coniractwith Kimi Sanstatingiha{ Sanwill
teachthreecoursesin historyduring the coming academicyear(Septemberl5 throughiune
15).If the contractis formed in March, it must be in writing to be enforceable-becauseit
cannot be performedwithin one year.If the contract is not formed until July,however,it will
not haveto be ir-rrvritingto be enforceable-becauseit can be performedwithin one year.
E P"hibit l3-i on page7)0 graphicallyillustratesthe one-yearrule.
The test for determining whether an orai contract is enforceableunder the one-year
rule of the Statuteof Fraudsis whether performanceis possiblewithin one year from the
day after the date of contract formation-not whether the agreement is /ikely to be
of the oral contractin court or
l. In somestates,the contractwill be enforcedif eachpartyadmitsto the existence
beforetrial (seeChapter3).
during discovery
 529rTtlrfi'f;m
OFFRAUDS
THESTATUTE

On April 12, 1677,the EnglishParliamentpassed?n

Act for the Prevention Four
of Fraudsand Perjuries."
dayslater,the act was signedby KingCharlesll and
becamethe law of the land.The act contained
sectionsand stipulatedthat certaintypes of contractswould henceforthhave
trruenty-five
to be in writingor evidencedby a written memorandumif they were to be enforceable
by the courts.a

EnforCement Of Oral PrOmiseS The Englishact was enactedspecifically to Pre-

vent the manyfraudsthat were beingperpetrated throughthe perjuredtestimonyof wit-
nessesin casesinvolvingbreachedoral agreements, for which no writtenevidence
existed.Duringthe earlyhistoryof the common law in England, the courtsgenerallydid
not enforceoral contracts,but in the fourteenthcentury they beganto be enforcedin
certainossumpsit actions.bTheseactions,to which the originsof moderncontractlaw
are traced,alloweda partyto sue and obtainreliefwhen a promiseor contracthad
been breached.Duringthe nexthruocenturies, the king'scourtscommonlyenforcedoral
promisesin actionsin assumpsit.

Problems with Oral COntractS Becausethe courtsenforcedoral contractson the

strengthof oral testimonyby witnesses,it was not too difficultto evadejusticeby alleg-
ing that a contracthad been breachedand then procuring"convincing" witnessesto
supportthe claim.The possibilityof fraud in suchactionswas enhancedby the fact that
seventeenth-century Englishcourtsdid not allow oral testimonyto be givenby the par-
ties to a lawsuit-or by any partieswith an interestin the litigation,suchas husbandsor
wives.Defensesagainstactionsfor breachof contractwere thus limited to written evi-
denceand the testimonygivenby third parties.The Statuteof Fraudswas enactedto
minimizethe possibilityof fraud in oral contractsrelatingto certaintypesof transactions.

Essentially,the Stotuteof Frouds offers a

defense ogainst controcts that fall under the stotute. lndeed, somehove criticized the statute
becouse,although it wos created to protect the innocent it con also be used os o technicol
defense by o porty who hos breached a genuine, mutually ogreed-on orol controct-if the
controct folls within the Stotute of Frouds. For this reason, some legal scholors believe the
oct hascousedmore fraud thon it hosprevented. Nonetheless, IJ.S. courtscontinueto opply
the Stotuteof Frouds to disputes involving oral controcts. The definitions of such terms os
writing cnd signature, however, have changed to occommodote electronicdocuments-os
you will read in Chapter IZ which covers e-contrqcts.

Tolocate information on the Web concerningthe Stotute

of Frouds, go to this text's Web sife of www.cengage.com/blaw/blt , select "Chapter t 3,"
ond click on "lJRLs for Landmarks!'

a. Thesecontracts are discussed in the text of this chapter.

b. Assumpsit is Latinfor "he or she undertook"or "he or she promised." Theemergence of remediesfor
breached promises and duties dates to these actions. One of the cases
earliest occurred in I370,when
the courtallowed an individual to sue a person who, in trying to curethe plaintiff's
horse,had actedso
negligentlythat the horsedied.Anothersuchactionwas permittedin 1375,when a plaintiffobtained
relieffor havingbeenmaimedby a surgeonhiredto curehim.
I5OINiIUEI
CONTRACTS

Underthe Statuteof Frauds,contractsthat by their terms are impossibleto perform within one year
from the day after the date of contractformation must be in writing to be enforceable.Put another
way, if it is at all possibleto perform an oral contractwithin one year from the day after the contract
is made,the contractwill fall outsidethe Statuteof Fraudsand be enforceable.

performed within one year. When performanceof a contract is objectively impossible

during the one-yearperiod, tl-reoral contract will be unenforceable.
lEExAlttPG tr.rl BankersLife orally contractsto lend $40,000 to Janet Lawrence "as
long as Lawrence and Associatesoperates its financial consulting firm in Omaha,
Nebraska."The contract does not fall within the Statute of Frauds-no writing is
required-because Lawrenceand Associates could go out of businessin one year or less.
In this event,the contract would be fully performedwithin o.te year.zSimilarly, an oral
contract for lifetirne employment doesnot fall within the Statuteof Frauds.Becausean
employeewho is hired "forlife" could die within ayear, the courts reasonthatthe con-
tract can be performedwithin one year.l @]

COttATERAt PROMISE
A secondary promisethat is ancillary
(subsidiary) to a principaltransaction
or primarycontractual relationship,
suchas a promisemadeby one
personto paythe debts of anotherif
the latterfailsto perform.A collateral
promisenormallymustbe in writing
to be enforceable.
C o l l a t e rPr
a l o m ise s
A collateral promise, or secondarypromise,is one that is ancillary (subsidiary)to a prin-
cipal transactionor primary contractualrelationship.In other words,a collateralpromise
is one made by a third party to assumethe debts or obligationsof a primary party to a
contract if that party doesnot perform. Any collateralpromise of tl-risnature falls under
the Statuteof Fraudsand thereforernust be in writing to be enforceable.To understand
this concept, it is important to distinguishbehreen primary and secondarypromisesand
obligations.

