Deck 11: Formal Requirements--Statute of Fraudse-Signatures

Question 1

As you read through the chapter, what are four key points that were made about the statute of frauds?

Answer 1

Statute of Frauds:
The Statute of Frauds was enacted to cure, or at least to circumvent, certain deficiencies of the law of evidence and common law procedure by reducing agreements to writing.
The following types of contracts are said to fall within or under the Statute of Frauds and therefore are required to be in writing or evidenced by a written memorandum:
1. Contracts involving interests in land.
2. Contracts that cannot by their terms be performed within one year from the date of formation.
3. Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally that is, out of her or his own pocket.
4. Promises made in consideration of marriage.
5. Under the Uniform Commercial Code, contracts for salve of goods priced at $5,000 or more under the 2003 amendments to § 2-201.
Hence, agreements covered under the Statute of Frauds must be in the executory stages, be in writing (if oral, it must have been executed and have evidence to support existence), it must be signed, and a court will assume that only the terms of the contract are evidence in support of the agreement.

Question 2

Martson, a retired professional athlete, owned a self-standing sporting goods store in a small city of about 50,000 people. He decided to retire completely and offered to sell his business, including the building, to a group of investors headed by a person named Greeves for $1 million. Greeves, without the aid of an attorney, drew up a handwritten purchase and sales agreement, signed it, and sent the document to Martson. The document was lacking an important requirement under the statute of frauds dealing with real property, namely a complete description of the property. It contained only a street address. A short time after Martson received the document, Greeves informed Martson that he decided not to go through with the contract. Martson never did sign the document.
Questions
1. Is Greeves bound by this agreement?
2. Is the fact that Martson did not sign the agreement significant?
3. Would an attorney have been helpful to the parties in this case?

Answer 2

As per the case, Mr. G would not be liable to purchase the property due to various reasons. They are listed below:
• Only the head of the investment group signed the contract.
• There were number of details that were not included in the contract which are specific to a real estate transaction. They are specifically building, land and other assets.
• The owner of the sporting goods did not sign the contract.

Question 3

Whitman Heffernan Rhein Co., a financial advisory company, sued the Griffin Company to recover compensation for services rendered in negotiating the purchase of a business (Resorts International) from Donald Trump. The agreement between Whitman and Griffin had been made orally, but it should have been in writing under the New York statute of frauds. The trial court decided for Griffin, but Whitman appealed. Should the appeals court decide for Whitman? (Whitman Heffernan Rhein Co., Inc. v. The Griffin Co., 557 N.Y.S.2d 342)

Answer 3

Issue:
Will an oral agreement for specific services that require evidence in writing be enforceable?
Oral Contract:
In order for an oral contract to be enforceable, it must be possible to complete the contract within one year after the date of the contract.
Valid Contract:
The elements of a valid contract include:
1. There must be an offer and acceptance that is easily perceived as an agreement.
2. There must be legally-sufficient value (Consideration) in the form of something received or promised that convinced a party to the contract to make the deal.
3. The parties to the contract must have legal capacity to enter into the agreement. Capacity consists of legal age, mental competency and sobriety within reasonable awareness.
4. The goal of the contract must be to achieve a purpose that is legal under local, state and federal statutes and regulations, and public policy in general.
Statute of Frauds:
The Statute of Frauds was enacted to cure, or at least to circumvent, certain deficiencies of the law of evidence and common law procedure by reducing agreements to writing.
The following types of contracts are said to fall within or under the Statute of Frauds and therefore are required to be in writing or evidenced by a written memorandum:
1. Contracts involving interests in land.
2. Contracts that cannot by their terms be performed within one year from the date of formation.
3. Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally that is, out of her or his own pocket.
4. Promises made in consideration of marriage.
5. Under the Uniform Commercial Code, contracts for salve of goods priced at $5,000 or more under the 2003 amendments to § 2-201.
Hence, agreements covered under the Statute of Frauds must be in the executory stages, be in writing (if oral, it must have been executed and have evidence to support existence), it must be signed, and a court will assume that only the terms of the contract are evidence in support of the agreement.
Opinion:
In the case Whitman Heffernan Rhein Co., Inc. v. The Griffin Co. , 163 A.D.2d 86, 557 N.Y.S.2d 342 (1990), the court granted summary judgment in favor of Griffin. The Supreme Court of New York affirmed.
In this case, Rhein sought to enforce an oral agreement between the parties. The Court determined that the services to be rendered by Rhein fell within the Statute of Frauds and was therefore void.
Hence, the oral agreement did not meet the standard under the Statute of Frauds.

