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CHAPTER 16
WRITING
I. OBJECTIVES
This chapter is designed to acquaint students with the circumstances under which a contract must be in
writing. It is also designed to teach them about the operation of the parol evidence rule and the basic
rules of contract interpretation. After reading the chapter and attending class, a student should be able
to:
A. List the contracts that must be evidenced by a writing under the Statute of Frauds.
B. Explain the exceptions to the Statute of Frauds.
C. Explain how to satisfy the Statute of Frauds under both the common law and UCC.
D. Explain the parol evidence rule and the exceptions to the rule.
II. ANSWER TO INTRODUCTORY PROBLEM
the promise for his own benefit.
B. To satisfy the statute of frauds, a memorandum in writing signed by Moore would have been
necessary.
C. That depends on the nature of the promise, the nature of the writing, and when the promise
was made. The essential promise to pay the debt of another, of course, must be evidenced by
made after the writing was signed, the oral promise could be admitted into evidence and
possibly enforced.
D. Although Moore has the legal right not to pay because of the statute of frauds, he may still have
the ethical duty to pay the debt. Under a deontological approach, keeping one’s word and
III. SUGGESTIONS FOR LECTURE PREPARATION
A. Introduction
1. Discuss the variety of functions that writing performs for contracting parties. How can we
writing in electronic transactions.
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2. Discuss the history of the statute of frauds. Students might enjoy the story about the
“contract” for the sale of Fiste, the fighting cock, which was the cause celebre that stimulated
the enactment the first statute of frauds.
4. Briefly preview the types of contracts that are within the statute of frauds. Note that the
significance today.
5. Contrast the approach to writing under the CISG (The Global Business Environment, p.
458) with that of U.S. law.
B. Effect of Noncompliance with the Statute of Frauds
1. Discuss the effect of noncompliance with the statute of frauds. Make it clear that
C. Contracts Within the Statute of Frauds
1. Collateral Contracts
a. Explain what a collateral contract is. Refer to the diagram on p. 458 or make a diagram of
a typical collateral contract on the blackboard. Indicate the positions of the guarantor,
principal debtor, and obligee, and point out which of the promises is within the statute of
Yates’s case.)
Olis, a former officer of Dynegy, was indicted on multiple counts of securities fraud, mail
and wire fraud, and conspiracy because of his work on a financial transaction while he
Court of Texas held that it was a collateral contract, that the main purpose exception did
not apply, and that in the absence of a suitable writing, Dynegy’s promise was not
enforceable against it.
Points for Discussion: Don’t the facts here suggest that Dynegy made a primary promise
to pay, not merely a secondary promise that it would pay if Olis didn’t? The fact that
Example: Introductory Problem.
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Additional Examples: Problem Case #4 and White Stag v. Wind Surfing, Inc., 679 P.2d
312 (Or. Ct. App. 1984) (creditor‘s oral promise to supplier to guarantee payment by a
debtor was enforceable under the main purpose exception). Contrast with the
Introductory Problem.
2. Creations and Transfers of Interests in Land
a. Explain that any creation or transfer of an interest in real property is within the statute of
ownership—e.g., easements, mortgages, long-term leases.
b. Distinguish contracts that involve land but do not involve the creation or transfer of an
interest in land. For example, a contract to build a building would not be within the land
by the vendor would be.
Explain the part performance (action in reliance) exception. Discuss the fact that this
exception serves the basic purpose of the statute of frauds because the buyer’s actions are
payment alone is not sufficient to justify enforcement of the contract (although the buyer
could get restitution of the money he had paid).
Example: Problem Case #6.
3. Contracts that Cannot Be Performed within One Year
a. Explain the one-year provision. Illustrate how time is computed in determining whether a
contract falls within this provision.
Examples:
PERFORMED WITHIN ONE YEAR.
