Written Contracts
Business Law and Ethics
Written Contracts
The Statute of Frauds
In certain cases an agreement (or some memorandum of it) has to be in written form and
be signed in purpose to be enforceable. These agreements are:

For any interest in land

That cannot be performed within one year

To pay the debt of another

Made by the executor of an estate

Made in consideration of marriage, and

For a sale of goods over $500
Unenforceable, but not Void
Once the contract is fully executed, it makes no difference that it was unwritten.
Contracts That Must be in Writing
Agreements for an Interest in Land
A contract for a sale of any interest in land must be written to be enforceable.
Exception: Full Performance by the Seller
If the seller fully performed his part of the contract, the court is likely to enforce the
agreement even if it is oral.
Exception: Part Performance by the Buyer
The buyer of land may be able to enforce an oral contract if he paid part of the purchase
price and either entered upon the land or made improvements to it.
Exception: Promissory Estoppel
If an oral promise should reasonably cause the promisee to rely on the promise, and the
promisee does rely on it, the promisee may be able to enforce the promise.
Agreements That Cannot be Performed within One Year
Contracts that cannot be performed within one year are unenforceable unless they are in
writing.
Example 1: An offer for employment for 3 years.
Cannot be performed in 1 year and must be in writing.
Example 2: “As long as you work in our company you may have Fridays off.”
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Written Contracts
Business Law and Ethics
Might be performed within one year, although could take many years –
employment contract can be terminated at any time. It is enforceable whether
it is oral or in writing.
Promise to Pay the Debt of Another
When one person agrees to pay the debt of another as a favor to that debtor, it is called a
collateral promise and must be in writing to be enforceable.
Exception: The Leading Object Rule
If the leading object of the promise is some benefit to the promisor himself, then the
contract will be enforceable even if unwritten.
Promise Made by the Executor of an Estate
This is a special application of the “Promise to Pay the Debt of Another” rule.
An executor’s promise to use his own funds to pay the debts of the deceased must be in
writing to be enforceable.
Promise Made in Consideration of Marriage
A promise made in consideration of marriage must be in writing to be enforceable.
What the Writing Must Contain
There’s no specifically requested form. There are general requirements though.
The contract or memorandum:

Must be signed by the defendant, AND

Must state with reasonable certainty the name of each party, the subject matter of
the agreement, and all the essential terms and promises
Sale of Goods
The UCC requires a writing for the sale of goods over $500.
UCC §2-201(1) – The Basic Rule
A contract for sale of goods worth $500 or more is not enforceable unless:



There is some writing,
Signed by the defendant, and
Indicating that the parties reached an agreement
Example 1: “Confirming phone conversation today, I will send you 1,000 reams of laser
printer paper, usual quality & price. [signed] Seller.”
This memorandum satisfies UCC §2-201(1), and the contract may be enforced
against seller. Quantity is set. The buyer may testify as to the “usual” quality
and price.
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Written Contracts
Business Law and Ethics
Example 2: “Confirming phone conversation today, I will send you best quality laser printer
paper today, $3.25 pear ream, delivery date next Tuesday. [signed] Seller.”
Not enforceable – no quantity stated.
UCC §2-201(2) – The Merchant’s Exception
Within a reasonable time of making an oral contract, if one merchant sends a written
confirmation to the other, and the confirmation is definite enough to bind the sender
himself, then the merchant receiving the confirmation is also bound by it unless he objects
in writing within 10 calendar days.
UCC §2-201(3) – Special Circumstances
An oral contract may be enforceable even without a written memorandum, if:

The manufacturer is specially manufacturing the goods for the buyer, or

The defendant admits in the court proceedings that there was a contract, or

The goods have been delivered or they have been paid for.
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