Essentials of Business Law, 9th edition
INSTRUCTOR’S MANUAL
Chapter 13 Form of Contracts
LESSON OVERVIEW
While the previous chapters discussed the essential elements of a valid contract, Chapter 13 discusses
the final element of a valid contract. We examine in detail the proper form of contracts, and through the
use of examples, understand their relevance in real life situations. Students will learn how the parol
evidence rule affects the addition of supplementary provision to a written contract. The chapter also
covers the Statute of Frauds and the types of contract. Students may additionally learn the terms of
information that must be included in a written contract to satisfy the Statute of Frauds. Students are
encouraged to conduct their research through the use of the Internet and other sources.
CHAPTER OUTLINE
A. THE REQUIREMENT OF PROPER FORM (p. 200)
1. When Contracts Should Be in Writing (p. 200)
B. THE PAROL EVIDENCE RULE (pp. 200-201)
C. THE STATUTE OF FRAUDS (p. 201)
D. TYPES OF CONTRACTS THAT MUST BE IN WRITING (p. 201)
1. Agreements by an Executor or Administrator to Pay the Debts of a Deceased
Person (p. 202)
2. Agreements to Answer for the Debts of Another (p. 202)
3. Agreements That Cannot Be Completed in Less Than One Year (pp. 202-203)
4. Agreements Made in Contemplation of Marriage (p. 203)
5. Agreements to Sell Any Interest in Real Property (pp. 203-204)
6. Agreements to Sell Personal Property for $500 or More (p. 204)
E. INFORMATION INCLUDED IN A WRITTEN CONTRACT (pp. 205-206)
F. CHAPTER SUMMARY (p. 206)
G. CHAPTER ASSESSMENT (pp. 206-212)
1. Matching Key Terms (pp. 206-207)
2. True/False Quiz (pp. 207-208)
3. Discussion Questions (p. 208)
4. Thinking Critically About the Law (p. 209)
5. Case Questions (pp. 209-210)
6. Case Analysis (pp. 210-212)
7. Legal Research (p. 212)
KEY TERMS
Key terms are listed at the beginning of the chapter, posted in the student textbook margins, and placed
in bold in the copy. They are listed here for your quick reference.
§ parol evidence rule (p. 200)
§ Statute of Frauds (p. 201)
§ executor (p. 202)
§ administrator (p. 202)
§ guaranty (p. 202)
§ antenuptial or prenuptial agreement (p. 203)
§ auction sale (p. 204)
§ memorandum (p. 205)
LEARNING OUTCOMES
The chapter Learning Outcomes will help you and the students discover the concepts and information
that should be understood upon completion of the chapter. You may want to access the PowerPoint
(PPT) slides for Chapter 13 when you begin the study of the chapter and discuss each Learning
Outcomes. Each Learning Outcome will be covered separately in the Instructor Notes, but they are
shown here in total as an overview of the sections being presented in Chapter 13. The corresponding
text page numbers and PPT slides are listed next to each outcome. These slides should be used to
reinforce the main points of the lecture.
After completing this chapter, the students will be able to:
1. Describe the requirement of proper form of contracts, and name instances when contracts (a)
should not be in writing, (b) should be in writing, and (c) must be in writing. (p. 200, PPT slides 2-3)
2. Explain how the parol evidence rule affects the addition of supplementary provisions to a written
contract. (pp. 200-201, PPT slides 4-6)
3. Discuss the Statute of Frauds. (p. 201, PPT slide 7)
4. Identify the six types of contracts that the Statute of Frauds requires to be in writing. (pp.
201-204, PPT slides 8-16)
5. Specify items of information that must be included in a written contract to satisfy the Statute of
Frauds. (pp. 205-206, PPT slides 17-19)
LECTURE OUTLINE
A. THE REQUIREMENT OF PROPER FORM
The requirements of a valid contract are (1) offer and acceptance, (2) mutual agreement, (3)
consideration, (4) competent parties, (5) legality of purpose, and (6) proper form. The element of
proper form requires that certain contracts must be in writing to be enforceable.
B. THE PAROL EVIDENCE RULE
The word parol simply means “speech” or “words.” Parol evidence refers to any supplementary
evidence or conditions, written or oral, that a party wants to add to a written contract.
