Exam 10: Failure to Create an Enforceable Contract

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?

What is the name of the federal government's legislation governing the gathering of personal information?

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.

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 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.

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.

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.

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.

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.

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

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, 1989. 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, 1990. On December 28^th, 1989, 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 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.

The parol evidence rule

Greentree Financing Ltd. enters into an agreement to lend $20,000 to Mark for the purchase of a boat. On the loan application Mark provided the following information: address, telephone, social insurance number, employer, annual earnings and banking information. Mark agreed to the collection of the information for the purpose of assessing his suitability for the loan. How else can Greentree use this information?

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.

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?

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 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.

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?

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

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.

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.