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CONTRACTS II FINAL OUTLINE - TRUE/FALSE & SHORT ANSWER MATERIAL Is there a K, and if so what are the terms?
STATUTE OF FRAUDS o
Is there a K?
If a K by its terms cannot be performed w/in one year from the making (formation) then it MUST be in writing
The statute of frauds under 2-201 in the UCC requires that any K that cannot by its terms be completed within one year be in writing to be enforceable. Either the buyer or the seller can try to use this SOF to get out of the K. There are however a few exceptions to SOF. These include admission, substantial performance, performance, promissory estoppel, and if the K is for more than 5000.
RequirementsA Writing (a napkin has sufficed), if it can't be performed w/in 1 yr.?How do we know if it can be performed w/in a year, look at the terms if it's remotely possible to complete, don't need writing
2 yr employment K - must be in writing
Hire you to finish a book - doesn't need writing, can be complete w/in 1 yr
Hire you for life - you could die, doesn't need writing, could die w/in 1 yr
Hired for 5 yrs or until retire? - doesn't need writing, could retire w/in 1yr
Hired today (Nov 18, 07) to work for one week starting Nov 19, 08 - has to be in writing, CANNOT be complete w/in 1 yr of formation
A promises to pay B w/in 10 years - doesn't have to b in writing, B could pay w/in 1 yr? Good draftsmanship can take K's outside of the statute of frauds! or keep it in, depending on how you want to allocate the risk...Signed by the party to be bound
oAdmission - if both sides admit, then statue doesn't applyReal Estate - Must be in writing, purpose to have clarity for title, recording system; exceptions to the exception;
If party makes improvements, takes possession, and/or pays the taxes; then they may not need the writing
Allowing part performance to evince a K depends upon jurisdiction.
? If specific performance is not allowed because of a lack of writing, then unjust enrichment might allow a partial recovery.P/E - a promise was actually relied upon to the detriment of the relying party. If it was a pre-existing duty, too badCan't hide behind the SOF to commit fraudElectronic K'
Last Resort: Quasi KIn the event that the SOF argument or any argument does not work on the part of the Seller they can always argue that there has been unjust enrichment. The court will allow a quasi K or K created out of a fiction to avoid cases of unjust enrichment.
PAROL EVIDENCE - WORDS HAVE NO MEANING The four corners approach goes to the formation of the K so that if the agreement is not included in the final writing it is not part of the K. Plain meaning goes towards the words that are included but can be construed in different ways. Under 2-202 Parol evidence is allowed if it is custom in the trade or prior dealings in order to either show whether the term would have been added and appears complete under 4 corners or in order to help explain a term that both parties are arguing about under plain meaning o The public policy behind this is to uphold contracts, allow freedom of K, prevent perjury, and create good draftsmanship o In California however there has been an erosion of the 4 corners approach and evidence is admissible if it is credible and relevant. Thus unless there is an explicit merger clause in the K B and S will be able to admit evidence of agreements of the sort o
Parole Evidence "Rule"
? (A) Formation Part - "4 Corners"
* No oral modifications of a written K that's "complete" to the judge
? (B) "Interpretation" Part
* Is there an ambiguous term?
* Prior dealings?
* Industry meaning?
What are the terms of the K)?
A writing is the final expression of the parties agreement; subject to prior dealings and custom in the trade/location.
whether the writing appears to be complete
Parole Evidence is excluded, and the terms in the K are strictly construed against the party wanting to apply other than the plain meaning. FREEDOM of K
Minority rule (CA)
? If there is an ambiguous term, parole evidence is included. Must look at: all possible meanings of the terms, each party's version of what happened, all circumstances surrounding the K. credible evidence needed
? If it's not expressly written in the K, then it can't be included, this offers predictability on K?
* if the court concludes that the K is fully integrated about the party's agreement, done deal, what is written stands, subject to exceptions.
* "one who signs a K builds 4 corners around themselves" ? this is to avoid perjury about whether terms are MISSING
* Look at the time of formation
* Practical matters; o Is there a Merger Clause? - "this K supersedes/encompasses any and all negotiations o No oral modification? - does something indicate there will be no subsequent agreement?
* this goes to interpreting the terms. ? This is to avoid perjury about what K terms MEAN
* one can argue, "what does chicken mean?" - Testimony and evidence may conclude the meaning
? K's made in Jest
? Collateral promise (outside the of the K)
* Can be enforceable if it has its own consideration (UCC 2-209 doesn't require new consideration, but duress can still come in)
* Test: o the collateral term does not contradict express or implied provisions of the written K o the collateral term is one that parties would not ordinarily be expected to include in the K
? No new consideration or there was a subsequent promise (which is a new deal)
? Custom, usage in the trade, prior dealings
* this must be objectively verifiable.
* Jurisdictions vary on subjective v. objective tests/intent. GR = Objective. Minority = subjective allowable
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