Exam 10: The Requirements of Form and Writing

In the presence of several witnesses, A verbally agreed to purchase B's farm for $175,000. The next day, B changed his mind, and refused to sell the farm to A. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm. If A had given B $10 in cash as a deposit the agreement would be enforceable. FALSE

The Consumer Protection Act states that the parties to a contract must each have a copy of the contract or it will not be enforceable. Tim and Tess go to the Rapacious Furniture Co. to buy a couch. They have saved $500 from their salaries as employees in a sheltered workshop for individuals with learning disabilities and do not intend to spend more than that, but the salesman takes advantage of their slower thought processes to fast-talk them into a couch which costs $1,200, the balance of which they must pay for in installments of $50 per month, a sum which is really beyond their means. Having read a book on contract law, the salesman makes sure that all the formalities are followed when Tim and Tess sign the contract, and he makes sure he gives the couple one copy of the contract and keeps one for Rapacious' files. Tim and Tess realize later that day that they cannot afford the couch and they ask Rapacious to tear up the contract. They are upset to find out that the furniture salesman will not do so. Can you advise them of any way out?

In the presence of several witnesses, A verbally agreed to purchase B's farm for $175,000. The next day, B changed his mind, and refused to sell the farm to A. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm. The verbal agreement is void. FALSE

Joyce's son, Al, borrowed money from Verity Finance. He lost his job last month and has not made the latest payment on the debt. When Verity's collections department telephones, Joyce answers the phone. She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss. Verity must first try to get the money from Al before approaching Joyce.

Painter and Hawe discussed the possibility of Hawe entering the employ of Painter as the general manager of Painter's firm. A written contract was prepared and signed by the parties on December 1^st, 2018. The contract provided for a salary of $3,000 per month and specified that the contract was to run for a period of two years from January 2^nd, 2019. On December 28^th, 2018, Painter notified Hawe that he was cancelling the contract. Hawe sued Painter immediately. The Statute of Frauds requires the contract to be in writing, and signed, to be enforceable by Hawe against Painter.

Painter and Hawe discussed the possibility of Hawe entering the employ of Painter as the general manager of Painter's firm. A written contract was prepared and signed by the parties on December 1^st, 2018. The contract provided for a salary of $3,000 per month and specified that the contract was to run for a period of two years from January 2^nd, 2019. On December 28^th, 2018, Painter notified Hawe that he was cancelling the contract. Hawe sued Painter immediately. The Statute of Frauds would render the contract illegal if it was not in writing and signed.

Cal has just co-signed a car loan for his friend, Peter. This action made Cal the guarantor of the loan. In the event that Peter defaults on payment, Cal has been made liable for payment. After a few months without incident, Cal receives a notice from the bank that Peter missed a payment, and that Cal is to pay. After writing a cheque, Cal confronts Peter who said he could not afford it this month because he bought a new stereo. Cal is annoyed with Peter's irresponsible actions and informs Peter that next month he will have to pay two installments, one to the bank and one to him to make up for this month.

The parol evidence rule

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. The gallery can successfully answer all of Ravi's case by raising the parol evidence rule.

The act of putting a contract under seal was born in the King's Courts of the 13^th century. It was used as an expression of the intent to be bound by the person making the contract to which the seal was affixed. Today in some provinces formal agreements such as power of attorney and a deed of land must bear a seal to be made enforceable.

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. The verbal agreement is unenforceable.

Parties sometimes enter into verbal agreements but then only partly perform their obligations. For the claim of part performance to succeed, what needs to be established?

Hrushka is the executor of her father's will. She does not want to liquidate any part of his stock portfolio at this time to pay off a large debt he owed Tom, because the market is very low right now and she would get a better price later in the year. Her verbal promise to Tom that she will repay him herself is unenforceable.

In the presence of several witnesses, A verbally agreed to purchase B's farm for $175,000. The next day, B changed his mind, and refused to sell the farm to A. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm. B may successfully plead the Statute of Frauds as a defence. TRUE

Painter and Hawe discussed the possibility of Hawe entering the employ of Painter as the general manager of Painter's firm. A written contract was prepared and signed by the parties on December 1^st, 2018. The contract provided for a salary of $3,000 per month and specified that the contract was to run for a period of two years from January 2^nd, 2019. On December 28^th, 2018, Painter notified Hawe that he was cancelling the contract. Hawe sued Painter immediately. When Painter cancelled the contract, Hawe was released from his obligation to perform.

Painter and Hawe discussed the possibility of Hawe entering the employ of Painter as the general manager of Painter's firm. A written contract was prepared and signed by the parties on December 1^st, 2018. The contract provided for a salary of $3,000 per month and specified that the contract was to run for a period of two years from January 2^nd, 2019. On December 28^th, 2018, Painter notified Hawe that he was cancelling the contract. Hawe sued Painter immediately. Hawe may sue Painter for breach of the contract.

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. The verbal agreement is valid and enforceable if the witnesses testify in court that an agreement of purchase and sale was made.

Greentree Financing Ltd. enters into an agreement to lend $25,000 to Mai for the purchase of a car. The loan is guaranteed by her father, Mao. At a minimum, what must be in writing to constitute a written agreement in accordance with the Statute of Frauds?

Steve orally agrees, at a family reunion picnic, to buy Bob's farm for $250,000, and all the terms of the agreement are settled. Bob agrees to let Steve come onto the property before the closing date so that Steve can renovate the farmhouse kitchen and build a new barn before he takes over formally. By the time Bob tells Steve that he has changed his mind and that he will not be completing the transaction on the closing date, Steve has spent $40,000 on the property.

In the presence of several witnesses, A verbally agreed to purchase B's farm for $175,000. The next day, B changed his mind, and refused to sell the farm to A. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm. The verbal agreement is unenforceable. TRUE