Twomey  Jennings
Anderson’s Business Law and the Legal Environment, Comprehensive 20e
Anderson’s Business Law and the Legal Environment, Standard 20e
Business Law: Principles for Today’s Commercial Environment 2e
Chapter 17
Contracts: Writing,
Electronic Forms, and
Interpretation of Contracts
Copyright © 2008 by West Legal Studies in Business
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Statute of Frauds
• Oral agreements are generally valid and
enforceable.
• However--certain agreements must be in
writing and signed to be enforceable
under the Statute of Frauds.
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Contracts That Must
Be In Writing
• An agreement that cannot be performed
within one year after the contract is made,
• A sale of any interest in real property,
• A promise to answer for the debt of
another,
• A promise by the executor of an estate to
pay a claim against the estate from
personal funds, …
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Contracts That Must
Be In Writing
• A promise made in consideration of
marriage,
• The sale of goods for a price of $500 or
more.
• Local statutes may include other types of
contracts, such as a contract between a
landowner and a real estate agent.
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Contracts and the
Statute of Frauds
Contracts That Must Be in Writing
Exceptions
Land  Sales
 Mortgages
 Options
Part Performance
Payment and Possession
Improvement
Contracts Not to Be
Performed Within One Year
Promise to Pay the Debt of Another
Executed Contracts
 Estates and Personal
Representative
 Guarantor/Surety
Promise to Marry
Sales of Goods $500 or More
Copyright © 2008 by West Legal Studies in Business
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Part Performance
Merchant’s Confirmation Memo
Specially Manufactured Goods
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Note or Memorandum
• The written contract must be signed by the
defendant against whom suit is brought in
order for a contract to be enforced.
• The signing may be made by printing,
stamping, typewriting, or any other means
that is intended to identify that party.
• E-Signatures can be enforceable under ESign and UETA.
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Effect of Non-Compliance
• To avoid unjust enrichment, a
plaintiff barred from enforcing an
oral contract may recover from the
other contracting party the reasonable
value of the benefits conferred by the
plaintiff on the defendant.
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Effect of Non-Compliance
• To prevent the statute of frauds from
being used to defraud a party to an
oral contract, the courts by decision
have made certain exceptions to the
statute of frauds.
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8
Parol Evidence Rule
• Prohibits introduction at trial of oral
statements to add to/modify or contradict
the written agreement that is fully
integrated or otherwise complete.
• Some courts have liberalized the rule so
that parol evidence is admitted when it
will aid in interpreting the writing.
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Exceptions to
Parol Evidence Rule
• The parol evidence rule does not bar
evidence when the writing is
incomplete or ambiguous when:
– There are allegations of fraud, duress,
mistake or illegality;
– A contract has been modified.
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Rules of Construction
and Interpretation
• Intention of the Parties.
• Incorporation by Reference.
• Contradictory/Ambiguous Terms.
–Is there a contract? If so, what are
the terms?
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Rules of Construction
and Interpretation
• Implied Terms: Good faith and fair
dealing.
• Conduct and Custom.
• Avoidance of Hardship.
– Generally a party is bound by a “bad”
agreement, but a court will try to avoid
hardship.
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