Book Opener

CHAPTERASSESSMENTSection 10.1 Statute of Frauds● The Statute of Frauds is designed to preventfraud and perjury by requiring written evidenceof the terms of a contract. Putting a contract inwriting can help to clarify an agreement for bothparties and for the courts, if necessary.● A contract that falls under the Statute of Fraudsbut is not in writing is deemed unenforceable.Oral contracts that do not fall under the statute offrauds are valid.● The following elements must be in a writtencontract: (1) place, (2) date, (3) parties, (4)subject matter, (5) price and terms, (6) the intentof the parties, and (7) signatures of the parties.● Generally, handwritten terms prevail over typewrittenor printed terms. The court will presumethat the handwritten terms were placed in thewriting after the contract was typed or printed.For that reason, the handwritten changes likelyrepresent the final intent of the parties. Generally,handwriting prevails over typewriting or printing,and typewriting prevails over printing. Whenthere is a discrepancy in an amount written inboth words and figures, as in a check, the amountwritten in words will prevail over the amountwritten in figures. Sometimes written contractscan be understood in different ways. When suchambiguous language exists, the court will favorthe intent of the party who did not draft thecontract.● The following are types of contracts that must bein writing: (1) contracts to pay the debts ofanother, (2) contracts to pay the debts of adeceased person, (3) contracts requiring morethan a year to perform, (4) contracts inconsideration of marriage, (5) contracts to sellreal property, and (6) contracts for the sale ofgoods costing $500 or more. Be aware that theStatute of Frauds applies only to executorycontracts; that is, contracts that have not beenfully performed. If two parties perform an oralcontract that should have been in writing, thenneither party can try to have it set aside laterbecause it was not in writing.Section 10.2 Special Rules and Formalities● The parol evidence rule presumes that all theterms of a contract are within the document. Noevidence of oral statements made before signinga written agreement can be presented to changeor add to the written agreement. Parol meansword of mouth; evidence, in this instance, meansanything presented as proof at a court trial.● Exceptions to the parol evidence rule permit oralstatements to be used to: (1) explain some pointthat is not clear in a written agreement, (2) showthat certain terms were agreed to but incorrectlytyped in the written contract, and (3) prove thatsomeone was persuaded by the fraud of the otherparty to make a written contract.● The best evidence rule is the preference given bythe courts to the original copy of an agreement.The court looks with disfavor at photocopies orcarbon copies of a written agreement. Copying acontract can make it easier for an unscrupulousparty to conceal any misleading alterations to theoriginal agreement. For this reason, each partyreceives an original version of the contract.● Because the parol evidence rule presumes thatall the terms of a contract are contained withinthe document, if you do not agree to the termsof a preprinted contract, you may cross out theoffensive terms. You may also write in promisesmade to you that are not evidenced on the preprintedcontract. To insure the validity of the newterms, both parties must initial the changes. If acontract contains a lot of complicated or ambiguouslanguage, ask a lawyer to review theagreement before you sign it.218 Unit 2: Entering Into Contracts