2) On May 1, 2015, Wyatt contracts to work for Wilson for 11 months, beginning
immediately. CONTRACT IS NOT WITHIN THE STATUTE OF FRAUDS
DATE ON WHICH IT WAS MADE.
3) On May 1, 2015, Wyatt contracts to work for Wilson for one year, beginning June 1,
2015. CONTRACT IS WITHIN THE STATUTE OF FRAUDS BECAUSE IT
CANNOT BE FULLY PERFORMED WITHIN ONE YEAR FROM THE DATE ON
WHICH IT WAS MADE. (Note that according to the terms of the contract,
performance cannot be completed until June 1, 2016—more than one year from May
1, 2015).
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Linscott v. Shasteen (p. 462): The Supreme Court of Nebraska holds that a supposed
agreement. Emphasize, however, that the impossibility test governs the determination of
whether a writing is required under the statute of frauds. Is full performance within a
year possible under the terms of the agreement, even if the parties think it is likely that
full performance will take more than a year? If it is possible (despite being unlikely), a
1. New York and Illinois are two states that treat contracts for lifetime employment as
susceptible of completion within a year, even if completion within a year is not likely,
Example: Problem Case #3.
4. Contracts for Sale of Goods of $500 or More
$500 or more.
Example: Problem Case #1.
the statute of frauds.
5. Promise of Executor or Administrator to Pay a Decedent’s Debts Personally
collateral contract provision.
6. Contracts in Which Marriage is the Consideration
a. Discuss the nature and applicability of this provision. Point out that no writing is required in
situations involving mutual promises to marry.
D. Requirements of the Statute of Frauds
1. Explain the requirements for the writing. Distinguish a memorandum from a written contract,
and emphasize that a complete written contract is not required by most states to meet the
filed.
a. Discuss the requirement of signature by the “party to be charged.” Emphasize that while
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
only one of the parties, you have a situation where the contract can be enforced only by
one of the parties (the one who didn’t sign).
b. Discuss the legal meaning of “signature.”
Example: Problem Case #10.
c. Cyberlaw in Action (p. 468): Discuss how writing requirements apply to contracts
d. Discuss the basic requirements for the content of the writing in contracts governed by the
2. Show how different writings can be “tacked” together to satisfy the statute of frauds.
Example: Babdo Sales v. Miller-Wohl Co., 440 F.2d 962 (2d Cir. 1971).
3. Alternative Means of Satisfying the Statute of Frauds in Contracts for the Sale of Goods
a. Discuss why the drafters of the Code provided for alternative means of satisfying the
statute of frauds. What is the underlying assumption? Why haven’t the legislatures
amended the statute of frauds to allow alternative means of satisfying all of the
provisions?
Green Garden Packaging Co., Inc. v. Schoenmann Produce Company, Inc. (p. 468):
Green Garden was a supplier of Shoenmann’s. When Shoenmann was preparing a bid to
applied, so the contract was unenforceable
Points for Discussion: Why was Green Garden’s attempt to use the part performance
exception unsuccessful? Would it have a good argument that providing the confidential
information was payment, which was accepted in exchange for the promised exclusivity?
You may wish to discuss the ethics of Schoenmann’s alleged behavior.
Example: Problem Case #1.
c. Note that the merchant’s memo provision requires a writing that satisfies the statute of
frauds in all respects except that it is signed by the charging party instead of the party to
be charged.
d. Students often have trouble with the merchant’s memo exception. It will be helpful to take
against this possible confusion.
e. Note that the other provisions for alternative ways of satisfying the Code statute of frauds
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
E. Promissory Estoppel and the Statute of Frauds
1. Discuss promissory estoppel as a possible way around the statute of frauds. (You may need to
review promissory estoppel briefly and to give an example of how it could be applied in the
context of a statute of frauds issue). Note that there is an active controversy among courts as
to whether it should be applicable. Some courts fear that a promissory estoppel exception
would essentially “eat up” the rule of the statute of frauds.
