MODULE 23 CONTRACTS 135

\z} Conformity with the Statute of Frauds

1. Contracts required to be in writing and signed by party to be charged-these are said to be
within
the Statute
(1) An agreement to sell land or any interest in land
(a) Includes buildings,.easements, and contracts to. sell real estate
(b) Part performance typically satisfies Statute even though real estate contract was oral, but
this requires
1] Possession of the land
2] Either part payment or making of improvements on real estate
3] Many courts require all three
(2) An agreement that cannot be performed within one year from the making of agreement
(a) Contract that can be performed in exactly one year or less may be oral
EXAMPLE: W agrees to hire Xfor ten months starting in four months. This contract must be in writing
because it cannot be performed until fourteen months after the agreement is made.
(b) Any contract which can conceivably be completed in one year, irrespective of how long
the task actually takes, may be oral
EXAMPLE: A agrees to paint B's portrait for $400. It actually is not completed until over a year later.
This contract did not have to be in writing because it was possible to complete it within one year.
(c) If performance is contingent on something which could take place in less than one year,
agreement may be oral
EXAMPLE: "I will employ you as long as you live." Party could possibly die in less than one year.
(d) But if its terms call for more than one year, it must be written even if there is possibility of
taking place-in less than one year
EXAMPLE: "I will employ youfor five years." The employee's death could occur before the end offive
years, but the terms call for the writing requirement under the Statute of Frauds.
(e) Generally, if one side of performance is complete but other side cannot be performed
within year, it is not within Statute (i.e., may be oral). Especially true if
performance has
been accepted and all that remains is the payment of money.
EXAMPLE: X agrees to pay E $6,000 salary per month and a bonus of $50,000 if he works for at least
two years. After two years, X refuses to pay the bonus. The $50,000 is payable and the Statute of Frauds
is no defense here.
(3) An agreement to answer for debt or default of another (contract of guaranty)
(a) A secondary promise is within this section of the Statute of Frauds (i.e., must be in writ-
ing)
EXAMPLE: "If Jack doesn't pay, I will."
(b) A primary promise is not within this section of the Statute of Frauds because it is in reality
the promisor's own contract
EXAMPLE: "Let Jack have it, and I will pay. "
(c) Promise for benefit of promisor may be oral ("Main Purpose Doctrine")
EXAMPLE: Promisor agrees to answer for default of X, because X is promisor's supplier and he needs
X to stay in business to keep himself in business.
(d) Promise of indemnity (will pay based on another's fault, for example, insurance) is not
within Statute
(4) Agreement for sale of goods for $500 or more is required to De in writing under UCC
EXAMPLE: Oral contract for the sale of fifty calculators for $10 each is not enforceable.
EXAMPLE: Oral contract to perform management consulting services over the next six monthsfor $100,000
is enforceable because the $500 rule does not apply to contracts that come under common law.
EXAMPLE: Same as previous example except that the agreed time was for fourteen months. This one was re-
quired to be in writing to be enforceable because of the one-year rule.
(a) Exceptions to writing requirement (these are important)