Primary versusSecondaryObligations A contract in which a party assLrrles a primary

obligation normally does not r-reedto be in writing to be enforceable.FEXAMpLE r5.ll
Kenneth orally contractswitl-rJoanne'sFloral Boutique to send his mother a dozen roses
for Mother's Day. Kenneth promisesto pay the boutique when he receivesthe bill for the
flowers.Kenneth is a direct party to this contract and has incurred a primary obligation

2. SeeWamery. Texas& PacificRailroadCo., 164U.S.418, 17 S.Ct. 147,41L.Ed. 495 (1896).

Corp.,67 Mas.App.Ct. I 102,851 N.E.zd I l3 j (2006).
5. See,for exanple,Cattengnov. TUI Construction
 551mrirrfilm
THE OFFRAUDS
STATUTE

under the contract. Becausehe is a party to the contract and has a primary obligation to
Joanne'sFloral Boutique,this contractdoesnot fall under the Statuteof Fraudsand does
not haveto be in writing to be enforceable.If Kenneth fails to pay the florist and the florist
sueshim for payment,Kenneth cannot raisethe Statuteof Fraudsas a defense.He can-
not clairn that the contract is unenforceablebecauseit was not in writing. E
In contrast,a conhact in which a party assumesa secondaryobligationdoeshave to be
in writing to be enforceable.lEEFArtapLErr.ilSupposethat Kenneth's mother borrows
$10,000from the Medford Trust Company on a promissorynote payablesix months later.
Kenneth promisesthe bank officer handling the loan that he will pay the $10,000lf his
motherdoesnot pay the loan on time. Kennelh, in this situation, becomeswhat is known as
a guarantor on the loan. He is gr-raranteeing to the bank (the creditor) that he will pay the
loan if his mother failsto do so.This kind of collateralpromise,in which the guarantorstates
that he or shewill becomeresponsibleonly if the primary partydoesnot perform,must be
in writing to be enforceable.E Exhibit l3-2 illushatesthe conceptof a collateralpromise.
We return to the concept of guaranty and the distinction between primary and secondary
obligationsin Chapter 26, in the contextof creditors'rights.

An Exception-The "Main Purpose" Rule An oral promise to answerfor the debt of

another is coveredby the Statute of Fraudsunlessthe guarantor'spurpose in accepting
secondaryliability is to securea personalbenefit. Under the "main PurPose"rule, this
type of contractneed not be in writing.aThe assumptionis that a court can infer from the
circumstancesof a casewhether a "leadingobjective"of the promisorwasto securea per-
sonalbenefit.
l*ExAMptEttel Carrie Oswald contractswith Machine Manufacturing Company to
havesomemachinescustommade for her factory.To ensr-rre that Machine Manufacturing
will have the suppliesit needsto make the machines,Oswald promisesAllrite Materials
Supply Company, Machine Manufacturing'ssr-rpplier, that if Nlrite continuesio deliver
materialsto Machine Manufacturing,she will guaranteepayment.This promiseneed r-rot
be in writing, even though the effectmay be to pay the debt of another,becauseOswald's
main purposeis to securea benefit for herself.E
Another typical application of the so-calledmain purposedoctrine occurs when one
creditorguaranteesthe debtor'sdebt to another creditorto forestalllitigation. This allows

4. Restatement(Second)of Contracts,Section I 16

A collateral(secondary)promiseis one made by athird party (C, in this exhibit)to a creditor(8, in this exhibit)to paythe
debt of another(4 in this exhibit),who is primarilyobligatedto pay the debt. Underthe Statuteof Frauds,collateral
promisesmust be in writing to be enforceable.

"r-^ to BeEntorce

@'lil;.,torNs
552llNiIIU
CONTRACTS
PRENUPTIAT AGREEMENT
An agreementmadebefore
marriagethat defineseach
partner'sownershiprightsin
the otherpartne/sproperty.
Prenuptial agreements must be
in writingto be enforceable.
the debtor to remain in businesslong enough to generateprofits sufficientto pay both
creditors.In this situation,the guarantydoesnot need to be in writing to be enforceable.
PromisM
e sad ein Co n sid e r a tio
of Mn a r r ia g e
A unilateral promiseto make a monetarypayment or to give propertyin considerationof mar-
riagemustbe in writing. If Mr. Baumannpromisesto payJoeVillard $10,000if Villard mar-
ries Baumann'sdaughter,the promisemust be in writing to be enforceable.The samerule
appliesto prenuptial agreements-agreementsmade beforemarriage(alsocalledantenup-
tial agreemenfs)that define each partner'sownershiprights in the other partner'sproperly.A
prospective wife or husbandmay wish to limit the amount the prospectivespousecan obtain
if the marriageends in divorce.Prenuptialagreementsmade in considerationof marriage
must be in writing to be enforceable.
Cenerally,courtstend to give more credenceto prenuptial agreementsthat are accom-
panied by consideration.EEXAMpI.E Iril Maureen, who is not wealthy, marries Kaiser,
who has a net worth of $300 million. Kaiserhas severalchildren, and he wantsthem to
receivemost of his wealth on his death.Prior to their marriage,Maureen and Kaiserdraft
and signa prenuptialagreementin which Kaiserpromisesto give Maureen$100,000per
yearfor the restof her life if they divorce.As considerationfor consentingto this amount,
KaiseroffersMaureen $1 million. If Maureen consentsto the agreementandacceptsthe
$1 million, very likely a court would hold that this prenuptial agreementis valid, should
it ever be contested.E
What happens to the prenuptial agreement when on engogementis broken? Sometimes,
partiesincludein theirprenuptialagreements termsthat haveto do with premaritalactivities.
Forexample,in one casea coupleagreedthat the bride-to-be(VirginiaDeFina)would payfor
all expensesrelatingto the wedding.In return,the groom-to-be(StephenScott)promisedto
transfera one-halfinterestin the real propertythat was to be the maritalabode.Then the
couplebroketheir engagement, and the weddingwas canceled.By this time, DeFinahad
alreadyincurred916,000in weddingexpenses. Giventhat the weddingwas canceled, did
DeFinahave any claim on Scott'sproperty?Scott claimedthat she did not becausetheir
agreementassumedthat they would marry.Furthermore,Scottmaintainedthat traditionally
the brideand/or her familypaythe weddingexpenses anyway.
Whenthis questioncame beforea New Yorkcourt,the court first noted that women are
usuallythe economiclosersin brokenengagements. Not only havethey traditionally
had to
bearthe weddingexpenses, but underthe laws of some states,they are also requiredto
returnthe engagement ring.Thecourt,referringto this"regime"as "both unequaland unjus-
tified," decidedthat contractprinciplesshould apply.The court pointed out that Scott and
DeFinawere "well-established professionaladults"who formed clearplansregarding their
engagementand their eventualmarriage.Indeed,Scottwas an attorneywho had been mar-
riedtwicebefore.Thus,the courtconcluded that DeFinahad a lien (a claim-seeChapter26)
on Scott'spropertyin the amount of $16,000.s
tr
C o n t r a cf o
t sr th eSa leo f Go o d s
The Uniform CommercialCode (UCC) includesStatuteof Fraudsprovisionsthat require
written evidenceof a contract.Section2-201 containsthe major provision,which generally
requiresa writing or memorandumfor the saleof goodspriced at $500 or more (this low
5. DeFinay. Scott,195Misc.2d75, 755 N.YS.2d 587 (N.Y.Sup.2003)
 5t5rinrurl]ra
THE OFFRAUDS
STATUTE

