Lecture 1 for "Chapter 8: Proper Form of the Contract: The Writing" (LGLA 1351)

Lecture 1 for "Chapter 8: Proper Form of the Contract: The Writing" (LGLA 1351)

welcome to this presentation the first
of the ones in this series which will be covering chapter 8 in our textbook the
name of this chapter is the proper form of the contract the writing as we've
covered in previous chapters there are four elements to contracts we need to
have an agreement we need to have consideration we need to have legal
capacity we need to have legal object each one of those four requirements have
sport have a variety number of sub requirements but those are the four
things we have to have in order to have a contract many people think that there
is a fifth thing that we have to have in order to have a contract and that is a
writing something with a physical manifestation the contract there's an
old saying he perhaps have heard it that an oral contract isn't worth the paper
it's not written on that's a popular belief and as we've seen it's not true
under American law an oral contract is in the vast majority of cases completely
enforceable so when we talk about the writing aspect of a contract we're not
talking about it being an element of contract law this isn't a fifth element
we just have our four we have agreement we need to have that and then we have to
have consideration that's our second element it's help well you don't have to
list these in a particular order it's helpful to list them in these orders
simply to get in the habit of thinking about them this way there's nothing
magical about this order if you happen to think of different orders better
maybe you have a mnemonic to help you remember it feel free to adopt a
different order this is the way that I always cover it though legal capacity and legal object as I
said before each one of these four elements have sub elements you notice on
this list that I don't have for an acceptance when I'm just gonna
say legality they got little objects another good way of saying it all for an
acceptance are elements of agreement they aren't elements of contract law so
they're elements of one of the elements of contract law you may say well I mean
who cares at the end of the day you need to have offered acceptance to have an
agreement you need to have an agreement to have a contract so really at the end
the day you need to have an offer and acceptance to have a contract I agree
with you that is true but sometimes and test questions I require that you give
me the elements of a contract if you happen to give me all six you say
agreement consideration legal capacity and legality and you also include all
for an acceptance I probably am not going to mind or at least I won't take
off much but that's not usually what happens usually people who list list
after offering acceptance as one of the elements of contracts leaves off to
these others so they might say offer an acceptance consideration a legal
capacity well they left this one off and they left this one off so my suggestion
is don't consider offer an acceptance elements of contracts because you know
they aren't they're all elements of an agreement it's a little bit like saying
that we're making oxi making water we need hydrogen and
oxygen to make the water and then we're making a recipe maybe we're making a
cake and one of the ingredients we need is water well guess what you you might
technically say that an ingredient to our recipe for our cake is hydrogen and
oxygen but that's not really what you deal with is what you really deal with
is water h2o already combined and so that would be a very misleading recipe
if you were to list hydrogen and oxygen as ingredients to your cake recipe so
stick with these four elements and think about the elements that are sub elements
of these if you wish and certainly that's helpful but don't get confused
between sub elements and elements and of course writing is neither an element or
a sub element in the vast vast majority contracts but there are a few contracts
that do have a fifth element and that fifth element is a writing so sometimes
people do list this fifth element and they will put a little asterisks and
they will say something like sometimes or occasionally but because it's a
sometime situation it isn't truly an element it's a little bit like going
back to my cake recipe in order to have a cake I don't need to put any cocoa in
it there's perfectly good cakes that have
carrots in it that have vanilla in it that have strawberry or lemon in it that
don't have any chocolate I don't have to add cocoa to my recipe in order to make
a cake I need to have some type of cocoa in my cake in order to have a chocolate
cake but not any cake so some cakes are going to require chocolate and some
cakes aren't but we wouldn't describe chocolate as an essential ingredient in
a cake recipe similarly we wouldn't say that our
writing is an essential agreement to a contract so let's go on from here and
we're going to have three topics that we're going to talk about in this
chapter and in this first lecture we're just going to get to this first item
statue of frost then in our second lecture we will expect to be able to get
to both of the other two items which our interpretation rules of contracts and
the parole Evidence Rule this first topic though is taking over taking up a
little bit over half of our chapter and is a kind of its own thing it's kind of
separate issues so that's going to be what we're going to be focusing on
during this lecture today so statute of frauds in in most most the semesters
I've taught this course there will be one to say five students who make a
mistake about this and so I'm telling you right now that most students get
this right but there's a significant minority who don't get this right and I
don't want you to be that student and so that what happens is is that we
had that chapter in our textbook where we talked about reality of a sins and
mutuality of a sins and one of the things we talked about was possibility
of fraud we talked about fraudulent misrepresentation innocent
misrepresentation negligent misrepresentation hopefully these ideas
are ringing about I believe that was maybe in Chapter five I'm not 100% sure
of the chapter number but it's something along those lines and so what happens is
people remember something about that lecture and then they hear this name
statute of frauds and they assume Nadia logically that this statute must have
something to do with that reality of assent topic fraud
that makes perfect logical sense I'm not going to try to argue that that
reasoning that those students go through is is not reasonable but it's just not
right not even close to right and so don't be
that student don't be fooled by the word frauds here if I could rewrite this
statute I would take away the word fraud and I would replace it with the word
writing statute of writings I might say statute of writings – to it that's what
I would do but you know what I am NOT the legislature in the state of Texas
and so I don't have the ability to do that so I would change his name but
guess what I am what I would like to change about it it doesn't have much
meaning to you in terms of your career the judges that you work with opposing
counsel that you work with we attorneys and paralegals with whom you work are
going to use the term statute of frauds so let's talk about what statute of
frauds is well the first thing you notice about statue frauds is the
statute of frauds is the statute so we're really not talking about the
common law here you know in the vast vast majority of this class so at least
today we've been talking about the common law we haven't really looked at
any statutes or these very few statutes at this point very
very few of them but this is a statues this is not something that we turn to
the common law some legislature somewhere has to have passed this law if
the state of Texas Legislature decided tomorrow tomorrow to get rid of this
statute we would have no statute of frauds there is no common law version of
this so we have a statute of frauds it's a statute that required and I'm gonna
say requires because it's still the law that requires certain classes of
contract I'll say contracts to be in writing and signed by the parties so the
statute of frauds is about requiring some contracts to be in writing its
purpose is to prevent fraud okay so this was a strategy than the legislature the
Parliament in case of England developed to avoid fraud it doesn't have magical
powers though requiring that a contract be reduced to writing doesn't eliminate
the chances of fraud and in fact in some respects will even create additional
