Environmental Engineering Chapter 10 Question Who Will Win Antonias Suit Against

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Chapter 10 Legality, Consent, and Writing 13

Witness to prove a parol Declaration of Mr. Thomas Penn that the Land in dispute was sold to

Defendant. This piece of Evidence was opposed by the Plaintiff, and refused BY THE COURT.

Agreements for an Interest in Land

A contract for the sale of any interest in land must be in writing to be enforceable. Notice the phrase

“interest in land.” This means any legal right regarding land

Additional Case: Baker v Daves9,

Facts: Tommy and Eleanor Daves gave their daughter Lisa Baker the deed to a two-acre property with a

house on it, keeping for themselves a life interest in the parcel. When they died, the property returned to

their daughter. Two years later Tommy and Eleanor divorced and settled their affairs amicably. In court,

Issue: Was Lisa obligated to sell the house??

Holding: Judgment for Daves reversed and remanded. The record of the court proceedings, introduced

as an exhibit, showed that there was testimony in open court reciting the details of the purported sales

transaction. Baker contends that she never agreed to sell the property and that “even if some of the parties

One judge dissented and would have affirmed the trial court’s decision, arguing that Baker was

present in court when the agreement was discussed and that she admitted listing the property for sale

pursuant to the agreement.

Question: What is a life interest?

Question: What evidence does the court rely on in ruling for Baker?

Question: What argument did the Daves make based on the courtroom testimony?

Question: Did they rely on anything else?

Answer: They relied on the fact that Baker listed the property for sale, although she soon took it off

the market.

Question: What is the significance of Baker listing the property for sale?

Question: What is partial performance?

Answer: Partial performance is an exception to the Statute of Frauds in the sale of land. If makes an

Question: Why didn’t partial performance apply here?

9 83 Ark. App. 145, 119 S.W.3d 53 Court of Appeals of Arkansas, 2003

14 Unit 2 Contracts and the UCC

Question: Can’t the court construe listing the land for sale as proof of the oral agreement with her

parents?

Question: Isn’t that unethical for Baker to ignore her promise? Shouldn’t the law support ethics?

Answer: The rationale for not enforcing an oral agreement is that this will protect all buyers and

Agreements That Cannot Be Performed Within One Year

Additional Case/You Be The Judge: Sawyer v. Mills10

Facts: Barbara Sawyer worked as a paralegal for Melbourne Mills, assisting him in a large class action

lawsuit against the maker of diet drug Fen-Phen. Mills promised Sawyer a large bonus, but never

specified how much he would pay her. When Mills settled the case, he later met with Sawyer and her

husband to discuss her bonus. The Sawyers secretly taped the conversation.

Holding: Yes, the order for JNOV is affirmed. According to the court, the undisputed testimony from

Sawyer, her husband, and her attorney and a draft agreement of the parties’ conversation regarding the

bonus, coupled with the tape recording of that conversation, all confirmed that the parties agreed the

bonus would be paid in monthly installments over 107 months. The tape recording clearly showed that

Mills never intended to pay Sawyer the bonus as a lump sum and Sawyer was recorded agreeing to the

monthly payments. Thus, the parties never contemplated that the bonus would be paid within one year,

and therefore the oral promise is not enforceable.

Question: Didn’t Mills agree to pay Sawyer $10,000 for ten years?

Answer: Yes.

Question: Is it fair that he can make that promise then not honor it?

Answer: Perhaps not. But the point of Statute of Frauds is to force people to be wary of relying on oral

Question: What about the checks that Sawyer received? Doesn’t nine months of checks constitute a

“writing”?

Answer: Sawyer tried to make this clam, but the court did not agree. According to the court, the nine

10 2007 WL 1113038. Kentucky Court of Appeals, 2007.

Chapter 10 Legality, Consent, and Writing 15

Additional Case: Bed, Bath & Beyond of La Jolla, Inc. v La Jolla Village Square

Venture Partners11

Facts: From May 1992 through January 1993 plaintiff Bed, Bath & Beyond negotiated with defendant

La Jolla Village Square Venture Partners (“La Jolla”) for a lease of retail space in La Jolla Village

Square, a shopping center La Jolla was then in the process of building. In February 1993 La Jolla’s legal

action is a valid, enforceable lease. The court granted defendant’s motion and plaintiff appealed.

Issue: Was the lease between plaintiff and defendant subject to the statute of frauds?