andInternational
of Frauds Sales
Contracts
As you will readin Chapter'l8, the Conventionon
Contractsfor the InternationalSaleof Goods(CISG)
providesrulesthat governinternational salescontracts
betweencitizensof countriesthat haveratifiedthe
convention(agreement). ArticleI I of the CISGdoes
not incorporate any Statuteof Fraudsprovisions. Rather,it statesthat a "contractfor sale
need not be concludedin or evidencedby writingand is not subjectto any other
requirements as to form."
ArticleI I accordswith the legalcustomsof most nations,which no longerrequire
contractsto meet certainformalor writingrequirements to be enforceable. lronically,
evenEngland, the nationthat enactedthe originalStatuteof Fraudsin l67J has
repealedall of it exceptthe provisionsrelatingto collateralpromisesand to transfersof
interestsin land.Manyother countriesthat once had suchstatuteshavealso repealed
all or partsof them. Civillaw countries,suchas France,haveneverrequiredcertain
types of contractsto be in writing.

F0 R CRlTl CAt ANAtYSI S ff therewasno Statuteof Fraudsond o dispute

oroseconcerningon oralagreement"how wouldtheportiessubstantiatetheir
respedive positions?

thresholdamount may be increasedin the future-see Chapter 1B).A writing that will sat-
isf, the UCC requirementneed only statethe quantity term; other terms agreedon need not
be stated"accurately"in the writing, aslong asthey adequatelyreflectboth parties'intentions.
The contract will not be enforceable,however,for any quantity greaterthan that setforth in
the writing.In addition,the writing mustbe signedby the personagainstwhom enforcement
is sought.Beyondthesehvo requirements,the writing need not designatethe buyer or the
seller,the termsof payment,or the price. (Seethis chapter'sBeyondOur Bordersfeatureto
learn whetherother countrieshaverequirementssimilarto thosein the Siatuteof Frauds.)

of Frauds
to theStatute
Exceptions
Exceptionsto the applicabilityof the Statuteof Fraudsare made in certain situations.We
describethosesituationshere.

Partial Performance In casesinvolvingoral contractsfor the transferof interestsin land,

if the purchaserhas paid part of the price, taken possession,and made vah-rable improve-
mentsto the property,and if the partiescannotbe returnedto their positionsprior to the con-
tract, a court may grantspecificperformance(performanceof the contract according to its
preciseterms).Whether a court will enforcean oral conhactfor an interestin land when par- The online versionof UCC
tial performancehastakenplaceis usuallydetenr-iined by the degreeof in jury that wouid be Section2-201 on the
sufferedif the court chosenol to enforcethe oral contract.In somestates,mere relianceon Statuteof Fraudsincludeslinksto
certaintypesoforal conhactsis enoughto retnovethem from the StatuteofFrauds. definitionsof certainterms used in
the section.To accessthis text,go to
Under the UCC, an oral contractfor goodspriceclat $500 or more is enforceableto
the extentthat a seller acceptspayment or a buyer acceptsdeliveryof the goods.o

6. UCC 2 - 2 0 1 ( 3 ) ( c )S. e eC h a ptcrl8

ril lwili[Et
CONTRACTS

The existenceand extentof a contractto supplycomputer kiosksfor use in schoolcafe-

teriaswere in disputein the following case.

UnitedStatesDistrictCourt,Districtof Kansas, I lOl (2007).

47t F.Supp.2d

BACKGROUND
ANDFACTS SLTwould be makingits own kiosks.Meanwhile,SLTpaid ARI
-.".'Hffi=:-F Applied Resources,lnc. (ARl),
makescomputerhardwarefor point-of-salesystems-kiosks
consistingof computersencasedin chassison which card
readersor other paymentdevicesare mounted.School-Link
TechnologielInc. (SLT),sellsfood-service technologyto
schools.In August2005, the New YorkCity Departmentof
Education(NYCDOE) askedSLTto proposea cafeteria
paymentsystemthat includedkiosks.SLTaskedARIto
participatein a pilot project,orallypromisingARtthat it would
be the exclusivesupplierof as many as l,5OOkiosksif the
NYCDOE awardedthe contractto SLT.ARIagreed.SLTintended
to cut ARIout of the deal,however,and told the NYCDOE that
in advancefor a certainnumberof goodsbut insistedon
oneroustermsfor a written contractto which ARIwould not
agree.ARIsuspendedproductionof the prepaiditems and
refusedto refundmore than $55,000that SLThad paid.SLT
filed a suit in a federaldistrictcourt againstARl.ARI
respondedwith, amongother things,a counterclaimfor
breachof contract,assertingthat SLTfailedto use ARIas an
exclusivesupplieras promised.ARI soughtthe expensesit
incurredfor the pilot projectand the amount of profitthat it
would haverealizedon the entiredeal.SLTfiled a motion for
summaryjudgmenton this claim.

lN THEWORDS0t THECOURT
, . . JaHNw LUNasrRItM,
United
states
DistrictJudge.