Question 4

Does putting a contract in writing guarantee that its terms will not be questioned by the parties at the time of performance?

Question 5

Jones (appellee) signed a printed contract form agreeing to purchase a house from Long. Long also signed the form. At the time of signing, Jones also made a down payment as evidence of her good faith to go through with the contract. The down payment was to be applied to the purchase price upon completion of the sale of the house. Jones later refused to go through with the contract and ended up suing Long for the return of the down payment. At trial, Jones introduced parol evidence that an understanding existed between Long's agent and her that she could not buy the house unless she sold her house first, and that her house was not sold. Jones won her case at the trial level. Long appealed on the grounds that it was improper for the trial court judge to rule for Jones based on the parol evidence rule regarding the agreement between Long's agent and Jones. Long claims that the contract for the sale of the house had been reduced to writing as the final and complete agreement and parol evidence could not be introduced to alter that agreement in any way. How would you rule in this case? (Court of Appeals of Kentucky, 319 S.W.2d 292)

Question 6

Under what circumstances will the courts not allow parol evidence to be introduced in a lawsuit relating to the terms of a written contract?

Question 7

Bratman, an attorney, had a client who was injured in an automobile accident and was being treated by Dr. Healy. Bratman orally promised to pay Healy his medical fees out of the proceeds of any award made to his client as the result of a lawsuit based on the accident if the client did not pay the fees. When the client was awarded $15,000 for his injuries, Bratman refused to pay Healy, invoking the statute of frauds. Can Healy legally hold Bratman liable for his oral promise to pay? (Healy v. Bratman, 409 N.Y.S.2d 72)

Question 8

Thompson, the owner of a successful floral shop, orally promised Franks, an experienced floral arranger, a bonus of $10,000 and a monthly salary if Franks would work for Thompson for two years. The bonus was to be paid at the end of the two-year period. Franks actually did work for the full term of the oral agreement. Will the statute of frauds prevent Franks from collecting the bonus?

Question 9

Malo, an architect, signed a contract with Gilman to design an office building. Nothing was said in the contract about the size, style, or maximum cost of the building, only an estimated cost. When the bids for the building came in, they were so much more than the estimated cost that Gilman decided not to build the building. He also refused to pay Malo for his services. In court, Gilman tried to introduce evidence that there had been conversations about maximum costs. Malo claimed that this was not possible under the parol evidence rule. Is Malo correct? (Malo v. Gilman, Ind. 379 N.E.2d 554)

Question 10

The Roc Co. entered into an oral contract to pay Willis and Associates, a certified public accounting firm, $35,000 to perform a complete audit of its accounting records. The report was to cover a period of ten months but due fourteen months from now. Willis agreed orally to perform the audit and to begin within three months. Regardless of the delay in beginning the audit, Willis agreed to meet the fourteen-month deadline for completion. Does the contract fall within the statute of frauds?

