PowerPoint Slides to Accompany
BUSINESS LAW
E-Commerce and Digital Law
International Law and Ethics
5th Edition
by Henry R. Cheeseman
Chapter 14
Writing and E-Commerce
Signature Law
Slides developed by
Les Wiletzky
Wiletzky and Associates, Puyallup, WA
Copyright © 2004 by Prentice-Hall. All rights reserved.
Statute of Frauds
State statute that requires certain types
of contracts to be in writing.
Intended to ensure that the terms of
important contracts are not forgotten,
misunderstood, or fabricated.
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Most states require the following types of
contracts to be in writing:

Contracts involving interests in land

Contracts that by their own terms cannot
possibly be performed within one year

Collateral contracts where a person promises
to answer for the debt of another

Promises made in consideration of marriage
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Contracts required to be in writing (continued):

Real estate agents’ contracts

Agents’ contracts where the underlying
contract must be in writing

Promises to write a will

Contracts to pay debts barred by the statute
of limitations or discharged in bankruptcy
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Contracts required to be in writing (continued):

Contracts to pay compensation for services
rendered in negotiating the purchase of a
business

Contracts for the sale of goods for more than
$500

Finders fee contracts
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Contracts Involving Interests in Land

Any contract that transfers an ownership
interest in real property must be in writing
under the Statute of Frauds to be
enforceable.
Real Property
 Fixtures

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Contracts Involving Interests in Land
(continued)
Real Property
 Land
 Buildings
 Trees, Plants, Crops
 Soil
 Minerals
 Timber
 Other things that are
permanently affixed to
the land
Fixtures
 Personal property that
is permanently affixed
to the real property

e.g., built-in cabinets
in a house
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Contracts Involving Interests in Land
(continued)
Other contracts that transfer an ownership
interest in land must be in writing under the
Statute of Frauds.
 These interests include:

Mortgages
 Leases
 Life Estates
 Easements

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Contracts Involving Interests in Land
(continued)

Part Performance Exception
An equitable doctrine that allows the court to
order an oral contract for the sale of land or
transfer of another interest in real property to
be specifically performed if it has been
partially performed and performance is
necessary to avoid injustice.
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One Year Rule
An executory contract that cannot be
performed by its own terms within one year
of its formation must be in writing.
 Intended to prevent disputes about contract
terms that may otherwise occur toward the
end of a long-term contract.
 Contract may be oral if the performance of
the contract is possible within the one year
period.

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One Year Rule (continued)

Employment contracts are often for periods
longer than one year.

These contracts should be in writing to be
enforceable.
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Collateral Promises

Collateral Contract – occurs where one
person agrees to answer for the debts or
duties of another person.


Required to be in writing under the Statute of
Frauds.
Guaranty Contract – the contract between
the guarantor and the original creditor.
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Original and Guaranty Contracts
Debtor
Guarantor
Contract No. 1
Original Contract
Contract No. 2
Creditor
Guarantor agrees to
pay the debt if the
debtor fails to pay
the creditor.
Guaranty Contract
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Collateral Promises (continued)
The Main Purpose Exception
 If the main purpose of a transaction and an
oral contract is to provide pecuniary benefit
to the guarantor,
The collateral contract is treated like an
original contract, and
 Does not have to be in writing to be enforced.

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Contracts for the Sale of Goods

Section 201 of the Uniform Commercial
Code (UCC) is the basic Statute of Frauds
provision for sales contracts.

Contracts for the sale of goods costing $500
or more must be in writing to be enforceable.
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Contracts for the Sale of Goods (continued)
Equal Dignity Rule
 A rule that states that agents’ contracts to
sell property covered by the Statute of
Frauds must be in writing to be enforceable.
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Contracts for the Sale of Goods (continued)
Electronic Signature in Global and
National Commerce Act (2000)
 Federal statute designed to place the world
of electronic commerce on a par with the
world of paper contracts in the U.S.
 Recognizes electronic contracts as meeting
the writing requirement of the Statute of
Frauds for most contracts.
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Promissory Estoppel
An equitable doctrine that permits
enforcement of oral contracts that should
have been in writing.
 Where this doctrine applies, the promisor is
estopped (prevented) from raising the
Statute of Frauds as a defense to the
enforcement of the oral contract.