SLT raisesseveralargumentsas to why it is entitled to summary judgment on ARI's

breach of * * * contractclaim. SLT relies,first, on the statuteof frauds.Contractsfor the
sale of goods over $500 generally must be in writing and must be signed by the party
against whom enforcement is sought. Becausethe NYCDOE contract undisputedly
involved the sale of goodsin excessof $500, the parties'oral contract thatARI would be
the exclusivesupplier of kiosksfor the project is not enforceablein the absenceof an
applicableexceptionto this generalrule.
ARI contendsthat the statuteof fraudsdoesnot apply with respectto goodswhich have
been received and accepted * * * . [Under] one ofthe exceptionsto the statute offrauds
* * * d contract which would otherwise
be unenforceablefor lack of a witing but which is
valid in other respectsis enforceable* * * with respectto goodsfor which payment has been
made and acceptedor which have been receittedand accepted.This exception allows par-
tial performanceto serveasa substitutefor the requiredwriting, but only for goodswhich
have been receivedand acceptedor for which payment has been made and accepted.
Here, the goodswhich arguablyfall within that definition are those supplied by ARI for
the pilot proiect with the NYCDOE becausethosegoodswere receivedand acceptedby
SLT. Consequently,SLT's motion for summary judgment basedon the statuteof frauds
is denied with respectto thosegoods.[Emphasisadded.]
SLT's motion basedon the statute of frauds is granted, however, with respectto ARI's
claim that it was to be the exclusivesupplier for 1,500kiosksfor the NYCDOE project.
* * 'r' The non-pilot program kiosks
do not fall within the ambit frealm] of [the partial
performanceexceptionto the Statuteof Frauds]becausethosegoodswere not received
and accepted,nor was payment made and acceptedfor them. ARI has not directed the
court's attention to any other evidencewhich demonstratesa genuine issueof material
fact with respectto any other statuteof fraudsexception.Accordingly,the court'sanalysis
of ARI's breach of oral contract claim is narrowedto the goodsARI supplied for SLI's
 IIsW
THE OFFRAUDS
STATUTE

CASEl l .l - Cont inued

pilot project with the NYCDOE, as the remaining aspectof that claim is barred by the
statuteoffrauds.

DECISI0NANDREMEDY denied
rnecourt motion enforceableto the extentthat the sellerdeliversthe goodsand
sLTs
judgment
forsummary onARI's forbreach
counterclaim of the buyeracceptsthem.
contract"with respectto goods which SLTalreadyreceived
and accepted,[that is,]the goodsfor the pilot programwith F0RCRITICAL ANAIYSIS- Legal
the NYCDOEj' Underthe partialperformanceexceptionto the ARt
Consideration coutd hovesuccessfully
Statuteof Frauds,an oral contractfor a saleof goodsthat ossertedo claim ogoinst SLTbosed on froudulent
would otherwisebe unenforceable for the lack of a writing is m isrepresentotion? Exploin.

Admissions In some states,if a party against whom enforcement of an oral contract is

soughtadmitsin pleadings,testimony,or otherwisein court proceedingsthat a contractfor
salewas made, the conhact will be enforceable.T A contract subjectto the UCC will be
enforceable,but only to the extentof the quantityadmitted.slffiMFiE!5.g]The president
of AshleyCorporationadmitsunder oath that an oral agreementwasmade with Com Best
to buy certain businessequipment for $10,000.In this situation,the agreementwill be
enforceable,but only to the extent it is admitted. H

Promissory Estoppel In some states,an oral contract that would otherwisebe unen-
forceableunder the Statuteof Fraudsmay be enforcedunder the doctrine of promissory
Forinformationon the
estoppel,or detrimental reliance. Recall from Chapter l0 that if a promisor makes a Resfofernenb of the Low,
promiseon which the promiseeiustifiablyreliesto her or his detriment, a court may estop includingthe Resfofement (Second)
(prevent)the promisorfrom denyingthat a contractexists.Section 139 of the Restatement of Controc8,go to the AmericanLaw
(Second)of Contracts provides that in these circumstances,an oral promise can be Websiteat
lnstitute's
enforceable,notwithstandingthe Statute of Frauds, if the reliance was foreseeableto www.ali.orq.
the person making the promise and if injustice can be avoided only by enforcing the
prornise.

Special Exceptions under the UCC Special exceptionsto the applicability of the
Statute of Frauds exist for salescontracts.Oral contractsfor customizedgoodsmay be
enforced in certain circumstances.Another exception has to do with oral contracts
between merchantsthat have been confirmed in writing. We will examine these excep-
tions in Chapter 18.Exhibit l3-3 on the following pagegraphicallysurnmarizesthe types
of contractsthat fall under the Statuteof Fraudsand the variousexceptionsthat apply.

A written contract will satis$'the writiag requirementof the Statuteof Frauds.Awritten

memorandum(written evidence of the oral contract) signed by the party againstwhom
enforcementis soughtwill alsosatisfythe writing requirement.The signatureneed not be
placedat the end of the document but can be anywherein the writing; it can evenbe ini-
tials rather than the full name. (Seethe Application feahrreat the end of this chapterfor
suggestions on how to preventproblemswith oral contracts.)

(Second)of Contracts,Seciion I J3
7. Restatement
8. UCC 2-201(3)(b).SeeChapter18.
556lmrfitm
CONTRACTS

EXCEPTIONS EXCEPTIONS EXCEPTIONS EXCEPTIONS

. Customizedgoods . Partialperformance . Admissiona . Main purposerule
. Admission(quantity) . Admissiona . Promissory
estoppela . Admissiona
. Partialperformance . Promissory estoppela . Promissoryestoppela
. Merchantsconfirmedin writing

.139(on promissory
a. SomestatesfollowSecton 133 (on admissions)and Section estoppel)aIlhe Restatement(Second)
of Contracts.

A significantissuein todav'sbusinessworld hasto do with how "signatures"can be cre-

ated and verified on electronic contractsand other documelits.We will examine elec-
tronic signatures in Chapter 17.