Holding: Judgment for defendant affirmed. Excerpts from the court’s opinion:

Three different “statutes of fraud” apply to bar enforcement of the alleged lease agreement in this

case.

• Civil Code section 1624, subdivision (d) specifies, as a type of contract which is invalid unless it

is in writing and subscribed by the party to be charged, “[a]n agreement . . . to lease real estate for

a longer period than one year . . . .”

Plaintiff contends the lease agreement is not subject to the statute of frauds because it possibly could

have been performed within one year from the date of its making. Plaintiff’s argument rests on two

provisions in the unexecuted written lease. The first provided the tenant could terminate the lease

before the rental term commenced if the landlord failed to begin certain preparatory work on the

leased premises by June 1, 1993, or substantially complete that work by December 31, 1993. The

second gave the landlord the right to terminate the lease before commencement of the rental term if

the landlord was unable to obtain the various governmental permits and approvals required for

construction of the premises despite exercising diligence and good faith in attempting to do so.

16 Unit 2 Contracts and the UCC

Common Law Statute of Frauds: What the Writing Must

Contain

The writing may consist of more than one document, written at different times, with each document

making a piece of the puzzle. But there are some general requirements: the writing

Incompleteness

Additional Case: Ahrens v. Dodd12

Mr. and Ms. Ahrens wanted to buy a trailer court owned by Charles Dodd. The Ahrenses drafted and

signed a contract to buy “Blue Bell Trailer Court” for $305,000. The contract stated that the trailer court

included 31 acres. Dodd held the deed to a 33.72-acre tract of land; the land included the 31 acres of Blue

Bell Court and two more acres on which Dodd lived. The Ahrenses wrote a check to Dodd for $65,000,

noting “trailer park” on the check. Dodd cashed the check. Later, Dodd refused to sell the trailer park to

the Ahrenses, who sued.

Question: This case raises two issues under the statute of frauds. What are they?

Question: The court held that the contract, together with the check, satisfied the writing requirement.

Was the writing clear and complete?

Answer. No, it was not. It was unclear exactly where the land’s boundaries lay. “Blue Bell Court”

for specific performance.

Electronic Contracts and Signatures

What happens to the writing requirement, when there is no paper? The present statute of frauds

requires some sort of “signature.” Today, an “electronic signature” could mean a name typed (or

automatically included) at the bottom of an e-mail message, a retinal or vocal scan, or a name signed

by electronic pen on a writing tablet, among others.

12 863 S.W.2d 611, 1992 Mo. App. LEXIS 1587 Court of Appeals of Missouri, 1992

Chapter 10 Legality, Consent, and Writing 17

The UCC’s Statute of Frauds

The UCC requires a writing for the sale of goods worth $500 or more. The Code’s requirements are easier

to meet than those of the common law. UCC §2-201, the statute of frauds section, has three important

elements:

1. The basic rule

UCC §2-201(1)—The Basic Rule

A contract for the sale of goods worth $500 or more is not enforceable unless there is some writing,

signed by the defendant, indicating that the parties reached an agreement. The key difference between the

Sale of Goods Distinguished from Other Contracts

Under UCC §2-201(1), a contract for the sale of goods worth $500 or more is not enforceable unless there

is some writing, signed by the defendant, indicating that the parties reached an agreement. The common

law requires that all terms of the agreement be in writing; the UCC does not. It requires writing

containing an indication that the parties reached an agreement, and a statement of the quantity of goods

being sold.

[Signed] Butch.

Question: What is missing from each fax?

Answer: Natalie’s fax omits the price, a description of the unit, the time, and place of performance, and

Question: Natalie and Butch both refuse to go through with their agreements, and Antonia sues both.

Who will win her suit against Natalie?

Question: Who will win Antonia’s suit against Butch?

Answer: Antonia wins. Butch’s fax is no more specific than Natalie’s, but the UCC does not demand

18 Unit 2 Contracts and the UCC

UCC §2-201(2)—The Merchants’ Exception

When both parties are “merchants,” that is, business people who routinely deal in the goods being sold,

UCC §2-201(3)—Special Circumstances

An oral contract may be enforceable, even without a written memorandum, if:

• The seller is specially manufacturing the goods for the buyer, or

Parol Evidence

The parol evidence rule: When two parties make an integrated contract, neither one may use parol

Case: Mayo v North Carolina State University,13

Facts: Dr. Robert Mayo was a tenured faculty member of the engineering department at North Carolina

State University (NCSU), and director of the school’s nuclear engineering program. In July, he informed

his department chair, Dr. Paul Turinsky, that he was leaving NCSU effective September 1. In October,

after Mayo had departed, the university’s payroll coordinator informed him that he had been overpaid

because for employees who worked 9 months but were paid over 12 months, the salary checks for July

Issue: What evidence could NCSU rely upon to establish its pre-payment rule?