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Promissory Estoppel (continued)
The oral promise is enforceable against the
promisor if three conditions are met:
1. The promise induces action or forbearance
of action by another.
2. The reliance on the oral promise was
foreseeable.
3. Injustice can be avoided only by enforcing
the oral promise.
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Sufficiency of the Writing
Formality of the
Writing
Required Signature
Integration of
Several Writings
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Formality of the Writing
Generally, the law only requires a writing
containing the essential terms of the parties’
agreement.
 Any writing can be enforceable under this
rule.
 A written contract does not have to be
drafted by a lawyer or formally typed to be
legally binding.

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Required Signature
The Statute of Frauds and the UCC require
the written contract, whatever its form, to be
signed by the party against whom
enforcement is sought.
 The signature of the person who is enforcing
the contract is not necessary.

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Required Signature (continued)
Electronic Signature in Global and
National Commerce Act (2000)
 Recognizes an electronic signature, or Esignature.
 The act gives an E-signature the same force
and effect as a pen-inscribed signature on
paper.
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Integration of Several Writings
The combination of several writings to form a
single contract.
 The entire writing does not have to appear in
one document to be an enforceable contract.

Incorporation by reference
 Implied integration

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Interpreting Contract Words and Terms
If the parties have not defined the words and
terms of a contract, the courts apply the
following standards of interpretation:
 Ordinary words are given their usual
meaning according to the dictionary.
 Technical words are given their technical
meaning unless a different meaning is clearly
intended.
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Interpreting Contract Words and Terms
(continued)
Specific terms are presumed to qualify
general terms.
 Where a preprinted form contract is used,

Typed words prevail over preprinted words.
 Handwritten words prevail over both
preprinted and typed words.

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Interpreting Contract Words and Terms
(continued)
If both parties are members of the same
trade or profession, words will be given their
meaning as used in the trade.
 Words will be interpreted to promote the
principal object of the contract.
 If there is ambiguity in a contract, the
ambiguity will be resolved against the party
who drafted the contract.

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The Parol Evidence Rule
Parol Evidence – Any oral or written words
outside the four corners of the written
contract.
 Parol Evidence Rule

Originally developed by courts as part of the
common law of contracts.
 The UCC has adopted the parol evidence rule
as part of the law of sales contracts.

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The Parol Evidence Rule (continued)
The rule states that if a written contract is a complete
and final statement of the parties’ agreement, any prior
or contemporaneous oral or written statements that
alter, contradict, or are in addition to the terms of the
written contract are inadmissible in court regarding a
dispute over the contract.
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Exceptions to the Parol Evidence Rule
Parol evidence may be admitted in court if it:

Shows that a contract is void or voidable.


e.g., evidence that the contract was induced
by fraud ‫باالحتيال‬, misrepresentation‫ تحريف‬,
duress ‫ اكراه‬, undue influence ‫ال لزوم له‬, or
mistake.
Explains ambiguous language.
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Exceptions to the Parol Evidence Rule
(continued)
Concerns a prior course of dealing or course
of performance between the parties or a
usage of trade.
 Fills in the gaps in the contract.
 Corrects an obvious clerical or typographical
error.


The court can reform the contract to reflect
the correction.
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The Parol Evidence Rule (continued)
Merger, or Integration Clause
 A clause in a contract that stipulates that it is
a complete integration and the exclusive
expression of the parties’ agreement.
 Parol evidence may not be introduced to
explain, alter, contradict, or add to the terms
of the contract.
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Writing Requirements for International
Contracts
United Nations Convention on Contracts
for the International Sale of Goods (CISG)
 Article 11 of the Convention states:
“A contract of sale need not be concluded in
or evidenced by writing an is not subject to
any other requirement as to form.”
 “It may be by any means, including
witnesses.”

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Writing Requirements for International
Contracts (continued)

Article 96, however, authorizes a contracting
nation that requires written sales contracts,

To stipulate at the time of ratification that
Article 11 (and some other provisions of the
Convention) does not apply if any party
operates a business in that nation.
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