opportunity for fraud so the connection between this writing requirement and its
goal of preventing fraud is not tremendously tight I'm going to share
some examples of what the let the Parliament was thinking the English
Parliament was thinking at this time when it decided to start requiring that
some contracts being or writing to let you know kind of what was going on in
the society what the concerns were and how this strategy was supposed to
address this issue but what I want you to focus on is not so much the fraud
aspect but the fact that we have to have a writing sometimes and the first half
of this chapter we're gonna focus on okay well what kind of writing do we
need what kind of things what type of contracts what classes of contracts that
require this writing so because it is a requirement for these classes of
contracts we do have that fifth element we have again this the four that we
always expect to see in a contract agreement consideration
legal capacity and legal object those are certain things that we need in every
contract and now for this these particular classes of contracts which
we'll go through the ones that are covered in a minute we have a fifth
requirement there has to be a writing so we have this requirement in all 50
states except for one Louisiana you probably are familiar the fact that
Louisiana has some important differences from the rest of our states certainly
historically it has differences and legally it has major differences we
talked about this when we talked about the UCC and the fact that Louisiana is
the only state that has very significant parts that you see that has chosen not
to adopt and we talked about the fact that it is a civil code jurisdiction
meaning that it's legal system developed from the Napoleonic Code because it was
part of the Napoleon's Empire the French Empire I'm at the time that it was
purchased from Napoleon in 1803 and became part of the United States that
historical wrinkle the fact that it's not a common law jurisdiction for the
most part is also related to the fact that it doesn't have a statute of frost
as I said before the statute of frauds is not common law but it is something
that has developed historically in Great Britain it was designed to
address a particular British problem and it addressed it in a particular British
way and as a result of our close connections or most states close
connections with Great Britain a state said well gosh this is the way the
British solved this problem and it seems to have worked okay for them so that's
how we're going to solve the problem now each state could have said though we're
a common law jurisdiction we think the common law is supercooling we want to
continue it but we don't think this law is super cool we don't want to follow it
and they would have been perfectly within their rights to do so but it just
so happens that all the states that chose to become law jurisdictions the
attorneys and their particular jurisdictions grew up knowing about the
statute of frauds and they all kind of thought this is a cool thing and we want
to keep it so while is it a requirement for common law jurisdictions to have
statute of frauds it's worked out as a practical matter
that they all do have it but it's not surprising Louisiana wooden because
after all it wasn't the common law jurisdiction it doesn't have those
historical ties with Great Britain its ties were to France and France didn't
have a statute of frauds so for that reason Louisiana does not have a statue
frost but the other 49 states do so I've kind of given a little bit of history
but I want to present to you a an interesting contrast I don't know
what the rules are in Australia or Canada or South Africa or India I don't
know if those jurisdictions still has statutes or fraud or not but I will tell
you Great Britain no longer has a statute of frauds it was a slow process
I don't know when it began but I think the last time there was any part of the
statute of frauds that was still in effect might have been in the 1980s
maybe even a little bit before then so they haven't had the statute of frauds
in quite a while they have chosen to get rid of it and
we'll talk about why they made that choice and a little bit later as we're
going through this lecture but it's interesting that to see that while we
have it because of our historical ties with the Great Britain Great Britain
itself has decided it doesn't mean it or wouldn't benefit from having it okay so
let me give you some examples about the concerns that Parliament may have had
imagine that I am a poor peasant person and what will say I'm not super poor
because I have some land maybe I've been heretical and maybe I have a very
lengthy lease on this land for all intents and purposes this small part of
parcel land is mine it's all that I have of value in the world and the only thing
that I know how to do to earn a living is to farm on this land
life is hard for me if my crops fail my family is likely to go hungry certainly
I am NOT well educated I'm not going to be able to go into a different industry
you know there's lots of hazards that confront me in my life if I somehow were
to lose this land most likely I would starve to death and my family would
start to death so there's no real thought of me being separated from this
land that is not something that can possibly be good for me so imagine as
I'm telling my small parcel and hoping to eke out a living for this next year
three noblemen approached my little piece of land and they
stop and they introduced themselves and they compliment me on my little part a
parcel of land and they said one says to me we'll call him Sir Bob sir Bob says
to me mistress groover I understand you want to sell your land I am will what
wanting to buy it from you and I say to survive sir Bob what you flatter me by
expressing an interest in my land but no I don't have an interest in selling my
land but thank you for your interest and sir bob says well I really think that
you ought to think about selling your land I'm prepared to offer you a good
price and again I say sir Bob thank you you do me great honor but no thank you
I need this land this is the only way I can earn a living and sir Bob goes oh oh
I think I understand now and then he raises his voice significantly higher
than it was before and says so mistress Gruber I hear that you accept
my offer for me to buy your land for ten pounds and I look at him like he's crazy
well no no sir Bob that's not what I said I said that I don't want to sell
you my land I don't want to sell it to you for any price but ten pounds would
definitely not be enough that might feed my family for a year maybe even eighteen
months but at the end of that time we would starve so I don't want to sell it
at all but I definitely don't want to sell it for ten pounds
and sir Bob goes oh you've made me very very happy I will drop off the 10 pounds
to you tomorrow and I would like for y'all to be off of my land now within 48
hours and I said but no I'm not I'm not going it's not your land it's my land
you can't do this and sir Bob goes white yes I can do this mister screwer because
I am here with my two friends and they will both testify that you agreed to my
terms and so I will go to course to enforce this contract that you have
entered into – with me and I will be able to get the
courts to force you off the land in exchange for me giving you $10 and that
is how we'll go and I will say but but I will fight you and he goes wait you
certainly can you can go to court with me of course you aren't an attorney you
don't know any attorneys you don't know how to read there's no witnesses for
your side other than your own testimony I have two friends as witnesses so it
seems really unlikely that you would win but certainly you can try to beat me in
this endeavor so you can see how the deck was stacked against some by the end
of those circumstances let me present to you another story on this story I am a
an heiress a very wealthy woman will say I am 22 years old and a little naive but
it kind of out going to balls and events like that pretty often anyway I am at
one of these balls and a young suitor approaches me and he goes oh Miss
groover I would be honored if you would dance with me
and I say oh you know he's straight elegant very nicely dressed very
charming I say of course I would be honored to dance with you so he whisks
me off on the dance floor and we're twirling around and there's music
playing and he sweeps me off into the balcony and were twirling around the
balcony hands oh so romantic anyway he pulls me over
into a corner and he goes miss groover you would make me the happiest man in