W h aC
t o n s titu te
a Wr
s itin g ?
A writingcan corrsist of any confirmation,invoice,salesslip,check,fax,or e-mail-or such
items in combination.The written contractneed not consistof a sineledocument to con-
stitute an enforceablecontract. One document may incorporateai-rotherdocument by
expressly referringto it. Severaldocumentsrnayform a singlecontractif they arephysicaliy
attached,such asb,vstaple,paperc1ip,or glue. Severaldocumentsmay forrn a singlecon-
tract even if tl-reyare merely placed in the sameenvelope.
fru Ex AMPt5tE5 l S am orai l l agreesto sel l somel and nert Loa shoppi ngrrral lto Ter r y.
SarngivesTerry an unsigneclmemo that containsa legal descriptionof the property,and
Terry givesSam an unsignedfirst draft of their contract. Sam sendsTerry a signedletter
that refersto the memo and to the first and final draftsof the contract.Terry sendsSam
an unsigned copy of the final draft of the contract with a signed check stapled to it.
Together,the docurnents can constitutea writing sr.rfficient to satisfythe Statuteof Frauds
and bind botl-rpartiesto the terms of the contract as evidencedby the writings. @

W h aM
t u sB
t eCo n ta in in
e dth eWr itin g ?
A memorandum evidencingtl-reoral contractneed only cor-itainthe essentialterms of the
contract.Under most provisionsof the Statuteof Frauds,the writing must name the par-
ties and identify the subjectmatter,cor-isideration,and quantity.With respectto contracts
for the saleof land, some statesrequire that the memorandum also setforth the essential
terms of the contract,such as location and price, with sufficientclarity to allow the terms
to be determinedfrom the memo itself,without referenceto any outsidesources.Under
the UCC, in regardto the saleof goods,the writing neeclonly statethe quantity and be
signedby the partyagainstwhom enforcementis sought.
Becauseonly the partv againstwhorn enforcernentis sought must have signed the
writing, a contract mav be enforceableby one of its partiesbut not by the other.
l*ExAMptFt3ro'l Rock orallyagreesto buy BettyDevlin'slake houseand lot for $150,000.
Devlin writes Rock a letter confirir-ringthe sale by identifying the partiesand the essen-
tial termsof the salescontract-price, method of payment,and legaladdress-andsigns
 5I7EIAEEilE
THE OFFRAUDS
STATUTE

the letter. Devlin has made a written memorandum of the oral land contract. Because
she signed the letter, she normally can be held to the oral contract by Rock. Rock,
however,becausehe has not signedor enteredinto a written contract or memorandum,
can plead the Statute of Frauds as a defense,and Devlin cannot enforce the contract
againsthim. E

Sometimes,a written contract doesnot include-or contradicts-an oral understanding

reachedby the partiesbeforeor at the time of contracting.Supposethat a leaseagreement
saysno pets are allowed but a personsignsit anywaybecausethe landlord orally repre-
sentsat the time of the signing that tenantsare allowedto have cats.Can the tenant have
a cat despitewhat the leaseagreementsays?In determiningtl-reoutcome of such disputes,
the courts look to a common law rule governing the admissibilityin court of oral evi-
dence, or parol evidence.
Under the parol evidence rule, if a court finds that a written contract representsthe PAROLEVIDE'{CE RULE
not allow either party A substantive ruleof contracts,as
complete and final statement of the parties' agreement, then it will
well as a procedural ruleof evidence,
to presentparol evidence(testimonyor other evidenceof communicationsbehveenthe underwhich a courtwill not receive
partiesthat are not contained in the contract itself). In other words,a party cannot intro- into evidencethe parties'prior
negotiations, prioragreements, or
duce in court evidence of the parties'prior negotiations, prior agreements, or contempo-
contemporaneous oral agreements if
raneousoral agreementsif that evidence contradictsor variesthe terms of the parties' that evidencecontradicts or varies
written contract. the terms of the parties'written
its fansto sell "stadiun'r builder licenses" (SBLs) contract,
Does a football team'sagreement with
for seatsrepresentthe parties'entire contract,or can an SBL brochure explain or vary the
agreement?That was the questionin the following case.

: C OMP A N PYR 0 F l tE the games.Pricesvarieddependingon the seats'locations,

@s
:^ . ..' PittsburghSteelersSports,lnc., whichwere indicatedby smalldiagrams. Yoccaappliedfor an
-'
is the operatingcompanyfor the NationalFootballLeague's SBL, listing his seating preferences. The Steelers sent him a
(NFlJs)PittsburghSteelers(rruww.steelers.com). Art Rooney letter notifying him of the section in which his seat was
located. A diagram included with the letter detailed the
foundedthe company,which his family still owns.The team
beganin 1935as the PittsburghPirates,named afterthe parameters of the section, but it differed from the brochure's
baseballteam. One of the star playersin the earlyyearswas diagrams.The Steelersalso sentYoccadocumentssettingout
Byron"Whizzer/'White, who led the NFLin rushingin 1958. the terms of the SBLand requiringhis signature.These
White becamea justiceof the UnitedStatesSupremeCourt in documents includeda clausethat read,"ThisAgreement
1962. Renamedin a contestsponsoredby the Pittsburgh Post- contains the entireagreementof the parties."Yoccasignedthe
Gozettein t 940, the Steelershad winning seasonsonly eight documents, and the Steelers told him the specificlocationof
times in the team'sfirst forty years.ln the 1970sand 1980,the his seat. When he arrived at the stadium,however,the seat
Steelerswon the SuperBowl four times,addinga fifth title in was not where he expected it to be. Yoccaand other SBL
2006. Groundbreaking for a new stadiumtook placein 1999. buyers filed a suit in a Pennsylvania statecourt againstthe
Steelers,alleging,among other things,breachof contract.The
BACKGR0UtiID AND FACTSInoctober 1ee8,Pittsburghcourt orderedthe dismissalof the complaint.The plaintiffs
SteelersSports,Inc.,and others(collectively, the Steelers)sent appealedto a stateintermediateappellatecourt,which
RonaldYoccaa brochurethat advertiseda new stadiumto be reversedthis order.The defendantsappealedto the state
built for the PittsburghSteelersfootballteam.The brochure supremecourt.
publicizedthe opportunityto buy stadiumbuilderlicenses
(SBLs),which grantthe rightto buy annualseasonticketsto C A S E1 5 . 2 - C o n t i n u e sn e x t Pa g e
558llEiluu
CONTRACTS

