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Statute of Frauds I.
Nature of Statute of Frauds: Most contracts are valid despite the fact that they are only oral. A few types of contracts, however, are unenforceable unless they are in writing. Contracts that are unenforceable unless in writing are said to fall "within the Statute of Frauds." Five categories: There are five categories of contracts which, in almost every state, fall with the Statute of Frauds and must therefore be in writing: a. Executor-administrator: a contract of an executor or administrator to answer for a duty of his decedent b. Suretyship: A contract to answer for the debt or duty of another. c. Marriage: A contract made upon consideration of marriage. d. Land contract: A contract for the sale of an interest in land. e. One year: A contract that cannot be performed within one year from its making. f. UCC: Under the UCC, a contract for the sale of goods for a price of $500 or more. Flow charts a. Whether there is an oral contract?
b. What is its predominant purpose? Sale of goods or others?
c. Whether it falls within the statute of fraud?
d. If it does, whether it is satisfied by memorandum?
e. If not, whether if falls within the exceptions?
1.1 Suretyship I.
II. General rule: A promise to pay the debt or duty of another is within the Statute of Frauds, and is therefore unenforceable unless in writing. Main purpose rule: If the promisor's chief purpose in making his promise of suretyship is to further his own interest, his promise does not fall within the Statute of Frauds. This is called the "main purpose" rule. a. Example: Contractor contracts to build a house for Owner. In order to obtain the necessary supplies, Contractor seeks to procure them on credit from Supplier. Supplier is unwilling to look solely to Contractor's credit. Owner, in order to get the house built, orally promises Supplier that if Contractor does not pay the bill, Owner will make good on it. Because Owner's main purpose in giving the guarantee is to further his own economic interest - getting the house built - his promise does not fall within the suretyship provision, and is therefore not required to meet the Statute of Frauds. So it is enforceable even though oral.
1.2 Marriage I.
Contract made upon consideration of marriage: A promise for which the consideration is marriage or a promise of marriage is within the Statute. Example: Tycoon says to Starlet, his girlfriend, "If you will promise to marry me, I'll transfer to you title to my Malibu beach home even before our marriage." Starlet replies, "It's a deal." No document is signed. If Tycoon changes his mind, Starlet cannot sue to enforce either the promise of marriage or the promise to convey the beach house, since the consideration for both of these promises was her return promise to marry Tycoon. Exception for mutual promises to marry: But if an oral contract consists solely of mutual promises to marry (with no ancillary promises regarding property transfers), the contract is not within the Statute of Frauds, and is enforceable even though oral. That is, an ordinary oral engagement is an enforceable contract.
1.3 Land Contract I.
II. A promise to transfer or buy any interest in land is within the Statute. a. Leases: For instance, a lease is generally an "interest in land," so that a promise to make a lease will generally be unenforceable if not in writing. b. Mortgages: A promise to give a mortgage on real property as security for a loan also usually comes within the Statute. c. Easement: is considered an interest in land d. The sale of unextracted minerals, to be removed by the buyer: within the SoF i. Removed by seller: not within the statute e. Contracts incidentally related to land: But contracts that relate only incidentally to land are not within the Statute. Thus a contract to build a building is not within the Statute, nor is a promise to lend money with which the borrower will buy land. Part performance: Even if an oral contract for the transfer of an interest in land is not enforceable at the time it is made, subsequent acts by either party may make it enforceable. a. Conveyance by vendor: First, if the vendor under an oral land contract makes the contracted-for conveyance, he may recover the contract price. b. Vendee's part performance: Second, the vendee under an oral land contract may in reliance on the contract take actions which: (1) show that the oral contract was really made; and (2) also create a reliance interest on the part of the vendee in enforcement. Such a vendee may then obtain specific performance (a court order that the vendor must
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