Ch. 3 statute of fraud (p.257)
REST 2d (Chapter 5. The Statute Of Frauds) § 110. Classes Of Contracts Covered
(1) The following classes of contracts are subject to the Statute of Frauds, forbidding enforcement unless there is a written memorandum …
- (a) (the executor-administrator provision); (b) (the surety-ship provision); (c) (the marriage provision); (d) (the land contract provision); (e) not to be performed within one year from the making thereof (the one-year provision). (f) DO – gift
(2) The following classes of contracts, which were traditionally subject to the Statute of Frauds, are now governed by Statute of Frauds provisions of the Uniform Commercial Code:
- (a) a contract for the sale of goods for the price of $500 or more (Uniform Commercial Code § 2-201);
- (b) a contract for the sale of securities (Uniform Commercial Code § 8-319);
- (c) a contract for the sale of personal property not otherwise covered, to the extent of enforcement by way of action or defense beyond $5,000 in amount or value of remedy (Uniform Commercial Code § 1-206).
UCC § 2-201, Formal Requirements; Statute of Frauds.
- (1) a contract for the sale of goods for the price of $5,000 or more is not enforceable … signed by the party against which enforcement is sought ; (4) (one-year provision is not applicable)
Rest, § 112. Requirement Of Surety-ship (p.257)
- A contract is not within the Statute of Frauds as a contract to answer for the duty of another unless the promisee is an obligee of the other's duty, the promisor is a surety for the other, and the promisee knows or has reason to know of the suretyship relation.
DO
- promisor promises promisee to pay some money which the other has to pay to promisee ;; the other has a duty to pay money to promisee, promisee is obligee of the other’s duty, promisor tells promisee “I will pay money for the other” )
- e.g. a contract is within Statute of Frauds ; a promise is within Statute of Frauds
Rest § 115. Novation (p.257)
- A contract that is itself accepted in satisfaction of a previously existing duty of a third person to the promisee is not within the Statute of Frauds as a contract to answer for the duty of another.
- Exam - Novation is not within Statute of Frauds
Rest § 121. Contract Of Assignor Or Factor
- (1) A contract by the assignor of a right that the obligor of the assigned right will perform his duty is not within the Statute of Frauds as a contract to answer for the duty of another.
- Exam - Assignment of right is NOT within Statute of Frauds
Rest § 125. Contract To Transfer, Buy, Or Pay For An Interest In Land
- (1) A promise to transfer to any person any interest in land is within the Statute of Frauds.
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Rest § 131. General Requisites of A Memorandum
- …, a contract within the Statute of Frauds is enforceable if … by any writing, signed by … the party to be charged, which
- (a) … the subject matter of the contract, (b) … the parties (c) … the essential terms of the unperformed promises in the contract
Rest § 136. Time of Memorandum
- A memorandum sufficient to satisfy the Statute may be made or signed at any time before or after the formation of the contract.
§ 148. Rescission by Oral Agreement (p.257)
- Notwithstanding the Statute of Frauds, all unperformed duties under an enforceable contract may be discharged by an oral agreement of rescission. The Statute may, however, apply to a contract to rescind a transfer of property.
- (DO – unless transfer of property, unperformed duty may be discharged by oral agreement)
§ 149. Oral Modification
- (DO- unless transfer of property, the originally agreed terms may be modified orally)
Ch. 4. Policing bargaining process (p.310)
1., capacity
Rest § 12. Capacity to Contract
- (1) No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. .
- (2) A natural person (a) under guardianship, or ; (b) an infant, or (c) mentally ill or defective, or (d) intoxicated.
§ 14. Infants (p.310)
- Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person's eighteenth birthday.
§ 16. Intoxicated Persons
- A person incurs only voidable contractual duties by entering into a transaction if the other party has reason to know that by reason of intoxication
- (a) he is unable to understand in a reasonable manner the nature and consequences of the transaction, or (b) he is unable to act in a reasonable manner in relation to the transaction.
Kiefer v. Fred Howe Motors, Inc., 39 Wis. 2d 20, (p.312)
- Generally, minor's contract, other than for necessaries, is either void or voidable at his option
- General rule permitting dis-affirmance of contract is not affected by minor's status as emancipated or un-emancipated
- Minor buyer's request that seller take automobile back and,, letter from minor's attorney advising seller of buyer's minority, declaring contract void, tendering return of automobile, and demanding repayment, was effective dis-affirmance.
- Seller under contract disaffirmed by minor has tort remedy for minor's misrepresentation of his age
pressure, concealment, misrepresentation in bargaining (p.322)
- A mid-marriage agreement which resolves the issue of equitable distribution and alimony in the event of divorce. P (husband) threatened wife to divorce if wife refused to make the contract. Refusal to make the contract would have cost the wife divorce, break-up of a family with two sons, which she wanted to avoid. P.324
- Issue : whether the agreement is enforceable – whether it is unfair, it result from coercion or duress ;; held that the mid-marriage agreement was coercive.