C. THE STATUTE OF FRAUDS
It is important to note that the Statute of Frauds does not prohibit a person from legally entering into
oral contracts for certain kinds of agreements; it only specifies that certain contracts must be in writing
to be enforceable. The Statute of Frauds applies to executory contracts only.
D. TYPES OF CONTRACTS THAT MUST BE IN WRITING
The Statute of Frauds specifies six types of contracts that must be in writing to be legally enforceable:
1. Agreements by an executor or administrator to pay the debts of a deceased
person
Either an executor or an administrator has legal authority to arrange for the distribution
of the assets of a deceased person, and in such a position may be inclined to promise to
pay debts of the deceased personally. The Statute of Frauds requires that such a
promise must be in writing to be enforceable.
2. Agreements to Answer for the Debts of Another
A guaranty, or promise, to pay the debts or settle the wrongdoings of another if he or she
does not make settlement personally is not enforceable unless it is written.
3. Agreements That Cannot Be Completed in Less Than One Year
A contract that obviously cannot be completed within one year must be in writing. If the
life of the contract is indefinite and there is a possibility of its being completed within a
year, it need not be in writing.
4. Agreements Made in Contemplation of Marriage
An exchange of promises made by persons planning to marry is known as an
antenuptial agreement, sometimes referred to as a prenuptial agreement. Such a
contract is enforceable only if it is reduced to writing before the marriage takes place.
5. Agreements to Sell Any Interest in Real Property
Real property, often called real estate, is land and items permanently attached to the
land, such as buildings or trees (all other property is considered personal property). All
contracts to sell real property or any interest in it must be in writing to be enforceable.
6. Agreements to Sell Personal Property for $500 or More
The UCC requires that sales of personal property for $500 or more must be in writing.
There are several exceptions to this requirement. Partial or full payment to the seller
renders the contract enforceable because it shows the serious intent of the buyer, just as
much as a written agreement does.
E. INFORMATION INCLUDED IN A WRITTEN CONTRACT
Most important contracts are printed and signed by hand by the parties to the agreement. A signature
may include any symbol used by a contracting party intending to authenticate a written agreement.
INSTRUCTOR NOTES
A resulting answer or explanation is provided below for each Learning Outcome in Chapter 13. Every
outcome is also mapped to corresponding text page numbers, PPT slides, and relevant chapter
assessment exercises and activities for ease of reference and use.
LO1. Describe the requirement of proper form of contracts, and name instances when contracts
(a) should not be in writing, (b) should be in writing, and (c) must be in writing.
Routine contracts should not be in writing because it would be a waste of time and effort. Some
contracts should be in writing to protect against later disagreement. Still other contracts must be in
writing because the law requires such for the contract to be enforceable.
Text Pages: 200
PowerPoint: Slides 2-3
LO2. Explain how the parol evidence rule affects the addition of supplementary provisions to a
written contract.
The parol evidence rule states that any spoken or written words in conflict with what the written
contract states cannot be introduced as evidence in a court of law.
Text Pages: 200-201
PowerPoint: Slides 4-6
Thinking Critically About the Law: 31
Case Questions: 38
Case Analysis: 40
LO3. Discuss the Statute of Frauds.
The Statute of Frauds is a law requiring certain contracts to be in writing to be enforceable. It does not,
however, prohibit a person from legally entering into oral contracts for certain kinds of agreements.
Text Pages: 201
PowerPoint: Slide 7
Discussion Questions: 30
Thinking Critically About the Law: 32
LO4. Identify the six types of contracts that the Statute of Frauds requires to be in writing.
Contracts that must be in writing to be legally enforceable include agreements (a) by an executor or
administrator to pay the debts of a deceased person, (b) to answer for the debts of another, (c) that
cannot be completed in less than a year, (d) made in contemplation of marriage, (e) to sell any interest
in real property, and (f) to sell personal property for $500 or more.
Text Pages: 201-204
PowerPoint: Slides 8-16
Discussion Questions: 26-29
Thinking Critically About the Law: 33-35
Case Questions: 36-37
Case Analysis: 39, 42
LO5. Specify items of information that must be included in a written contract to satisfy the Statute
of Frauds.
To satisfy the Statute of Frauds, a written contract must include the following five items of information:
(a) the names of the parties, (b) the purpose of the agreement, (c) a description of the consideration
promised, (d) the date and place where the contract was made, and (e) the signatures of the parties.
Text Pages: 205-206
PowerPoint: Slides 17-19
Case Analysis: 41