Flashcards in REG 6 - Contracts 3 - Statute of Frauds Deck (11):
Bond and Spear orally agreed that Bond would buy a car from Spear for $475. Bond paid Spear a $100 deposit. The next day, Spear received an offer of $575, the car's fair market value.
Spear immediately notified Bond that Spear would not sell the car to Bond and returned Bond's $100.
If Bond sues Spear and Spear defends on the basis of the Statute of Frauds, Bond will probably
A. Lose, because the agreement was for less than the fair market value of the car.
B. Win, because the agreement was for less than $500.
C. Lose, because the agreement was not in writing and signed by Spear.
D. Win, because Bond paid a deposit.
B. This is correct because for the sale of goods under the Statute of Frauds, contracts for goods priced at $ 500 or more require a writing to be enforceable. This oral contract for a good (car) is $475, under $500, and thus enforceable.
To which of the following transactions does the common law Statute of Frauds not apply?
A. Contracts for the sale of real estate.
B. Agreements made in consideration of marriage.
C. Promises to pay the debt of another.
D. Contracts that can be performed within one year.
D. Only contracts that CANNOT be performed within a year must be in writing.
Under the parol evidence rule, oral evidence will be excluded if it relates to
A. A contemporaneous oral agreement relating to a term in the contract.
B. Failure of a condition precedent.
C. Lack of contractual capacity.
D. A modification made several days after the contract was executed.
A. This answer is correct because the parol evidence rule applies to complete and unambiguous written contracts and makes any evidence that would modify or alter the written contract terms inadmissible. This rule applies to any oral agreements made prior to or contemporaneous with the written contract.
Which of the following statements is true with regard to the Statute of Frauds?
A. All contracts involving consideration of more than $500 must be in writing.
B. The written contract must be signed by all parties.
C. The Statute of Frauds applies to contracts that can be fully performed within one year from the date they are made.
D. The contract terms may be stated in more than one document.
D. The Statute of Frauds sets forth requirements that must be met in order for a writing to be sufficient.
These elements may be present in more than one document, with some in one document and some in another, so long as there is evidence that all documents are related to the same agreement.
On June 1, 20x5, Decker orally guaranteed the payment of a $5,000 note Decker's cousin owed Baker. Decker's agreement with Baker provided that Decker's guaranty would terminate in 18 months. On June 3, 20x5, Baker wrote Decker confirming Decker's guaranty. Decker did not object to the confirmation. On August 23, 20x5, Decker's cousin defaulted on the note and Baker demanded that Decker honor the guaranty. Decker refused. Which of the following statements is correct?
A. Decker is liable under the oral guaranty because Decker did not object to Baker's June 3 letter.
B. Decker is not liable under the oral guaranty because it expired more than one year after June 1.
C. Decker is liable under the oral guaranty because Baker demanded payment within one year of the date the guaranty was given.
D. Decker is not liable under the oral guaranty because Decker's promise was not in writing.
D. This answer is correct because a guaranty contract under the Statute of Frauds to be enforceable against the guarantor must be in a writing signed by the guarantor, or a signed memorandum (written evidence of oral guaranty). Here, Decker signed neither, and Decker is not liable under the oral guaranty.
Two individuals signed a contract that was intended to be their entire agreement.
The parol evidence rule will prevent the admission of evidence offered to
A. Explain the meaning of an ambiguity in the written contract.
B. Establish that fraud had been committed in the formation of the contract.
C. Prove the existence of a contemporaneous oral agreement modifying the contract.
D. Prove the existence of a subsequent oral agreement modifying the contract.
C. The parol evidence rule prohibits the introduction of evidence that additional terms were agreed upon before the contract was signed. In effect, it dictates that a written contract will have the final say on what agreements are present. A contemporaneous oral agreement is one that allegedly existed before or at the time the written contract was signed, and evidence pertaining to one cannot be introduced.
Rogers and Lennon entered into a written computer consulting agreement that required Lennon to provide certain weekly reports to Rogers. The agreement also stated that Lennon would provide the computer equipment necessary to perform the services and that Rogers' computer would not be used. As the parties were executing the agreement, they orally agreed that Lennon could use Rogers' computer. After executing the agreement, Rogers and Lennon orally agreed that Lennon would report on a monthly, rather than weekly, basis. The parties now disagree on Lennon's right to use Rogers' computer and how often Lennon must report to Rogers. In the event of a lawsuit between the parties, the parol evidence rule will
A. Not apply to any of the parties' agreements because the consulting agreement did not have to be in writing.
B. Not prevent Lennon from proving the parties' oral agreement that Lennon could use Rogers' computer.
C. Not prevent the admission into evidence of testimony regarding Lennon's right to report on a monthly basis.
D. Not apply to the parties' agreement to allow Lennon to use Rogers' computer because it was contemporaneous with the written agreement.
C. This answer is correct because an exception to the parol evidence rule allows evidence of "subsequent agreements" to be admitted into evidence. The parol evidence rule applies to complete and unambiguous written contracts and prohibits any evidence that would modify or alter the contract. This rule would apply to oral agreements made "prior" to the formation of the written contract but does not apply to "subsequent" agreements.
Y/N: Green, over the phone, orders from Sit-on 100 chairs at $50 each to be delivered within three weeks. One week later, Sit-on delivers and Green accepts 50 chairs (a truckload). Green doesn't like the color of the chairs, and immediately cancels the contract. Green claims that the contract is under the Statute of Frauds and can tender back the 50 received without liability.
Is Green correct?
For the 50 chairs delivered, Green had accepted them and will be required to pay for the 50 chairs only. Green can cancel the second delivery of 50 chairs to avoid paying for all 100.
T/F: Jim agrees orally with West Bank to guarantee a loan that West Bank will make to Susan to purchase an existing restaurant upon Susan's agreement to pay Jim 10% of the gross revenues for two years. All parties orally agree. Jim's guaranty agreement with West Bank is unenforceable under the Statute of Frauds.
Y/N: Green orally orders 5,000 new year calendars from Print-up with Green's name, address, telephone number, and e-mail address printed on each. The printed calendars, priced at $7,500, are special-ordered goods. Print-up prints the calendars with the above information. Green, due to financial problems, cancels the contract, claiming the oral contract is unenforceable under the Statute of Frauds.
Is Green correct?
Goods that a seller cannot resell in the ordinary course of business are special ordered goods. An oral contract for special ordered goods is enforceable if the seller has substantially begun performance, or has made an irrevocable commitment to do so, before the buyer cancels the order claiming the Statue of Frauds.