the world if you would but agree to marry me will you marry me and I say
well no I mean I don't know you and you don't have any money and no I won't
marry you to me are you sure yeah yeah I'm sure
thanks thank you very much but no thank you
and then two of his friends jump out from behind the potted plant and he says
thank you Miss Gruber you have made me the happiest and one of the richest men
in the world and he whispy back onto the dance floor he says at the end of the
dance ladies and gentlemen at the party miss groover has agreed to be my bride
and everybody claps and I'm like what just happened there and I might start
but but but but but there's no opportunity everybody is coming over to
congratulate me and even if I do protest he has two witnesses who will say yes I
heard her say yes and under those circumstances we had the four elements
of contract so I might be in a position in which I could be entering into a
marriage contract but I don't at all want to get into let's consider a little
bit different scenario kind of along those same lines this time I am still a
22 year old but I'm quite a bit more impressed with this young suitor then I
was in my first scenario I mean this suitor is handsome and he's charming and
he's a wonderful dancer and when he sweeps me into his arms and twirls me
around the dance floor I'll be honest I'm minute in a fog of infatuation he
whisks me off onto the balcony and he says and again I've had a few glasses of
champagne which he's probably furnished to me and he says to me Oh miss groover
you and made me the happiest man in the world if you would but say yes will you
say yes and I say yeah and he goes yay thank you he swirls me out of the
dancefloor and he says that the same thing says
the same thing he says ladies and gentlemen miss Gruber has agreed to be
my bride the next morning I wake up with a bit of a hangover and I think to
myself what did I do last night did I agree to marry that poor but really
good-looking loser is that what I want from my life
I don't think so I was a little tipsy a little drunk on infatuation if I had but
had a little bit more time to carefully consider my options I never would have
agreed to this and yet I have agreed I received an offer I accepted it there
was consideration mutual agreements to marry I was I had my legal capacity I
was 22 and certainly marriage is a lawful object gosh
I'm stuck these are the three these are three examples of situations that we
once upon a time before the statute of frauds did require writing and so you
can see in these cases we have people who are either lied about so oral
contracts create the opportunity for people to lie about whether in fact
there was a contract to begin with they can say the knurl contract existed when
in fact there never was an oral contract it also though allows for the problem of
somebody making an impulsive or unwise momentary decision that if they have
thought about a little bit longer the time that I might take to reduce it to
writing they might well as that oops this is not a good decision for me so
the statute of frauds really is kind of two purposes one is to eliminate that
fraud the actual perjury and the second is to maybe make people pause for a
second before they enter into the contract the writing does create that
that moment for a little bit of reflection so those are the reasons that
we have the statute of frauds but keep in mind our primary emphasis isn't on
the fraud part it's on the writing part because the statute of frauds writing
requirement applies if there's no fraud at all we have to
have a writing the policy reason behind this requirement is really not of a
great deal of importance it can knowing this part can help you make sense of why
we call the statute the name we do but focusing on this part and not
emphasizing this is going to result in you getting confused about it so keep in
mind the statute of frauds is really about writings the requirement that we
have writings there are five traditional requirements for statute frauds we'll
talk about two additional ones as we get closer to the end so about two
little-ass courses here so we really have it in some sense seven requirement
or seven situations where we need to have a writing in the state of Texas the
first one is we need to have a writing when a contract by its own terms cannot
be performed with one year if it's making so contracts that are gonna last
more than a year need to be in writing that's a first requirement the second
requirement is a contract to answer for another's debt also needs to be in
writing a classic example this is when one person cosines for the the loan of
another person for example if I'm if my friend Bob is buying a car his credit
isn't so good he might want me to co-sign for him so that the bank will
approve his loan that co-signing arrangement my agreement to assume his
debt if Bob doesn't pay would be the a contract to answer for another step
that's another type of contract that has to be in writing a third is when an
executor or it could be an executor –ax or an administrator and administrate
tricks promises to pay the debts of an estate an executor of course is somebody
who's a who is settling the estate of a decedent of a dead person sometimes
people who die owed more money than their assets were worth and sometimes an
executor my moral II feel like gosh maybe I ought to settle the debts
this estate and my role is executor of course he doesn't have a legal
requirement to do so but sometimes the the executor may feel a moral or
emotional motivation to do so and an agreement that he or she might make
under those situations that has to be in writing a fourth situation is a contract
in consideration of marriage is where they talked about a an agreement to
marry again traditionally news were situations that involve marriage
settlements with Diaries and things like that obviously we don't really have
those in modern day America but we do have prenuptial agreements agreements
that couples enter into before they marry that discuss how their assets will
be divided in the event of a divorce or the death of one of the parties those
need to be in writing and finally we have a contract involving real property
this is the land that's what could be to buy land it could be to rent land it
could be for a mortgage on land it could be for an interest relating to land such
as a mineral interest or something like that we'll talk about the last two at
the end of this section so I'm going to say get a little excitement a little
anticipation going through these last two now don't let me just tell you now
don't look ahead I want it to be a surprise when we get to the last two
it's kind of like you know turning to the last page in the murder mystery book
you don't want to do that okay so anyway let's let's go here here is the statute
that we have I'm just going to actually pull up the statute so we're gonna look
in the in the Texas business and Commerce Code 2601 so let's just pull
this down here and I am going to whoops two fine Texas statutes you just have to
type in literally Texas statutes it'll be the first one that pulls up here you
go into that and you'll go into watch the right screen goes up we're going to
go into the Texas business and commerce code and then we're gonna go down here
we're looking for 26 yeah scroll down here and you can see it actually says
statute of frauds you can see that this is one we want 2601 promise or agreement
must be in writing so let's look at that so this is the entire statute for us
this is what we're talking about today it's not very long and this is really
all the specificity we have in the statute so I'm going to show you the
statute maybe a little bit prettier format but it's word-for-word what's on
this slide so let's go back to our PowerPoint okay so promise or agreement
must be in writing and we have our first section not surprisingly section a says
a promise or agreement described in Subsection B so we haven't gotten to be
yet we'll get to be in a second so we're so we're talking about what this next
section talks about is not enforceable unless the promise or agreement or
Memorandum of it is in writing and signed by the person to be charged with
the promise or agreement or by someone lawfully authorized to sign for him so
whatever categories are covered in Section B that that that state hey you
need to have a writing this is what we mean when we want to writing it has to
be in writing it has to be signed by the person who's being sued so let's say I'm
suing Bob to enforce a contract Bob is the defendant I'm the plaintiff the fact
that I signed the paper isn't legally relevant what's important is that did