Question 11

Marlan's son was arrested for driving while intoxicated and had to hire an attorney to defend him in court. The attorney requested to be paid $1,500, one-half in advance and the remainder at the conclusion of the court hearing. Because the son did not have the funds, Marlan, in the presence of several other attorneys in the law office, told his son's attorney that he would pay the fee out of his own pocket following the court hearing. Because Marlan was a well-to-do businessperson in the community, the attorney agreed to these terms. Following the court hearing in which the son was convicted, Marlan refused to pay as agreed, claiming that the attorney had done a poor job representing his son. The attorney sued, but Marlan defended, claiming that his agreement to pay was not legally binding on him because it was made orally. Can the attorney collect her fee?

Question 12

Moralle orally promised Hanson that if she agreed to marry him, he would give her a large monthly expense account, a new car every two years, and a vacation trip each year to a destination of her choice. Hanson accepted, and they were married. Moralle, however, did not keep his promises. Hanson sued Moralle on his promises. Will she succeed in this suit?

Question 13

Lisi, vice president of the National Football Association, made arrangements to hold the association's annual convention at the Marvel Hotel and Convention Center. He met with Brock, the hotel manager, one year before the scheduled event. They orally came to terms on several important points, including room rates, meal prices, and exhibit space charges. Brock was then replaced by a new manager, Talbot. Lisi met with Talbot to review the oral agreement he had made with Brock, intending to draw up a written contract to cover these points. Talbot had no record of this agreement and refused to honor any prior arrangements, claiming instead that because of inflation, prices should be raised 20 percent. Can Lisi legally require Talbot to abide by the original oral agreement he had with Brock?

Question 14

McLean orally agreed to manage several of Orcini's aerobics studios in Los Angeles for three years at a salary of $35,000 a year. After six months, McLean decided to quit her job and move to the East Coast. Orcini had to hire a new manager at a salary of $38,000 a year. Orcini claimed that McLean was liable for damages of $3,000 a year for breach of contract until McLean's original contract expired. Is Orcini correct in his claim?

Question 15

A landlord entered into a lease (contract) with a tenant. A clause in the lease stated that the tenant would use the premises only for a gasoline station, car wash, and related activities. The landlord sued to terminate the lease, claiming that the tenant had violated an oral agreement, which was made at the time the lease was drawn up, not to add a convenience store to the gas station. Was this oral agreement binding on the tenant? (Snow v. Win, 607 P.2d 678)

Question 16

Bain lived in Bristol Harbor, a resort area along the Atlantic coast. She entered into a written agreement to sell her daily catch of fresh lobster at an agreed price to a local restaurant owner during the tourist season. At the end of the tourist season, Bain sued the restaurant owner for an additional $2,000. At the trial, she claimed that shortly before signing the contract, the restaurant owner orally agreed to pay her a $2,000 bonus. Can Bain introduce the oral agreement as evidence and collect the $2,000 bonus?

Question 17

Adams, an attorney, represented Hall, who called himself an International Trader, in a deal with a company in India that was to result in Hall receiving $10 million. Adams and Hall resided in the state of Maine. The attorney's fee of $1 million for handling the case was to be paid when Hall received his money from the company. In order to receive this $10 million, however, Hall was required to pay an upfront fee of $100,000 to an agent of the company handling the deal in India. Hall had done business with this Indian company on prior occasions, but the agent was new to the company. Hall borrowed the fee from Garlock, a business associate, and signed a promissory note agreeing to pay back the $100,000 within five days. Adams made arrangements with a local bank to wire the money to the agent in India. Neither Hall nor Adams heard from the agent once the money was sent. Adams had orally guaranteed to repay Garlock if Hall did not himself repay the debt. When the due date of the note arrived, Garlock requested his $100,000, but Hall was unable to make payment. Garlock therefore brought a lawsuit against Hall for the money. He hired Adams as his attorney. The court awarded damages to Garlock requiring Hall to make payment. However, Hall had no assets from which to collect it. During the trial, Adams publicly reprimanded Hall during cross-examination for not paying his loan as scheduled.
Questions
1. Has Adams, as the attorney, acted unethically in this case?
2. I s Adams legally obligated to pay Garlock the $100,000 that Hall borrowed from him?