C ASE13 .2-Co ntin ued

Of T H ECOURT., . Justice
I I { I } I EW O R DS NI?RA.
{<**t<

* * * Where the parties,without any fraud or mistake, have deliberatelyput their

engagementsin writing, tl-ielaw declaresthe writing to be not only the best,but the only,
evidenceof their agreement.All preliminary negotiations,conversations and verbalagree-
ments are merged in and supersededby the subsequentwritten contract * x x and its
terms and agreementscannot be added to nor subtractedfrom by parol evidence.
Therefore,for the parol evidencerule to apply, theremust be a writing that represents the
entire contractbetweenthe parties.To determine whether or not a writing is the parties'
entire contract,the writing must be looked at and if it appearsto be a contract complete
within itself, couched fexpressed]in such terms as import a complete legal obligation
without any uncertaintyasto the object or extentof the parties'er-rgagement, it is conclu-
sively presumed that the writing representsthe whoie engagement of the parties
* * * An integrationa
clause [a provision stating that all of the terms of the parties'
agreementare included in the written contract] *( * x is alsoa clear sign that the writing
is meant to be jr-rstthat and therebyexpresses all of the parties'negotiations,conversation{
-
and agreementsmade prior to its execution.fEmphasisadded.]
()nce a writing is determinedto be the parties'entire contract,
the parol eyid.ence rule
appliesand evidenceof any previousoral or written negcttiations o, agrnn*entsinttohtingthe
same subiectmatter as the contract is almost always inadmissibleto explain o, vary the
termsof the contract.One exception to this general rule is that paroi evidencemay be
introduced to vary a writing meant to be the parties'entire contract where a party avers
[asserts]thata term wasomitted from the contractbecauseof frar,rd,accident,o,
In addition, where a term in the parties'contract is ambigr,rous, parol evidenceis -irtrk".
admis-
sible to explain or clarif, or resolvethe ambiguity,irrespectiveoi whether the ambiguity
is createdby the languageof the instrument or by extrinsicor collateralcircumstancei.
IEmphasisadded.]
In the instant case fthe casebefore the court], we cannot agreewith the
lappellate
court] that the SBL Brochurerepresentedthe termsof the parties'contractconcerningthe
saleof SBLs.Contrary to the lappellatecourt's]understanding,the SBL Brochure diJ not
representa promise by tl-reSteelersto sell SBLs to Appellees.Rather,the Brochure was
merely an offer by the Steelersto sellAppelleesthe right to be assignedan unspecifiedseat
in an unspecifiedsectionofthe new stadiumand the right to receivea contractto buy an
sBL for that later-assignedseat. Moreover, by sending in their applications * * *
,
Appelleessimply secr,rred their right to be consideredfor assignedseati and the opportu-
nity to receivea subsequentoffer to purchaseSBLsfor thoseseats.In this respect,the SBL
Brochure was similar to an option contractin that it merely gaveAppelleesthe option to
possiblyacceptan offer for SBLs at some later date.
On the otl-rerhar-rd,the SBL Agreementclearly representedthe parties'contract con-
cerningthe saleof SBLs.Unlike the SBL Brochure,the SBL Agreementreflecteda prom-
ise by the Steelersto actuallysell Appelleesa specificnumber of SBL seatsin a specified
section.F urthermore,the SBL Agreementdetailedall of the termsand conditioni of that
sale,fthat is,] the precisenumber of seatsto be sold to the named Licensee,the exactsec-
tion in which thoseseatswere located (inciuding a visuai depiction of that location), the
total amounts due for each SBL, the datesthoseamountswere due, and all of the rights
and duties associatedwith owning an SBL, including the Licensee'sright to transferlhe

a. lntegrcted confrocfswill be discussedlater in this chapter.

 5598@
THE OFFRAUDS
STATUTE

C ASE1 5 . 2- Cont inued

SBL. Most importantly, the SBL Agreementexplicitly statedthat it representedthe par-

ties' entire contract regarding the sale of SBLs. Accordingly, we find that the SBL
Agreementrepresentedthe parties'entire contract with respectto the sale of SBLs and
that the parol evidencerule bars ihe admissionof any evidenceof previousoral or writ-
ten negotiationsor agreementsenteredinto behveenthe partiesconcerningthe saleof the
SBLs, sucl-ras the SBL Brochure, to explain or vary those terms expressedin the SBL
Agreement.

rtrePennsylvania
ANDREMEDY
DECISI0N supreme WEREDIFFERENT?
WHATIF THEFACTS
Court reversedthe lower court'sjudgment.The statesupreme Supposethat the Sfee/ershod not sent Yoccoo
court held that the SBLdocumentsconstitutedthe parties' diogrom with the letter notifying him of his seat'ssection
entirecontractand underthe parolevidencerulecouldnot be qnd that the SBLdocumentshod not included on integration
supplementedby previousnegotiationsor agreements. clause. Would the result have been different?
Because the plaintiffsbasedtheircomplainton the claimthat
the defendantsviolatedthe terms of the brochure,and the
court held that the brochurewas not part of the contract,the
complaintwas properlydismissed.

tr
to theParolEvidence
Exceptions Rule
Becauseof the rigidityof the parol evidencerule, courts make severalexceptions.These
exceptionsinclude the following:

I Evidenceof a subsequentmodification of a written contractcan be introducedin court.

Keep in mind that the oral modificationsmay not be enforceableif they come under
of Frauds-for example,if they increasethe price of the goodsfor sale to
the Statr-rte
$500 or more or increasethe term for performanceto more than one year.Also, oral
modifications will not be enforceable if the original contract provides that any
modificationmust be in writing.q
2 Oral evidencecan be introduced in all casesto show that the contractwasvoidabieor
void (for example,induced by mistake,fraud, or misrepresentation). In ihis situation,
if deception led one of the pariiesto agreeto the terms of a written contract,oral evi-
dence indicating fraud should not be excluded. Courts frown on bad faith and are
quick to allow the introduction at trial of parol evidencewhen it establishesfraud.
5 When the terms of a written contract are ambiguous,evidenceis admissibleto show
the meaning of ihe terms.
i[ Evidenceis admissiblewhen the written conhact is incomplete in that it lacksone or
terms.The courtsallow evidenceto "fill in the gaps"in the contracl
more of the essential
5 Under the UCC, evidencecan be introduced to explain or supplementa written con-
tract by showinga prior dealing,courseof performance,or usageof trade.l0We discuss
theseterms in further detail in Chapter 18, in the contextof salescontracts.Here, it is
sufficientto saythat when buyersand sellersdeal with each other over extendedperi-
ods of time, certain customarypracticesdevelop.These practicesare often overlooked
in the writing of the contract,so courtsallow the introduction of evidenceto showhow