Bob sign the paper because he's the one being charged with the promise I'm suing
him I'm trying to enforce the promise against him so we're looking really at
the defendant from this perspective so this is the first section section a
but let's find out what's in this subsection B here here subsection of
this section plot B subsection a of this section
applies to and here we have you can actually see we have eight categories
here so they but prior we we saw over here we had five categories and I said
that we're adding two extras I said I was gonna say one that the two until the
very end wash I'm gonna let you see this this first one right here in the earlier
okay the Texas statutes divided up a bit
differently than the way our textbook does so we actually have eight here and
although in the textbook there's only seven but we'll see that really is the
same subject it's just a different way of dividing it so our first one is a
promise by an executor or administrator to answer out of his own debt free yes
on this day for any debt or damage due from his testator or intestate this is
the person who died whose wills he's a ministry so you can see this is just here right so this is number one from
the Texas statute a promise by one person to answer for the debt default or
miscarriage of another person this is that co-signing situation so let's find
that right here number three is an agreement made in consideration of
marriage or on consideration of non-marital conjugal cohabitation number
three we have number four check for the cell of real estate number
four now we have number five a lease of real estate for a term longer than one
year you that's number five I'm sorry I'm
strapped in there you could put that under either this one or this one I'm
gonna put it under both number six an agreement which is not to be performed
within one year from the date of making the agreement okay that's number six so
I'm going to put that right up here number six number seven a promise or
agreement to pay a commission for the sale or purchase of an oil or gas mining
lease and oil or gas royalty minerals or mental interest this is real estate this
is all about stuff under the land so number seven right here and then number
eight is our funky one so an agreement promise or contract or warranty of cure
relating to medical care results that are made by a physician or healthcare
provider as defined by this particular part of the law this section does not
apply to pharmacist so that's number eight we'll talk more about that at the
end so you can see all of our categories under our Texas statute correlate to the
ones that we already have and we've just added another one so now we're going to
go through each one of these but we're not going to use the order in our
statute we're going to use the order in the textbook we're going to stick with
this order just wanted to show you before we went into it the same things
we're talking about in the organization of the textbook relate to how we look at
this also under Texas state law so let's look at that first item and the first
item again is a contract that by its terms cannot be performed within one
year it's making again I've just taken the Texas statute you can see it's word
for it an agreement which is not to be performed with one year from the date of
making the agreement so I just literally cut and pasted
this language right here so the way that the courts approach this is is the
courts tend to want to find that the statute of frauds doesn't apply there
their assumption is if there's a way for us to look at this and say you know what
the statute of frauds doesn't apply then that's going to be kind of their default
status here so when you read this language you might say well there could
be some contracts that you're just not sure whether they're gonna be completed
within a year or not I mean if there's for example let's say I'm building well
let's imagine let me scroll hey I'll show you this this house Dion Sanders
house you if you this is um he didn't no longer lives there but this is in a
Salina if you go north on Preston Road in Salina before you hit the new Salina
high school you'll see if you're going north you'll see on the right side of
the road this fancy brand new beautiful Kroger well just north of it I mean
literally just north of it there is this palace this huge huge house that was
once owned by Deion Sanders and so literally I mean right here is the
parking lot for the Kroger anyway this house a madman it's just means
ridiculously big multiple you know a dozen bedrooms more than one kitchen I
mean just tons of stuff yeah I know how many tens of thousands of square feet
but just really really large house so let's imagine that Deion Sanders
approached you back when he was trying to build this house he goes listen we'll
say he approached Bob listen Bob but you're a great general contractor you've
done some work on the past I want you to build this house for me
I've had the architect drop the plans I want you to be the general contractor
hire all the subs get everything organized to build this house and so we
sit down we crunch some numbers I give him a number we negotiate back and forth
and we reach an agreement and I okay well I'll write at the contract Indian
says you know what I'm an honorable man I think you're an honorable
man let's just shake on it I I feel like that's the way I like to do business
that's how long did business with you Bob's like okay I guess we can just
shake on it because I really want your business so okay so they shake on it Bob
goes out and he starts hiring the subcontractors making all the
arrangements when Bob and Dion discussed it um Bob said listen Dion if everything
goes perfectly and it never does but imagine everything falls into place
perfectly we can get this house done in 11 months but realistically it's
probably 18 months I mean when I say perfectly I mean there's no delays due
to rain there's no problems getting the city inspectors out there's no backorder
of equipment or supplies or fixtures nothing there's no time where the
workers are unavailable or that work has to be redone because somebody painted a
wall the wrong color you know if everything goes perfectly 11 months more
realistically 18 months in DSO damned understands that they they go about
making the house they build it they get it done in 14 months
Bob's quite proud of the work that he's done he feels like the house turned out
really really nicely Bob and Deanna walking through the house but even
though it looks great I mean it's not perfect you can't have that many Barry's
people working on a project like this without seeing a couple of errors here
and there Dion looks at he goes this is awful this is not the house I wanted I
see this minor problem course he doesn't think it's minor problem I see this
problem I see that problem I just I'm not willing to pay for this piece of
garbage I am NOT going to pay you any money for this project ends up having to
sue Dion over it and beyond says well where's our contract I
see anything signed I don't see any paper version and Bob says well you know you know we we we we shook on it we had
an agreement well the courts would say under those circumstances well Bob you
said it was possible for the contract to be completed within 11 months so this
provision does not apply your contract doesn't have to be in writing for this
reason because it would would have been possible so this doesn't apply to the
facts in your case and it doesn't need to be in writing for this reason
the question is is it possible for the contract occurs in year it's the the
relevant question isn't did it actually take longer than a year that's not the
question question is everything in worked out just so would have been
accomplished in within 365 days or 366 days I guess in leap year let's consider
a contract that would require writing let's say that a Dion effortless a Dion
is happy with the house after it's been built and he goes to Bob eNOS listen Bob
I understand you also own a janitorial service I would like to hire your
janitorial service to come out once a week and to clean my house and I'd like
to enter in this contract with with you for thirteen months Bob and Dion agreed
it again it's a handshake deal there's a dispute at some point somebody sue
somebody else and again the issue is well could the contract is it possible
to perform under this contract within one year well you can't pre clean house
and you can't clean dirt that isn't there yet and so a contract for
janitorial services for thirteen months could not possibly be performed within
one year so that would be an example of a contract in which this provision
