Deck 11: Written Contracts

Question 1

To organize West Valley Surgical Center (WVSC), Welden Daines and Richard Vincent signed a memorandum of understanding (MOU) giving Daines $150,000 plus expenses to provide Ambulatory Surgical Centers Group (ASC) a list of physicians from West Valley City. A founder of ASC, Vincent signed under the heading "ASC." Daines supplied a list of physicians and negotiated with ASC on behalf of physicians, but felt he was also negotiating on behalf of ASC. He told Vincent he was uncomfortable, and they orally agreed he would forego the $150,000 in exchange for eight Class II shares of WVSC. WVSC was formed with ASC as a member. The Boyer Company orally agreed to pay Daines $50,000 if its site were chosen for WVSC. That site was chosen, and Daines requested $50,000 from Boyer. Boyer said it would pay when WVSC leased the premises. ASC agreed to pay Boyer $6,000 in expenses if Daines signed a release. It stated that Daines released WVSC and its members "from any and all liabilities and or claims... [for] services rendered to... V alley West Surgical Center or on behalf of its members... for any services connected with the organization, development and operation" of WVSC. The release said, "it encompasses... any prior agreements or discussions whether written or verbal." Daines signed the release and received $6,000. After Boyer paid $50,000, Daines asked Vincent for eight shares of WVSC. Vincent refused, so Daines sued ASC and Vincent for breach of an oral contract for the shares. Should he succeed?

Answer 1

, he may not be succeeding in his plan since the Memorandum of Understanding was signed by both of the parties. But due to lack or written document for the oral contract between RV and WD, the case is unenforceable.This is a case of fraudulent on the basis of lack of written document. The contract was oral and there were no documents found against the convict.

Question 2

If David agrees in consideration of $1,000 to mow his elderly neighbor's lawn "for as long as she lives next door to him," does the contract have to be in writing? Why or why not?

Answer 2

Statute of Frauds is a law enacted by English Parliament in 1677 and it is applicable to executor contracts only. This law provides list of certain classes of contracts which cannot be enforced if their terms are not given in a written form.
No, this contract needs not to be in writing.
If D agrees to mow lawn of his elderly neighbor in consideration of $1,000 till the time she lives next door then it is not necessary that this contract should be in writing because there is no certainty that his elderly neighbor will live next door to him for more than a year.
Though, Statute of Frauds says that all contracts which involves the terms that are not possible to be performed within a year should be made in writing so that any party to the contract does not forget the terms of the contract. But in this case there is no certainty of time period; it is possible that his elderly neighbor may move somewhere else or he may pass away so this contract needs not to be in writing.

Question 3

Glenn Page began borrowing money from Gulf Coast Motors. He had a gambling problem. One of the owners of Gulf Coast, Jerry Sellers, became concerned about Page's debt to Gulf Coast. He testified that he had phoned Page's wife, Mary, who orally promised to pay the debt. There was no evidence that Mary had received any benefit from the money Glenn borrowed. Gulf Coast sued both Glenn and Mary for the debt. Must Mary pay it?

Answer 3

The Statute of Frauds listed certain classes of contracts that could not be made enforceable in courts unless the terms pertaining to them were evidenced into written form.
Statute of Frauds require the following agreements to be writing:
• An agreement to sell land or any interest in it.
• An agreement the terms of which cannot be performed within the same year.
• An agreement to be responsible for the debts of another.
• An agreement of an executor to pay the debts of the estate from the executor's personal accounts.
• An agreement containing a promise in consideration of marriage.
• An agreement to sell goods for $500 or more.
In the present situation, Mr G has borrowed money for gambling from a company GC Motors. Mr. J one of the owners of GC motors, testifies that Ms. P, wife of Mr. G had promised orally to pay the debt incurred by her husband.
According to the statute of frauds an agreement to be responsible for the debts of a defaulter when the promisor undertakes to make good the loss the promisee would sustain if another person would not pay the promisee the debt owed, then such promise or agreement should be in writing.
This provision of statute of frauds was made specially for those situations when one promises to repay the debt or default of another person purely as an accommodation to that person.

Question 4

Under what circumstances is the Statute of Frauds requirement of a writing unnecessary when a person agrees to be responsible for the debt of another?

Question 5

Don Wang and Royal Investment Group LLC signed a contract of sale of Wang's house. Sean Shahparast was the sole member of Royal. The parties signed an addendum obligating Wang to remove all trash by January 21 and permitting Royal to do "any repair/ construction at buyer's risk and expense." The trash was not removed, and additional addenda were signed obligating Royal to remove the trash, and Wang to remove a derelict car. On June 16, the car was still in the way, so Wang's real estate agent phoned Shahparast. They agreed to reduce the sale price to $600,000, set August 31 as the closing date, and require Wang to remove the car in two days. Wang signed the addendum and had the car towed that day. Royal then asked to extend the closing date to December. Negotiations followed without agreement. The closing was not held on August 31, so Wang's lawyer wrote Shahparast, saying it was clear he was not going to settle under the terms of the contract, and asking for release of the earnest money to Wang. Letters went back and forth. In October, after Royal had the house demolished, it unilaterally set a new closing date. The June 16 addendum, signed but undated by Shahparast, was sent to the closing company. Royal applied for and received a building permit saying that Wang authorized the work. Royal built a house on the property. Royal sued Wang to execute the sale of the property, alleging the June 16 addendum did not satisfy the Statute of Frauds memorandum requirement because it was signed after the August 31 settlement date, thus after a breach of contract. Was the June 16 addendum enforceable?