Holding: Judgment for Mayo affirmed. Excerpts from the court’s opinion:

Here, the language of the employment agreement is clear and unambiguous-petitioner is to be paid in

twelve monthly installments for his service as a nine-month, academic year, tenured faculty member. Dr.

13 2005 WL 350567 North Carolina Court of Appeals, 2005

Chapter 10 Legality, Consent, and Writing 19

employment agreement set forth the compensation policies upon which NCSU bases its claim. The

payroll director admitted at the agency hearing that the policies were “not stated anywhere specifically.”

Dr. Turinsky testified he did not know of the existence of the terms until September, after petitioner left

his employment with NCSU. The parol evidence rule prohibits the admission of parol evidence to vary,

add to, or contradict a written instrument intended to be the final integration of the transaction.

Question: What is an integrated contract?

Question: What is the source of this dispute?

Question: Why?

Answer: The University relied on its “prepayment” rule, under which salary received in July and

Question: Was this rule part of Mayo’s employment agreement with the University?

Question: How does the parol evidence rule arise in this case?

existence of the prepayment rule.

Question: Did the court agree?

Note: The court affirmed in part, ruling that Mayo owed the university nothing, and reversed in

part, declaring that Mayo was also entitled to his tax refund.

Multiple Choice Questions

1. Ricki goes to a baseball game. The back of her ticket clearly reads: “Fan agrees to hold team

blameless for all injuries – pay attention to the game at all times for your own safety!” In the first

inning, a foul ball hits Ricki in the elbow. She ____________ sue the team over the foul ball. Ricky

spends the next several innings riding the opposing team’s first baseman. The very nicest thing she

says to him is, “You suck, Franklin!” In the eighth inning, Franklin has had enough. He grabs the

ball boy’s chair and throws it into the stands, injuring Ricki’s other elbow. Ricki _____________ sue

the team over the thrown chair.

(a) can; can

(b) can; cannot

(d) cannot; cannot

2. Kerry finds a big green ring in the street. She shows it to Leroy, who says, “Wow. That could be

valuable.” Neither Kerry nor Leroy knows what the ring is made of or whether it is valuable. Kerry

20 Unit 2 Contracts and the UCC

sells the ring to Leroy for $100, saying, “Don’t come griping if it turns out to be worth two dollars.”

Leroy takes the ring to a jeweler who tells him it is an unusually perfect emerald, worth at least

$75,000. Kerry sues to rescind.

(a) Kerry will win based on fraud.

(b) Kerry will win based on mutual mistake.

(d) Kerry will lose.

Answer: D. Kerry will lose, based on conscious uncertainty. If Leroy knew the ring was valuable,

3. CPA QUESTION 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

(d) Prove the existence of a subsequent oral agreement modifying the contract

Answer: C. The rule prevents reliance on any oral agreements made while signing the integrated

4. Raul wants to plant a garden, and he agrees to buy a small piece of land for $300. Later, he agrees to

buy a table for $300. Neither agreement is put in writing. The agreement to buy the land

____________ enforceable, and the agreement to buy the table ____________ enforceable.

(a) is; is

(b) is; is not

(d) is not; is not

5. In December 2012, Eric hires a band to play at a huge graduation party he is planning to hold in May,

2014. The deal is never put into writing. In January 2014, if he wanted to cancel the job, Eric

_____________ be able to do so. If he does not cancel, and if the band shows up and plays at the

party in May, 2014. Eric ______________ have to pay them.

(a) will; will

(b) will; will not

(d) will not; will not

Chapter 10 Legality, Consent, and Writing 21

Essay Questions

1. For 20 years, Art’s Flower Shop relied almost exclusively on advertising in the yellow pages to bring

business to its shop in a small West Virginia town. One year the yellow pages printer accidentally

omitted to print Art’s ad, and Art’s suffered an enormous drop in business. Art’s sued for negligence

and won a judgment of $50,000 from the jury, but the printing company appealed, claiming that under

an exculpatory clause in the contract, the company could not be liable to Art’s for more than the cost

of the ad, about $910. Art’s claimed that the exculpatory clause was unconscionable. Please rule.