L UCCz-209(Z),(3).SeeChapter
18.
10.UCC I-205,2-202.SeeChapterl8
 r{0llEili@
CONTRACTS

the partieshaveacted in the past.Usageof trade-practices and customsgenerallyfol-

lowed in a particular industry-can also shedlight on the meaning of certain contract
provisions,and thus evidenceof trade usagemay be admissible.
The parol evidencerule doesnot apply if the existenceof the entire written contract
is subject to an orally agreed-oncondition. Proof of the condition does not alter or
modify the written terms but affects the enforceability of the written contract.
IEEXAMilEt5"m ]elek orally agreesto purchasefumand's car for $8,000.but only if
]elek'smechanic, Frank, inspectsthe car and approvesof the purchase.Frank cannot
do an inspection for another week, and Armand is leaving town for the weekend. jelek
wantsto use the car right away,so he draftsa contractof salethat doesnot include the
EEIE The parol evidencerule and agreed-oncondition of a mechanical inspection.Both partiessign the contract. The
its exceptionsrelateto the rules following week Frank,the mechanic,inspectsthe car but doesnot recommend its pur-
concerningthe interpretotion ot
contracts. chase.When felek does not buy the car, Armand sueshim for breach of contract. In
this case,)elek'soral agreementdid not alter or modify the terms of the written agree-
ment but concernedwhether the contractexistedat all. Therefore,the parol evidence
rule doesnot apply. E
When an obviousor grossclerical (or typographic)error existsthat clearly would not
representthe agreementof the parties,parol evidenceis admissibleto correctthe error.
lrExAMptFtsJZ Sempter agreesto lease 1,000squarefeet of office spacefrom Stone
Enterprisesat the current monthly rate of $3 per squarefoot. The signedwritten lease
providesfor a monthly leasepayment of $300 rather than the $1,000agreedto by the
parties.Becausethe error is obvious, Stone Enterpriseswould be allowed to admit
parol evidenceto correct the mistake.E

Integrated
Conttacts
The determinationof whether evidencewill be allowedbasicallydependson whether the
written contractis intended to be a completeand final statementof the terms of the agree-
INTEGRATED CONTRACT ment. If it is so intended, it is referredto as an integrated contract, and extraneousevi-
A written contractthat constitutes dence (evidencefrom outsidethe contract) is excluded.
the final expressionof the parties'
agreement.lf a contractis integtated, An integratedcontract can be either completely or partially integrated.If it contains
evidenceextraneous to the contract all of the terms of the parties'agreement,then it is completely integrated.If it contains
that contradictsor altersthe only some of the terms that the parties agreed on and not others, it is partially inte-
meaningof the contractin any way
is inadmissible. grated. If the contract is only partially integrated, evidenc_eof consistent additional
ierms is admissible to supplement the written agreement.ll Note that for both com-
pletely and partially integratedcontracts,courts exclude any evidence that contradicts
the writing and allow parol evidence only to add to the terms of a partially integrated
contract. Exhibit I J-4 illustratesthe relationship between integratedcontractsand the
parol evidencerule.

One common way for parties to avoid disputes over whether a contract is
partially or fully integrated is to include an integrotion clduse in the contract.
An integration clause declares that the contract is the parties'complete and final
agreement and explicitly states that there ate no other terms or conditions of
performance. A contract that includes such a clause is conclusively deemed to
be an integrated contract, and all extrinsic and parol evidence will be excluded.

Ii (Second)of Contracts,Section 216.

11. Restdtement

l
d
 ill r!7irtrrfiIfl
THE OFFRAUDS
STATUTE

FULLY INTEGRATED NOTFULLY INTECRATED

lntendedto be a complete andfinal Omitsan agreed-ontermthat is consis-
embodimentof the termsof the parties' tentwith the parties'agreement.
agreement.

PAROL EVIDENCE INADMISSIBLE PAROL EVIDENCE ADMISSIBLE

Forexample, evidence of a priornegotia- Forexample,if the contractis incomplete
a term of the wriften
tion that contradicts andlacksoneor moreof the essential
contractwouldnot be admitted. terms,parolevidence maybe admifted.

ofFrauds
CharterGolf,Inc., Assumethat the courtdoesfind that the contractfallswithin
manufactures and sells the Statuteof Fraudsand that the statein which the court sits
golfappareland recognizeseveryexceptionto the Statuteof Fraudsdiscussed
supplies.KenOdin had in the chapter.What exceptionprovidesOdin with the best
worked as a Charter chanceof enforcingthe oral contractin this situation?
for six monthswhen he was offereda
salesrepresentative
Now supposethat Montieth had taken out a pencil,written
positionwith a competingfirm. Charter'spresiden!,JerryMontieth,
"lO percentfor life"on the backof a registerreceiptand
offeredOdin a 10 percentcommission"for the restof his life" if
handedit to Odin.Would this satisfythe Statuteof Frauds?
Kenwould turn down the offerand stayon with Charter.He also
Why or why not?
promisedthat Odinwould not be fired unlesshe was dishonest
Odinturned down the competito/sofferand stayedwith Charter. Assumethat Odin had signeda written employmentcontract
Threeyearslater,Charterfired Odin for no reason.Odin sued, at the time he was hired to work for Charter,but it was not
allegingbreachof contract.Usingthe informationpresentedin the completelyintegrated.Would a court allow Odin to present
chapter,anwverthe followingquestions. parolevidenceof Montieth'ssubsequentpromises?
I Woulda courtlikelydecidethat Montieth'semployment
contractfalls within the Statuteof Frauds?Why or why not?

s a generalrule, most makeoral conhactsoverthe telephone,however,particularly

businesscontracts when the partieshavedone businesswith eachother in the past.
shouldbe in writing even
when they fall outside Confirm inWriting
theAgreement
the Statuteof Frauds. Any time an oral contractis made,it is advisablefor one of
Businesspersons frequently the oartiesto sendeithera written memorandumor a confir-

* ThisApplicationis not meantto substitutefor the servicesof an attorneywho is licensedto practicelaw in your state.

