Exam 10: The Requirements of Form and Writing

The Carpenters bought a house from the Taylors for $250,000, paying a $25,000 deposit with the balance of $225,000 to be paid on the closing date. To save money on lawyers, they used a standard contract purchased from a stationery store. Thinking that the appliances, drapes and carpets, which the Taylors were to sell them for $5,000, could not be included in a contract for the sale of real estate, the Carpenters simply agreed to that verbally, and paid the extra $5,000 on the date of closing. They were horrified to arrive at their new house and find no carpets, drapes or appliances. The lawyer to whom they went said, "You have nothing here that says they are selling you those things." a. What rule of law would the lawyer tell them about which could cause them difficulty in suing the Taylors for the missing furnishings, and how would it apply in this case? b. What solution could the lawyer suggest, once she knew all the facts, and how would it apply in this case? c. If the verbal agreement about the furnishings had been made sometime after the contract of purchase and sale, would the same problem exist and why or why not?

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. If Verity, without Joyce's knowledge, extends the time Al has to make the payments but increases the interest rate by ½%, because he explains about his job loss, they could no longer enforce Joyce's promise, regardless of whether or not it was in writing and signed by her.

Lev and Drew have been negotiating verbally and in writing concerning the purchase by Lev of a number of items manufactured by Drew's company. Lev insists that they have only reached the stage of having an agreement in principle but Drew says they have a binding contract. If one of the terms they agreed upon verbally was that they would execute a written contract, the court will hold that a contract does exist.

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 has made an offer to guarantee the payment of the debt of X.

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 that his words were agreement in principle only.

A power of attorney is a legal document usually signed under seal in which a person appoints another to act as his or her attorney to carry out the contractual or legal acts specified in the document.

Sandra offered to purchase Jean's car for $3,500, and Jean accepted this offer. This contract was reduced to writing and signed by the parties, when Sandra discovered that Jean was searching for an evening gown to wear to a social affair some months in the future. Sandra offered then to make a dress for Jean, if Jean would accept $3,200 for the car. Jean agreed to the modification and in return for Sandra's cheque in the amount of $3,200 gave her the keys to her car. Sandra finished the dress in time for the social event; however Jean was not pleased with the final result, and declaring it worthless to her, returned the dress to Sandra and brought an action on the face of the written contract for the $300 balance outstanding. Discuss the legal issues raised in this fact situation, its likely resolution, and treat explicitly how Sandra may counter in procedural terms with a defence against the document for $3,500, which is clear on its face and bears her signature. D.L.R. 985.

The effect of the Statute of Frauds (or any other statutory provision in provinces that have repealed it) is that none of the following may be brought in a court of law unless they are in writing and signed by the party to be charged:

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." If Z made the guarantee in writing, and signed the document, the guarantee would not be enforceable until X defaulted on a demand for payment by Y.

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 valid and enforceable if the witnesses testify in court that an agreement of purchase and sale was made. FALSE

Mary verbally agrees to purchase Carrie's cottage for $75,000 and gives her a deposit cheque for $7,500. Carrie later sends her a letter thanking her for the cheque and confirming all the details of the contract. Mary later refuses to go through with the deal.

Randy, an avid hunter, wishes to build a hunting cabin for himself and his companion to use during hunting season. He travelled around the area and found a farm that had an ideal piece of land. Randy telephoned the farmer and asked to meet him over coffee. Bob, the farmer, decided to sell Randy the lot for $3,000. Randy agreed, handing Bob $500 in cash as a deposit. When Randy arrived for hunting season three months later, having erected a cabin in the summer, he offered Bob another $1 000 towards the purchase price. However, he found quite a surprise. Bob decided he no longer wishes to sell the land and informs Randy he will have to tear down his building. Bob tells Randy that he may do this because they did not have a written agreement. Apply the four criteria of the "doctrine of part performance" to the circumstances and explain their relevance to both Randy's arguments and Bob's defence.