F. The Parol Evidence Rule
1. Set up an example to show how the parol evidence rule would operate. E.g., John goes
a complete and final statement of the parties‘ agreement. The day after the warranty expires,
the computer goes down, and Compuzone refuses to make a free repair. Show how the parol
evidence rule would be applied in this situation. Ask what John should have done to protect
himself.
guaranteed.
Points for Discussion: The case furnishes a fairly clear, easy-to-understand example of the
parol evidence rule’s operation. Ask the students about each necessary element of the parol
evidence rule (written contract that reasonably appears to be complete integration; party’s
argument that prior term not appearing in written contract was nevertheless part of the
Additional Example: Problem Case #5.
3. Ethics in Action (p. 474): The parol evidence rule makes it at least possible for a person
exceptions to the parol evidence rule, modern concepts of unconscionability, and some
the statute of frauds.
5. Discuss the circumstances under which parol evidence can be admitted to prove the existence
of additional terms that are consistent with the rest of the contract. Explain and give an
example of a merger clause.
6. Discuss the exceptions to the parol evidence rule. Note that these are situations in which the
being used to contradict the writing.
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G. Interpretation of Contracts
1. Discuss courts’ basic methods of interpreting contracts. It would be helpful to present to the
2. Discuss some of the specific rules of construction that are used to resolve common
interpretation problems.
IV. RECOMMENDED REFERENCES
A. B. E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS (3rd ed. 2004).
B. Michael B. Metzger & Michael J. Phillips, Promissory Estoppel and Section 2-201 of the U.C.C.,
26 VILL. L. REV. 63 (1980).
V. ANSWERS TO PROBLEMS AND PROBLEM CASES
York, Auburn 2005).
2. No. Contracts for the sale of goods for $500 or more are within the statute of frauds under §
2-201 of the Uniform Commercial Code. Under the UCC, however, a writing signed by the
party to be charged is not the only way of satisfying the statute of frauds. Admission of the
contract under oath is one way and acceptance and payment of goods shipped is another way.
retire within a year, it is nevertheless possible. Thus, enforcement of the oral contract is not
barred by the statute of frauds. Hodge v. Evans Financial Corp., 823 F.2d 559 (D.C. Cir.
1987).
4. Yes. The case concerns the applicability of the leading object (main purpose) exception to the
of the statute of frauds, however. White’s mere status as a shareholder was not enough to
show a direct benefit, because there was no proof that his benefit amounted to anything more
substantial than an indirect effect of his share ownership. Wintersport Ltd. v.
Millionaire.com, Inc.,2004 Wash. App. LEXIS 1071 (Ct. App. Wash. 2004).
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require a false statement of fact. In this case, however, Carrow was alleging that he relied on
(Del. Ct. Ch. 2006).
6. No. The court stated that an oral contract for the sale of real property can be enforceable if
the purchaser “(1) “pays the consideration”; (2) “takes possession of the property”; and (3)
“makes permanent and valuable improvements on the property with the consent of the seller,
or without such improvements, other facts are shown that would make the transaction a fraud
LEXIS 669 (Tex. Ct. App. 2010.)
7. Yes, according to the Indiana Court of Appeals. The court concluded that the parties’ written
Packaging, Inc., 920 N.E.2d 766 (Ind. App. 2010).
8. No. The court stated that “evidence of the alleged oral agreement, which would contradict and
was unreasonable as a matter of law for the Harrises to rely on any such oral agreement. Harris v.
9. No. The court discussed the question whether the contract was original, in which case the statute
of frauds would not apply, or collateral. The court found no evidence that the promise was
the only term that must be in the writing is the quantity. That term was covered in this
writing. The writing also supplied the date, the price, the specific paintings involved, and the
2-201. Rosenfeld v. Basquiat, 78 F.3d 84 (2d Cir. 1996).
satisfy the writing requirement because it was not signed by the party to be charged (here, St.
(D. Minn. 2007).