definitely does apply and it would be a requirement that it be reduced into
writing according to these terms here that we'll talk about in more detail
later let's consider a scenario that Sal ittle bit surprising let's imagine that
after Bob builds this palace for Dion Dion is so delighted with it he says to
Bob listen Bob I have a large company here that I'm the CEO of you have just
done such a great job I want hiring you and you know what I I know that you're
running your own successful business I appreciate that I know that you're
giving up a lot of autonomy and security with this business that you have and so
I want to guarantee you lifetime employment with me you'll have a job
here for the rest of your life if you choose to
stay odd things well yawns great to work with he's very
successful smart man yeah okay they negotiate over the benefits and pay but
they work it all out and Bob sells his business and goes to work for Dion and
he worked for Dion for several months but you know what Dion and Bob have
falling-out has one vision for how the business ought to go and Dion has
another and Dion one day becomes so frustrated Bobby says Bob get out of
here I'm done with you I don't want to see you I don't want to work with you
anymore in other words D on fire spa well Bob
says but what about my lifetime contract Dion says what lifetime contract and bob
says remember when you were interviewing me for that opening you offered me a job
and you said I would have it for the rest of my life
well Dion says well you're gonna live more than a year right isn't that whole
statute of frauds doesn't that require that an agreement which is not to be
performed within one year from the date of making the agreement has to be in
writing but we never did reduce it into writing and so therefore that
requirement means that that contract is null and void well unfortunately for
Dion and I guess also unfortunately for Bob such a contract is potentially valid
there are other reasons why it's probably not enforceable in Texas that
are beyond the scope of this this particular chapter but the statute of
frauds isn't why it's not enforceable because Bob could have been hit by a
train or a bus or have a heart attack or any number of bad things happen to him
right after he had entered into this agreement with Dion it is possible that
the lifetime contract could have been performed within one year if Bob dies
quickly right and so because a relevant lifetime can mean less than 365 days
that the the is possible in the contract to be completely performed within one
year so a lifetime contract doesn't fit under the categories of the statue
frauds even if the person during the contract is an 18 year old
even if statistically it's very unlikely that he'll die within the next 365 days
now this interpretation the is it possible rule is not the rule in every
single jurisdiction but it is the rule in Texas so it's the world that I'm
going to expect you to be familiar with so that's our pause here in a little
history this happens to be Versailles for sign of courses of Palace in France
very fancy palace it was actually the where the the king and queen of France
lived it's where the political power in France
existed at various points of time in French history but perhaps the most
important period of time where the Palace of Versailles was important was
during louis xiv reign and he established this as a center of his
political power in 1682 1682 it actually wasn't finished
as a palace until sometime after that but the important year the the kind of
the beginning time of it becoming a really important place in France was
1682 let's move on from here you can see this palace obviously the the statue
frauds would have applied in France but if this palace had been being built and
the statue frauds had applied you can see that this there's no way this could
have been completed in a year and it took many many years for it to be
completed and so I think that under those circumstances if the statute
frauds had been in effect in Texas Masumi and France at that time then this
would have been required to have been in writing so we have completed our first
category for the statute of frauds we've covered the faff in a contract that
cannot be performed within one year of its making has to be in writing let's
move on to our second category which is a contract to answer for another's debt
and again that the classic term for this is co-signing and
this is the language we have from the Texas statute a promise by one person to
answer for the debt default or miscarriage of another person so we have
that that this third party is this person right here the person who's
making a promise he or she is acting as a guarantor or a surety and we have
these two terms defined here from the textbook so what is a surety a person
who promises to pay the debt or to satisfy the obligation of another person
and this other person we call the principal in a guarantor is the person
who makes or gives a guarantee so you can see in this situation both of these
terms point to this third party here the obligor is a person who owes an
obligation to another a promise or so the obligor is this other person also
the principal let me just kind of this scenario can help maybe figure out this
this meaning the meaning here isn't hard I think the challenge with this is
keeping the vocabulary term straight so let's look at it kind of a classic
example of how this might play out so we have B B is the bank the person who is
loaning the money C is we'll call him Carl C is the person who wants to borrow
the money so he is Carla's gonna promise the bank that he's going to repay the
money with interest and the bank is going to agree to loan Carl this money
you can see how we have consideration he's making a promise to repay so that's
Carl's consideration the bank's consideration is the money that he's
giving to Carl but greened a loan to Carl
both Carl the bank of legal capacity there's nothing unlawful about this
contract there's offer and acceptance um and we have a complete contract here
this contract doesn't have to be in writing nothing I mean topanga's going
to insist it in writing I mean that's a good business
practice but from a purely legal standpoint no doesn't have to be in
writing at all but as a practical matter it's going to be in writing but you know
the problem with this transaction is bless Carl's poor little heart he isn't
the best credit risk he's had some ups and downs in his life maybe he's had
difficulty maintaining employment maybe he lives a little too richly and
sometimes doesn't pay his bills on time who knows what Carl's stories but
whatever it is the bank says uh-huh a car on we're not agreeing to loan you
this money because your credit rating stinks so Carl then goes to his aunt
Angela and Angela he said hey aunt Angela my dear my favorite hand I would
really really really really really appreciate if you would co-sign for Mike
my loan I need this money so that I can get a car so that I can work again
without a car I can't get to I can't interview for four jobs I can't go to
places to work I need to have this car so I can get back on my feet please and
Angela help me out so aunt Angela because she loves her nephew Carl very
much agrees to co-sign for the loan the bank now is willing to enter into the
contract with Carl because it knows that even if Carl stops paying it can then go
to Angela cousin Angela is a good credit rating and say Angela no you must pay us
so this is the second contract this contract here is the one that has to be
in writing this is the one that the statute of frauds requires the writing
you can see that it's kind of an unusual contract because there's only Angela's
receiving consideration or is not receiving any consideration now it is
true that it's not necessary that the bank give consideration to Angela the
consideration that the bank is giving to Carl counts as consideration
for this second contract as well but it's it's Angela herself is not
benefiting from this loan of money to Carl she's not getting the money she's
just getting this obligation and so the courts do arcing out the courts that the
law does required this being writing and the logic here is that you know what
Angela's being a nice person and it's lovely that Angela wants to be a nice
person certainly the law wants to encourage people to be nice to each
other but the law also recognizes that sometimes bozos like Carl kind of twist
people's arms a little bit puts them may put them in and may be
socially awkward positions and catches Angela in a weak moment and persuades
her to enter into a deal that's honestly not in her best interest