(Continued)
542llNilsil
CONTRACTS

mation of the oral agreement by lax or e-mailto the other
party.This accomplishes two purposes:(1) it demonstrates the
party'sclearintentionto form a contract, and 12; it provides
the termsof the contractasthat partyunderstoodthem. If the
partyreceivingthe memorandumor confirn-ration then dis-
agreeswith the terrnsasdescribed, the issuecan be addressed
beforeperformancebegins.
Rules
Special Merchants
between
forContracts
What aboutthe saleof goodsbehveenmerchants? Underthe
UCC, wriitenconfirir-ration receivedby one merchantremoves
the Statuteof Fraudsrequirenent of a writir-rgunlessthe mer-
chantreceivingthe confirmationobjectsin writingwithin ten
daysof its receipt.This law (discussed in Chapter18)clearly
pointsout the needfor the mercl-rant receivingthe confirma-
tion to reviewit carefuilyto ascertainthat the confirmation
confonnsio the oral contract.If the writingdoesnot so
conform,the merchantcan obiectin writing (the Statuteof
Fraudsstill applies),and the partiescan resolvemisunderstand-
ingswithoui legalliability.If the n-ierchantfailsto object,the
writtenconfirmationcan be usedasevidenceto provethe
termsof the oral contract.Note,however,that this ten-dayrule
doesnot applyto contractsfor interests in realtyor for services,
to which the UCC doesnot apply.
CHE CK TFI O
STT HEB US I NE S S P E RSON
R
1 When feasible,use written contracts.
2 lf you enter into an oral contractover the telephone,
fax or e-maila written confirmationoutliningyour
understanding of the oral contract.
5 lf you receivethe other Party'swritten or faxed confir-
mation, read it carefullyto make surethat it states
the terms alreadyagreedto in the oral contract,as
you understandthem.
4 lf you have any objections,notify the other party of
these objections,in writing, within ten days'

promise350
collateral parolevidence
rule 557 Statuteof Frauds527
contract540
integrated prenuptial
aSreement552

Appticobitity-The followingtypesof contracts{all underthe Statuteof Fraudsand must be in

writing to be enforceable:
a. Contractsinvolvinginterestsin land-The statuteappliesto any contractfor an interestin
realty,suchas a sale,a lease,or a mortgage.
b. Contractsthat cannotby their terms be performedwithin one year-Thestatuteappliesonly
to contractsthat are objectivelyimpossibleto performfully within one yearfrom (the day
after)the contract'sformation.
c. Collateralpromises-Thestatuteappliesonly to expresscontractsmade betrrueen the
guarantorand the creditorthat make the guarantorsecondarilyliable.Exception: the main
purposerule.
d. Promisesmade in considerationof marriage-Thestatuteappliesto promisesto make a
monetarypaymentor give propertyin considerationof a promiseto marryand to
prenuptialagreementsmade in considerationof marriage.
e. Contractsfor the saleof goodspricedat $5OOor more-See the Statuteof Fraudsprovision
in Section2-2Q1of the UniformCommercialCode(UCC).
2. Exceptions-PartiaI performance,adm issions,and promissoryestoppel.
 545mllE rH
IHESTATUTE
OFFRAUDS

The Sufficiencv To constitutean enforceablecontractunderthe Statuteof Frauds,a writing must be signedby the
of the Writing' partyagainstwhom enforcementis sought,name the parties,identifythe subjectmatter,and
(See pages 335-337.) statewith reasonablecertaintythe essentialteims of the contract.In a saleof land,the priceand
a descriptionof the propertymay need to be statedwith sufficientclarityto allow them to be
determinedwithout referenceto outsidesources.Underthe UCC,a contractfor a saleof goodsis
not enforceablebeyondthe quantityof goodsshown in the contract.

TheParol The parol evidencerule prohibitsthe introductionat trial of evidenceof the parties'prior
EvidenceRule negotiations,prior agreements,or contemporaneous oral agreementsthat contradictsor varies
(Seepages337-341,) the terms of the parties'writtencontract.Thewritten contractis assumedto be the complete
embodimentof the parties'agreement.Exceptions are made in the followingcircumstances:
L To show that the contractwas subsequentlymodified.
2. To show that the contractwas voidableor void.
5. To clarifythe meaningof ambiguousterms.
4. To clarifythe terms of the contractwhen the written contractlacksone or more of its
essentialterms.
5. Underthe UCC,to explainthe meaningof contractterms in light of a prior dealing,course
of performance,or usageof trade.
6. To show that the entirecontractis subjectto an orallyagreed-oncondition.
7. When an obviousclericalor typographicerrorwas made.

,1 .

Answers for the even-numberedquestionsin this tar Reviewsection can be found on this text's occompanyingWeb site at
www.cengage.com/blaw/blt. Select"Chopter15" ond click on "For Review."

I What contractsmust be in writing to be enforceable?

2 If it is possibiefor a contractto be perfomed rvithin one year,must it be in writing?
5 Wl-renwill an oral promiseto pay anotherperson'sdebt be enforced?
4 If a written contractis required,what terms are consideredesser-itial
and n-rustbe containedin the written document?
5 What is parol evidence?When is parol evidenceadn'iissible
to clarif, the termsof a written contract?

tr
'r ::

HypoTHETrcAr. ANDcAsEpRoBr.EMs
scENARr0s
#
23"4 The One-YearRule. On May 1, by telepl'rone,YLroffersto hire
Bensonto perforr-npersonalservices.On May 5, Benson
returnsYu's call and acceptsthe offer. Discussfulll' whether
this contractfalls under the Statuteof Frauclsin the follow-
irro nirorrrnqlrnnec'
? The contract calls for Bensonto be employedfor one year,
with the right to begin performanceirr.rnediately.
2 'l'he contract calls for Bensonto be employedfor nine
months, rvith perforrnanceof servicesto begin on
September1.
E The contract calls for Bensonto subrnita lr'ritten rese:rrch
report,with a deadline of two yearsfor subnission.
T3"? HypotheticalQuestionwith SampleAnswer. Gemma pron.rises
a local hardrvarestorethat she will pay for a larvn nower that
her brother is purchasingon credit if the brother fails to pay '
the debt. Must this promisebe in r,vritingto be enforceable?
Why or u,hy not?
Fora sampleanswerto Questiont5.2,go to AppendixEat the
endof thistext.