In pre-nuptial agreement - no risk of divorce yet, no risk of destroying family
In agreement at a marriage’s termination - each party can look to his or her economic rights, the relationship is adversarial
In a mid-marriage agreement in the present case - (i) marriage does not lose all of its vitality, (ii) at least one party wanted marriage to survive, (iii) cost to divorce is destruction of family with two sons, and stigma of a failed marriage,
- Exam ** coercive + under duress + unfair
Alaska Packers' , <pre-existing duty rule> p.325
- Held : the promise to pay additional wage is not legally enforceable
- (1) <consideration> -
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- (2) <breach of original contract> no waiver of the breach of the original contract – here, (i) the workers breached the contract, and the company did not waive it, (ii) the supervisor had no authority to modify the original contract
- (Prof.) (i) pricing differentiation – incentive for workers to move to Chicago, for industry to invest in SF for cheap labor, (ii) Alaska packers had awesome lawyers
- employee was offered more money from another employer. Original employment contract was destroyed. Second employment contact was made to increase employee’s salary. à. full rescission of original contract, the new contract with only difference of increased salary
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- distinction between here and Loral,(p.340) in terms of duress - unlike Loral, here, the employee was offered more money from another employer ; like in Loral, here, employer couldn’t get a designer now.
Watkins & Son v. Carrig ,
- contract for excavation to remove “all materials” ; no understanding that no rock would be found ; contractor (P)’s manager improvident ; rock was found ; D agreed to pay additional price for the removal of the rock
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- creditor may make voluntary and gratuitous concession to his debtor,,
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- defense of <mutual mistake> not available, here, coz pacta sunt servanda ,”all materials”
- Exam - modification of original contract (i) consideration, (ii) changes to meet changes in circumstances, (iii) intentional and voluntary concession, (iv) duress,(v) mutual mistake
C.C. King Co. v. Aldrich
- contract for a sale of “two good large hogs” ; D knew that P were buying the hogs for food ; P paid and discovered the hogs delivered were with disease ;
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Austin v. Loral Corp,
- Loral contractor; Austin sub-contractor ; Loral contracted with Navy to supply radar during Vietnam war ; Austin supply precision gear to Loral ; Austin demanded increase in the price
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- (DO- if apply under duress to Alaska packers case ? here, pre-existing duty rule )
Odorizzi v. Bloomfield School Dist,
- <under duress> “by means of wrongful threat” - here, dismiss the employment of teacher is not only lawful, but obligation of the school,
- <actual fraud> actual fraud, conscious mis-representation, concealment, or non-disclosure of material fact , here, lacked (i) knowledge of falsity, (ii) intent to induce reliance, (iii) justifiable reliance
- <constructive fraud> in a confidential or fiduciary relationship , here, just employee and employer, not fiduciary relationship
- <mistake> consent was obtained through a mistake of fact or law , here, no
- <undue influence> a use of excessive pressure, to one vulnerable to such a pressure, usually in a confidential relationship ; however, no excuse for bad bargaining ;; over-persuasion is inferred from unusual time, unusual place of negotiation, urge that the biz should be done at once, no time to consult adviser or attorney,
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<to what extent, information should be disclosed to the other party during negotiation>
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entrepreneurial information (productive information)
- parties should have a right-not-to-disclose productive information, which is information that is costly to produce, impossible to protect via intellectual property rights, and valuable to other market player, ;; so that without the right-not-to-disclose, free-rider problem will discourage the production of the information
Swinton termite case
- infested with termites, knowing the internal destruction. The vendee (P) could not readily observe this condition upon inspection..
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- (i) infestation of building by termite has not been common in MA, (ii) the law does not expect idealistic standard of human nature
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- <least cost info gathering>
Kannavos
- vendee purchased a property from vendor to invest as multi-family house, which was prohibited by local zoning, vendee sought to rescind the purchase.
(1), when duty to disclose more arise, so as to avoid deception and reliance on a half-truth? ;
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(2), whether vendee (P) is barred from recovery merely because the vendee did not use due diligence when could readily have discovered the defect
- the zoning violation could have been discovered by exercising due diligence through public record (whereas, the termite would have been discovered only by retaining expert investigators )
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- DO- in Swinton no affirmative statement ; whereas, in Kannavos, the vendor made statement as to the state of the property - multi-family purpose in violation of the ordinance with knowledge of the purpose of the vendee - income property of multi-family use.
- Prof, GDG – “least cost information gathering”
Vokes v,
- (P) dance student, (D) dance studio ; the dance studio induced her to sign a series of the contract, lying that she was improving and has potential ; Held, Vokes old woman could avoid contract on the ground of misrepresentation
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- “a statement of a party having superior knowledge, regarded as a statement of fact,, although considered as opinion if the parties were dealing at arm’s length”
- “ If contracting party who owes no duty to disclose facts within his knowledge or to answer inquiries respecting such facts undertakes to disclose, he must disclose whole truth. “
- (2) DO- whether (trade puffing) and (misrepresentation),,, here, sole intent was to induce her to buy addition hours of lessons
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