and so she flippantly says yes maybe without really thinking it through maybe
without talking it over with her spouse and gosh two minutes later she regrets
the decision but hey if we didn't have a writing requirement she would be
contractually bound the writing requirement is just giving her the
opportunity to be a little cautious to kind of think things through a little
bit more carefully she can still agree to it once she's had time to think about
it and before she puts her signature on the writing and of course if she does
sign it then she is bound but it's just an opportunity to give her just a moment
to reflect upon it in a little bit more care so let's see who these players are
so a well I shouldn't start with B hua Bank B is the promisee or the offeree he
is that the bank I guess it is receiving a promise from Carl the primary promise
promise to pay and also a promise from Angela a secondary promise to pay
whoever is receiving a promise we call the promisee we could also say I have an
extra yes sir there the offeree now we don't know for
sure who made this initial offer it could be that the bank is the offer or
and see in Carl and Angela the offeree but they could be but there could be
that Carl made this offer and then of course
of Carl made the offer then the bank is the offeree now let's consider Carl Carl
is the promise or and he's promising to pay or in this Asaro if the bank is a
promise II and the offeree then Carl is the offer or Carl is the debtor he's the
one receiving the loan the money and then Angela here is the guarantor or the
surety and we have the definition these terms back here this is the back up
promise sir of course Angela pays only if Carl does not meet
Carl's obligations so the bank goes to Carl first and only goes to Angela if
Carl doesn't pay up so this contract right here has to be in writing to
satisfy statute France having said that there is a situation in which this type
of contract doesn't have to be in writing let's go to the next slide to
talk about that this rule has two names you are responsible for both one is a
sometimes it's called leading object world the other is the main purpose rule
I think I'm not sure which term I use more often if I use the leading object
term more often but both are perfectly legitimate terms you'll hear both of
them pretty regularly so let's talk about this this is the same situation
that we've talked about before literally we have the exact same terms the exact
same relationships this whole scheme is exactly the same scenario
the only difference doesn't show up in this picture because remember in this
story we had Angela doing this out of the goodness of her heart for her
deadbeat nephew Carl she was getting nothing out of this other than being a
good aunt but sometimes that's not the way things go sometimes the person who
is in this role sometimes person Jose is actually agreeing to co-sign not because
a is just a tremendously generous person but because a is getting something out
of this let's see what I give a little example or a little definition here what
is a leading object role it's the that a contract to guarantee the dead of
another must be in writing does not apply so the statue Franz does not apply
if the promise or is leading object in other words A's leading object or main
purpose in giving the guarantees to benefit himself or herself so if a is
doing this out of self-interest statue frauds doesn't apply let me give an
example imagine for a second that you are Mick Jagger here is Mick Jagger on
the back in the back of a limousine Mick Jagger probably doesn't drive his car
that often he is usually being driven around town so he can avoid the crowds
and the paparazzi and things like that anyway when he's in London he has a
favorite limousine driver we're gonna call his favorite limousine driver Bob
and Bob knows all of the cool haunts that Nick likes to go to Bob knows how
to avoid the paparazzi he knows how to get from one place in London to another
as quickly as possible getting the fewest number of tickets all that good
stuff plus Bob's fun Nick Mick likes hanging
around by the way this is mixed name here Mick m.i.c K Jagger yeah Bob's
gonna hang around with Mick and joy is Bob's company and they've developed a
rapport over the years Bob's not a wealthy person he works for will say a
plus limousine service but bob has been saving up his money over the years and
he has a pretty nice nest egg what do you really like to do it start his own
business and buy just the perfect kind of limousine for this kind of Rockstar
clientele that he has established over the years and so he goes to me goes hey
Mick you know I'm gonna buy a limousine that's exactly what you want I mean I've
driven you around town and you've told me over the years you really like it dad
this feature but you don't want to this feature and you know what I have
taken all those pieces of information together not come up with I think the
perfect limousine design let me show it to you and so Bob shows Mick this
perfect limousine design and Mick loves it maybe he makes a few Corrections but
overall I thinks it's a great plan so Bob then goes to the limousine
manufacturer and says listen what is it gonna cost for you to make this
limousine a reality it gets priced out I'm gonna say I'm not
even seen cuz we'll say $300,000 well Bob doesn't have enough money for that
he can't get a loan for that sum of money so he goes to Mick and he says hey
Mick you know I I would love to be able to design this perfect limousine for you
you come to London all the time you use me whenever you come here and this
limousine would be perfect for your needs plus you'd have me to drive you
around and I know that you appreciate how I'm able to get you from one place
to another so in this scenario instead of us having Bob we have I said if we
have is Karl we have Bob here and we have Mick the rock star we'll just call
it Mick Jagger here and then this is still the bank so Bob is promising to
pay the bank back the bank wants to loan by money but bank says Bobby you're not
a good credit risk but cuz well what about if Mick Jagger signs with me Bank
looks overmix financials well yeah that's no problem he can afford tons of
limos for how much money he has and so Mick signs guarantees alone acts as a
cosigner Mick's not doing it to be nice to Bob he's doing it because he is
considering his own country he wants to be in that awesome limo that meant that
Bob was designing he wants to have Bob as his driver his quality of life is
going to be improved so the fact that that Mick is signing as the cosigner for
his own self-interest means that statue frauds
doesn't apply to this contract here's another example a promise so this is
Nick again that the Mick Jagger character the aunt Angela character
promised to be Carl's guarantee or maybe it's Bob's so that Carl could get money
from the bank so that Carl could buy the equipment to complete Carl's contractual
obligations to a you can see in this situation is helping si do it si has to
do to benefit a so a is simply acting in a zone best self interest but again if a
promised B C's guaranteed because a is C's grandfather best friend or aunt
that's the scenario has to be in writing once out of the goodness of your heart
that's when the leading object role doesn't apply and you do need have it in
writing so we've covered the second carrot quality situation where the
statue front applies when the contract is to answer for another's debt now
we're going to talk about our third category in executives promised to pay
estate debts okay so here we have a fair amount of
vocabulary let's just approach the vocabulary first then we'll go back and
look at this as we've talked about in previous lecture sometimes our textbook
likes to introduce kind of related vocabulary but that isn't completely
necessary I'm just going with it it's in the textbook so I'm gonna ask that you
know it I agree with you that it is of limited applicability to contract law
but these are terms that a paralegal needs to know anyway and if you don't
end up taking wills you will miss out and stop so here's a little bit of free
legal knowledge for you to have but it's not completely free cuz you do need to
know for the test so probate probate is the process by
which a will is found to be valid so you say you were probating in a will that's
that process I'm the executor is the person who has been designated by the
testator this is the person who's dead the decedent but this applies in a
situation where the person has written a will so the person said the
decedent obviously while the decedent is still alive writes a will and is well he