Answer: The West Virginia Supreme Court gave judgment for Art’s, holding that the clause was

2. Guyan Machinery, a West Virginia manufacturing corporation, hired Albert Voorhees as a salesman

and required him to sign a contract stating that if he left Guyan he would not work for a competing

corporation anywhere within 250 miles of West Virginia for a two-year period. Later, Voorhees left

Guyan and began working at Polydeck Corp., another West Virginia manufacturer. The only product

Polydeck made was urethane screens, which comprised half of 1 percent of Guyan’s business. Is

Guyan entitled to enforce its noncompete clause?

3. Morell bought a security guard business from Conley, including the property on which the business

was located. Neither party knew that underground storage tanks were leaking and contaminating the

property. After the sale, Morell discovered the tanks and sought to rescind the contract. Should he be

allowed to do so?

Answer: Yes. There was no fraud or misrepresentation because Conley knew nothing of the tanks.

4. Richard Griffin and three other men owned a grain company called Bearhouse, Inc., which needed to

borrow money. First National Bank was willing to loan $490,000, but insisted that the four men sign

personal guaranties on the loan, committing themselves to repaying up to 25 percent of the loan each

if Bearhouse defaulted. Bearhouse went bankrupt. The bank was able to collect some of its money

from Bearhouse’s assets, but it sued Griffin for the balance. At trial, Griffin wanted to testify that

before he signed his guaranty, a bank officer assured him that he would only owe 25 percent of

whatever balance was unpaid, not 25 percent of the total loan. How will the court decide whether

Griffin is entitled to testify about the conversation?

Answer: Under the parol evidence rule, if the parties intended the guaranty to be integrated, which

22 Unit 2 Contracts and the UCC

entire remaining balance. First National Bank v. Griffin, 310 Ark. 164, 832 S.W.2d 816, 1992 Ark.

LEXIS 439 (1992).

5. When Deana Byers married Steven Byers, she was pregnant with another man’s child. Shortly after the

marriage Deana gave birth. The marriage lasted only two months, and the couple separated. In

divorce proceedings, Deana sought child support. She claimed that Steven had orally promised to

support the child if Deana would marry him. Steven claims he never made the promise. Comment on

the outcome.

Answer: It makes no difference whether he said it or not. An oral promise in consideration of

Discussion Questions

1. ETHICS: Richard and Michelle Kommit traveled to New Jersey to have fun in the casinos. While in

Atlantic City, they used their MasterCard to withdraw cash from an ATM conveniently located in the

“pit” – the gambling area of a casino. They ran up debts of $5,500 on the credit card and did not pay.

The Connecticut National Bank sued for the money. Law aside, who has the moral high ground? Is it

acceptable for the casino to offer ATM services in the gambling pit? If a credit card company allows

customers to withdraw cash in a casino, is it encouraging them to lose money? Do the Kommits have

any ethical right to use the ATM, attempt to win money by gambling, and then seek to avoid liability?

Answer: They should and did claim that they borrowed the money to gamble. They argued correctly

2. Should noncompete agreements in employment contracts be illegal altogether? Is there equality of

bargaining power between the company and the employee? Should noncompetes be limited to top

officers of a company? Would you be upset if a prospective employer asked you to agree to a one

year covenant not to compete?

3. Sixteen-year-old Travis Mitchell brought his Pontiac GTO into M&M Precision Body and Paint for

body work and a paint job. M&M did the work and charged $1,900, which Travis paid. When, Travis

later complained about the quality of the work, M&M did some touching up, but Travis was still

dissatisfied. He demanded his $1,900 back, but M&M refused to refund it since all of the work was

“in” the car and Travis could not return it to the shop. The state of Nebraska, where this occurred,

follows the majority rule on this issue. Does Travis get his money? Is this a fair result?

Chapter 10 Legality, Consent, and Writing 23

Answer: Yes, Travis gets his money. In most states, a minor is permitted to disaffirm a contract and

get a full refund of his money, even if he is unable to make restitution. Since restitution is impossible

4. Contract law gives minors substantial legal protection. But does a modern high school student need so

much protection? Older teens may have been naïve in the 1700s, but today, they are quite savvy.

Should the law change so that only younger children – perhaps those aged 14 and under – have the

ability to undo agreements? Or is the law reasonable the way it currently exists?

5. Is the statute of frauds reasonable, or does it unacceptably allow people to escape their obligations on a

mere technicality?