Question 6

When a party sues to enforce an alleged contract, what is the requirement of the Statute of Frauds regarding the evidence of an agreement of the parties to an alleged contract?

Question 7

Lang Industries, Inc. negotiated and entered into a business loan agreement with Bank of America, N.A. The written contract clearly stated the terms of the loan, including the principal amount, interest rate, and the repayment schedule to be paid in 120 monthly payments. The loan agreement stated that the final monthly payment would be a larger "balloon" payment for all remaining principal and accrued interest due on the loan. After Lang Industries failed to make the final payment, the bank sued to recover the interest and fees associated with the loan. Lang Industries argued that the contract was ambiguous and that when negotiating the loan, David Lang and a bank employee had agreed that there would be no balloon payment at the end of the loan. Should the court allow oral evidence to be admitted in interpreting the contract?

Question 8

What must be included in a note or memorandum required by the Statute of Frauds?

Question 9

As the operator of a baseball stadium, Metropolitan Entertainment Convention Authority (MECA) entered negotiations with Fall Ball Sports, LLC to bring a baseball team to the stadium. An officer of MECA sent Fall Ball Sports a draft lease agreement with blue editing marks which stated that MECA would lease the stadium to Fall Ball Sports for five years for the purpose of "presenting Northern League baseball games." Fall Ball Sports paid Northern League franchise and applications fees. However, the draft agreement between MECA and Fall Ball Sports was never signed by MECA. After Northern League ceased operations, MECA informed Fall Ball Sports that it was no longer interested in leasing the stadium. Fall Ball Sports argued that MECA had represented that the lease was a "done deal" and sued MECA for breach of contract. Was an oral lease agreement sufficient to bind MECA?

Question 10

How does a memorandum differ from a written contract?

Question 11

Preston Exploration Co. (Preston) entered into purchase and sale agreements (PSAs) to sell certain oil and gas leases to Chesapeake Energy Corp. and GSF, LLC (Chesapeake). The PSAs stated that the leases to be conveyed were the ones that had marketable title and would continue for at least one year. Exhibits were attached to the PSAs and specifically referenced in them. The PSAs provided that Preston was to convey "[a]ll of Seller's right, title and interest in... oil and gas leases" as defined in Exhibit A. Among other items, the exhibit referenced the county, lease ID, lease name, lessee, effective date, gross acres, and net acres. The day before the sales were to close, Chesapeake said it would not close. Preston sued. Chesapeake claimed enforcement was barred by the Statute of Frauds. Was it?

Question 12

When will the parol evidence rule permit modification of a written contract that appears to be complete, by another writing made before or at the time of executing the contract?

Question 13

What advantages does a written contract have over an oral contract?

Question 14

Under what circumstances will courts admit oral evidence to add to or modify a written contract?

Question 15

Nodak Mutual Insurance Co. (Nodak) terminated Barry Myaer's contract as an insurance agent. The most recent contract Myaer had signed provided a 10 percent commission on gross premiums for sales of insurance, with a 1 percent bonus if notes for insurance were paid by a set date. However, the contract allowed Nodak to "modify... any bonuses that might apply." A subsequent contract, sent by e-mail, provided for a reduction of 1 percent in commissions if all submissions and loss reports were not submitted online, and another 1 percent if all notes for insurance were not paid and received by the home office by a specified date. When Nodak failed to pay Myaer deferred commissions on the policies he had sold, Myaer sued. He stated in an affidavit that if he did his reports via the Internet and all notes were paid, his total commission would be 12 percent. Nodak argued Myaer's claim to a 12 percent commission was barred by the parol evidence rule. Was it?

Question 16

Under what circumstances will the courts allow enforcement of an oral contract required by the Statute of Frauds to be in writing?

Question 17

Michael Kalmus entered an oral employment contract with Financial Necessities Network, Inc. The contract provided that Kalmus would work as a commissioned salesman, with a starting salary and a 25-70 percent commission rate. After an initial period, Kalmus' salary would decrease to zero while his commission rate increased to a maximum of 50-70 percent. The contract also provided that Kalmus would receive "any and all commissions" regarding his insurance sales as long as they were being generated, regardless of whether Kalmus was still employed with the company. The parties never specified the duration of the employment agreement. After Kalmus was terminated from the company, the management told him it would only pay a 25-50 commission rate for a limited period of time. Kalmus sued for breach of contract. Financial Necessities Network asserted that the oral contract was unenforceable, because it was intended to be a "lifetime contract or contract until the age of retirement" and was required to be in writing under the Statute of Frauds. Was the contract barred by the Statute of Frauds?

Question 18

Give three examples of contracts not involving the sale of land, but only an interest in the land, that the Statute of Frauds requires to be in writing.