named somebody's the executor so the person designated in the will to carry
out the directions or request in the testator's will and to dispose of the
testator's property according to the provisions of his or her will so the
executor basically does with the will says an administrator is very similar to
an executor but we have this in a situation where the decedent didn't
write it will so there is no document that the court can look to and say ok oh
I know who I should appoint ah there's nothing in the document that says so
this person is appointed by the court it's usually a child or a spouse or
somebody else closely affiliated with that another time that you might have an
administrator is when the person named in the will the executor in other words
decides I don't want to have anything to do with this
I was named in it but I changed my mind or maybe I never agreed and so then the
court has to appoint somebody so but I see this is the preferred route but it's
either there is no one named or the person whose name declines then the
courts going to appoint an administrator now we can see here the word decedent
and looks like it begins like the word deceased and then of course
as the person who's died we're caring about his or her will okay so let's look
at the language that we have in the Texas statute about this our language is
a promise by an executor or administrator so it's not just executor
but it also includes that administrator category to answer out of his or her own
estate for any debt or damage do from this testator intestate okay so let's go
through a scenario that this might arise we'll say that Bill Gates has a great
Aunt Mabel um great Aunt Mabel you know she's doing okay in life she has a nice
little nest egg but she's no gazillionaire like her great-nephew Bill
Gates and she names Bill Gates to be her a executor in the will maybe bill agrees
maybe he doesn't know but however that plays out that's what happens um in the
last couple years of Mabel's life she encountered some health issues and
honestly they drained out her savings so she goes from having a nice little nest
egg to actually being in significant debt when she passes away she owes more
money than she has a net worth bill was always very fond of his great aunt and
of course he attends the funeral with all of his cousins and aunts and uncles
etc and you greet Aunt Mabel was a lovely woman loved by everybody and
everybody is just so sad she has passed away and people's feelings get moved
they go to this funeral you think about your own mortality you think about all
the lovely things about this special person maybe you're at the wake or maybe
you gathered at the family house after the dinner and me after the funeral and
her having lunch and everybody is is emotional and a little overwrought
anyway a few thousands approached bill and say how
bill I can't believe it maple is gone and now commiserate with them and then
they go you know and people she always said to me that she wanted me to have
her china Oh is she so important to me that I get to have her China I mean it
has so much emotion associated with it I would come to her house every Sunday
after church for for dinner and we would eat on that China and the idea of it
going to somebody else is just devastating and I know that it's in her
will I know that it says in the will that she is leaving me her China and
then another cousin comes up to Bill and says hey Bill I don't know if you know
this about granny at Mabel but she collected beanie babies she has a very
large collection and she and I actually did it together we would compare notes
and she would buy this one and I would buy the end which we were careful not to
buy the same one so we would have you know as large a collection as possible
and she always told me that when she passed away she would believe me it was
very very precious precious beanie babies and I just I just wouldn't be
able to go on if I didn't get those beanie babies bill I know it's in the
will just just make sure it happens and bill says to both of these cousins of
course you can count on me of course you're gonna get granted Mabel's China
and of course you will get all of the beanie babies and he doesn't really
think too much of it he thinks that's what he's gonna do why not he's Bill
Gates this is not real money damn so anyway he few days later he's visiting
an attorney trying to square away the estate and he finds that oh he had
assumed that Granite Mabel was doing okay financially but he sees it no she
really wasn't doing okay as she actually owed a few hundred thousand dollars and
he looks at all the particular but quests in the will and he sees there's a
lot of people that granted me thought she could leave stuff too and
all of these things ought to be liquidated and sold at auction or in an
estate sale so that the creditors can be paid because they're of course entitled
to the money first and the bill thinks back to those promises that he made kind
of lightheartedly unexpectedly at the funeral and now he kind of regrets it I
mean you know times are tough he's got kids in college he's got you know that
plumbing problem in his fifth house the common problems that you and I face
every day right he's got those issues too and so he's not sure that he really
wants to to pay all of great at meatballs day that's but because he said
he would because he made that oral statement without the statement statute
of frauds he might be required to make that good and that's why we do require
that it be in writing because the executor administrator can be put in
kind of an emotionally difficult place to to not settle in fact sometimes
people actually choose an executor who is wealthy in the hopes that they would
be willing to do this of course in a normal probate proceeding all the
identity gets are only paid from the estate's assets otherwise most people
would say hey I'm not gonna agree to be an executor it's a lot of hard work
thankless work I definitely don't end up paying for
that privilege but again sometimes this moral duty feeling can arise especially
when there's a family member relationship there and this this
requirement means that in order for that executor to be legally bound to a settle
to get to settle the debts of the estate out of his or her own wealth that will
only be a requirement if he or she signs a written document so we've covered our first three
requirements that a contract that can't be performed within one year must be in
writing a co-signing contract must be in writing and the executor is agreement to
pay for the estate debts must be in writing and now we're ready for a
contract in consideration of marriage and here is the language we have in the
Texas statute an agreement made on consideration of marriage or on
consideration of non-marital conjugal cohabitation these pictures by the way
our pictures of traditional kind of religiously based marriage contracts and
many people of the Jewish faith will enter into a marriage contract and not
in this sense of an arranged marriage although that probably happens in some
parts of the Jewish community but as a recognition that marriage is a contract
and we certainly have that idea more largely in the secular or the Christian
culture as well we also see marriage contracts in other communities is not
just restricted to the Jewish community of course in in the in the European
world marriage contracts are settlement marriage settlement contracts were quite
common especially amongst the wealthy even well into the 1800s and so it's not
something that is just restricted to religious issues we see here some
contracts here in this particular picture the the this is a painting in
which a future husband and wife are signing the marriage settlement amounts
and we can see in this picture this bride is showing up at a wedding with
her dowry her settlement and tow how romantic is that right okay so this type
of contract is different from a simple promise to marry so we're not talking
about the scenario wherein people are just saying I want to marry you I want
to know talking about a situation in which
there's an agreement that certain assets are going to be exchanged it must be
coupled with an interest a promise to exchange money or property as
consideration for the marriage this more importantly for our purposes this is
kind of the historical stuff historical context but nowadays this is the one the
pre prenuptial agreement or premarital agreement is what is of interest to us
nowadays that's how this becomes an issue if you had a premarital agreement
that was just oral it's not going to be enforceable in Texas because the statute
of frauds so let's consider a couple of vocabulary terms again we don't really
