Exam 10: The Requirements of Form and Writing

Martin enters into a verbal contract with Marlowe Ltd. to investigate their operations and their accounting systems, make recommendations as to how to improve them, and help implement the changes Marlowe Ltd. accepts. In the negotiations, Martin makes it clear that he cannot give Marlowe Ltd. a definite timetable and that it is clear that the whole process will take longer than a year. Part of their agreement is that either party may terminate the contract on 60 days' written notice to the other if the work is progressing unsatisfactorily. In this situation,

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. Ravi may successfully plead the Statute of Frauds as a defence.

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." The contract of guarantee is subject to the Statute of Frauds.

Audrey agrees verbally to do some repair work on the retaining walls in Douglas's terraced gardens. After she has turned down another contract from someone else, Douglas tells her he has changed his mind. It is now too late to get the other contract. Since the contract concerning the work on Douglas's land was a verbal one, Audrey cannot enforce it due to the Statute of Frauds.

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. Joyce's promise is called an indemnity.

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. What agreements have to be in writing to be enforceable?

Martin enters into a verbal contract with Marlowe Ltd. to investigate their operations and their accounting systems, make recommendations as to how to improve them, and help implement the changes Marlowe Ltd. accepts. In the negotiations, Martin makes it clear that he cannot give Marlowe Ltd. a definite timetable and that it is clear that the whole process will take longer than a year. Part of their agreement is that either party may terminate the contract on 60 days' written notice to the other if the work is progressing unsatisfactorily. The agreement that the arrangement can be terminated is

Travis verbally ordered a new $500 dinette set from Timpson's Furniture and the salesman accepted the order verbally. Taking his name and address, the salesman having run out of sales contracts, said he would send Travis a copy of the contract the following day, and asked Travis to sign and return it. When the copy of the contract arrived, Travis did not sign it and he refused delivery of the dinette set when it arrived. Timpson's sued Travis for breach of contract.

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. Assuming the verbal agreement is unenforceable, the contract would still exist. TRUE

David wants to sell one of his properties but will be out of the country for an extended period. He decides to ask his brother John to sell the property on his behalf. For John to be able to legally enter into a purchase and sale agreement on behalf of his brother David, the following should take place:

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." Z's promise would be unenforceable, unless it was made in writing and signed by Z.

To comply with either the Statute of Frauds or most statutory writing requirements, evidence of the contract in writing needs to be embodied in a formal document.

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. Joyce's promise does not have to be in writing to be enforceable.

Mr. Guimond was teaching his son, Jacques, to drive in the family car when Jacques failed to apply his brakes soon enough and hit the car in front, causing considerable damage. Mr. Bouchard, the driver of the other car, should get Mr. Guimond's promise to pay for his repairs in writing or it will be unenforceable.

Karen, a marketing consultant, entered into an agreement with Better Life Consumer Products Co. whereby she agreed to assist in test marketing their products for a year. The verbal agreement was made on June 12^th, and Karen was to begin work for the firm on November 1^st of that year. The contract was to terminate on November 1^st of the following year. Better Life offered to prepare a formal agreement for her signature which would be available for signature on her first day of work. However, the August prior to her starting work, Better Life was forced to drop plans to test market their intended products as a result of a patent infringement suit. They notified Karen that there was no need for her services Discuss Karen's rights (if any) and Better Life's position at law.

Pashi promises, in an unsigned note, to give Neve, her daughter-in-law-to-be, the family jewellery and some share certificates worth $100,000 on the day she marries Pashi's son. If she does not do so, Neve can enforce the agreement since it is evidenced in writing and she, by marrying, gave Pashi consideration for her promise.

A collateral agreement is defined as an agreement that has its own consideration and does not support another agreement.

Raimondo has been named as executor of his father's estate. Raimondo's father was a very wealthy man who had made a lot of money in real estate and then reinvested his money in mutual funds and other long-term investments. This left few of his finances in a position to be quickly liquidated. Since his father's death, bills have been piling up and creditors are starting to knock on his door. Raimondo has decided that, because there is no way to utilize his father's money in the near future, he will pay the debts out of his own pocket and be reimbursed later from his father's estate. Raimondo is allowed to do this but must clearly state the intention in writing as outlined in the Statute of Frauds.

A verbal contract concerning the sale of land to Jack by Jill will not be enforceable by either one of them unless it can be shown that the one who wishes to enforce it dealt with the land as if there was such a contract and no other interpretation could be put on their actions; that the non-enforcement would perpetrate a fraud and a hardship on the one who wishes to enforce it; and there is clear verbal evidence, such as witnesses to the transaction, to establish that there was such a valid verbal contract between them.

A subsequent agreement involves which of the following?