think about dowry nowadays it's kind of an historical term you may have seen in
in in history books or things like that but this is the the dowry is a property
that a woman brings to her husband when she marries this is kind of the assets
that she's bringing into the relationship let's consider the term
antenuptial agreement when we see this term the ante here does not mean anti as
against but anti meaning before so before marriage before the wedding and
so anti nuptial means the same thing as premarital or prenuptial agreements we
usually use the word premarital in Texas so what is this it's a written contract
and it has to be in writing because of statute of frauds executed prior to the
marriage which divides up the parties real and personal property in the event
that the marriage ends and of course all marriages end they may end when with the
death of one of the parties or but whether it's by divorce or death and
then there can be a variety of different circumstance in which they end with a
variety of different division systems in place generally speaking premarital
agreements are enforceable in Texas again if they're in writing and if other
statutory requirements are satisfied so those are our first four let's look at
our last one this is the most important by far these categories I mean this
one's a pretty important one too but this one is is the rock star of this
gathering I'll share a little story about my own family when I was thirty
years old I was single and I decided to buy a house and shortly after I bought
the house my grandparents my grandfather was born in 1913 and my grandmother's
born in 1919 anyway they came up to visit and they looked at the house and
they thought it was a very nice house it wasn't anything fancy obviously but it
was a very nice house in their estimation and my grandfather it was
born deaf and so when he would talk with people sometimes he would speak louder
than he meant to because he couldn't hear and so he pulled aside my
grandmother to metaphorically whisper in her ear but he was talking so loudly
that I could hear him anyway he said to her Oh where's his fed oh I'm so glad
that Cindy has bought this house maybe she'll finally be able to get a husband
it didn't work out I didn't get married for a little while longer
but his idea was one that would have been a kind of a common one given the
fact that he grew up in in the early 1900's in an agrarian culture which of
course is most of world history most people live in those circumstances land
was everything in his mind anytime he got a little bit extra money one of the
first things he would do would try to find some more land to buy he really
felt that that land and as do many people with his upbringing that land was
what you invest in land was the asset that would last forever that you would
pass to your family members upon your your death very very important idea this
is an idea that perhaps doesn't resonate as much with us in modern times as it
would have once upon a time but certainly that when the statue Franz was
being written the idea that this was the asset that really really
mattered what it would have been something that everyone would have
immediately understood at that time period and so that's why this is being
treated differently than other types of contracts this is the asset that yes sir
usually the most significant asset that a person owns and the most important
asset that person owns so here I've grouped the two or they're
actually the three provisions that we had in the statute together a contract
for the sale of real estate a lease for real estate for a term longer than one
year and a promise or agreement to pay a commission for the sale or purchase of a
doll or gas mining lease and all our gas royalty minerals or mineral interest all
of these even though they're from three separate sections the statue of frauds
relate back to this contracts involving real property these requirements apply
to deeds mortgages leases easements purchases and sell agreements basically
any contract having to do with land adheres but as is often the case when we
talk about a legal rule as you probably have noticed over time many times we'll
start by saying this is what the legal rule is and then I'll say in here are
the exceptions to the house rule well this is a situation we're going to talk
about some exceptions to this point I haven't shared with you any exceptions
these are I haven't said well you know what this is the usual rule but there's
these three or four carve outs that we have but this is one that I think it's
important to go through in this example we're going to talk about four carve
outs actually I'm really just I'm going to say one one one carve out here
we'll talk about in the car battle later on so I'm sorry about this okay so we
have an oral contract to sell the land now we know that this type of
arrangement has to be in writing but this one they didn't they shook hands or
whatever be pastes a portion of the price but not the whole price being
moves on to the land in question and this is the crucial ingredient be makes
improvements onto the land he makes puts in a building he puts in offense he puts
a driveway in he does something that permanently changes the land presumably
for the better I mean I guess people can disagree about that but he is investing
money and stuff that if he gets thrown off the land he can't take it with him
you can't take the fence out of the land the courts would say you know what the
statute of frauds means you don't have a contract I mean that for this type of
contract for a real estate sell a type of contract we need to have a writing so
we're not going to enforce your contract but we are going to apply that
quasi-contract theory that we've talked about in the past this is the idea that
it's kind of sordid but not quite a contract that idea that's what we're
going to be looking at so we're going to kind of be using equitable principles
with respect to this and the idea that is oftentimes used for this is
detrimental reliance so in this situation B is a person who relied be
trusted a that a was going to honor his oral contract so that's where the
reliance is the trust and the trust has to be reasonable under the circumstances
it seems pretty reasonable B he pays for it he moves in and a allows all this to
happen so the reliance seems reasonable and it has to be to his detriment and we
can see the detriment happens when B either by spending money or by using his
own sweat equity makes improvement tool and that a says doesn't even belong to B
so we have detrimental reliance under those circumstances the courts might
well enforce this oral agreement as if it were a contract but the courts have
some options the court might just say we'll be
you have to pay be the value of the improvements for example or be doesn't
have clean hands and in some respect and so and maybe his reliance wasn't
reasonable or something along those lines so we aren't going to enforce the
contract completely I mean courts have some flexibility about how to approach
this but you can see this could be one way to avoid the unfair implications of
the statute are fraud in these situations let me present to you an
example of how a another type of contract might play out so in this case
we have we'll have Bob so we'll have Ted and Bob Ted owned some land Ted and Bob
live in the same community it's a small community they've known each other for
years and years and years they trust each other I mean they have a lot of
history with each other no reason free the one to think that the other is gonna
do anything unethical well I'm Bob here to the grapevine that
Ted is trying to sell a bit of his land there's a parcel of land that Ted wants
to sell Ted's pretty affluent person in the community and so Bob approaches 10
so hey Ted I'd like to buy that parcel and I understand you are willing to sell
it for $100,000 Ted says yes that's my price and Bob says okay I'm willing to
buy it but you know what Ted a little bit of a complication
I am the heir to my great-aunt Maybelle's estate I'm expecting to get
about $100,000 out of it she's already passed away unfortunately it's gonna
take a little while for the estate to settle though I expect to get the
$100,000 in about six months but I want to go ahead and complete this
transaction now or at least get started on it because I know that maybe you know
you'll have another buyer come around and so what I'd like to do is I'd like
to lease your land for the next six months and I agreed to pay well say
$1,000 a month for the right Tony silent and then at the six-month point I will
buy your land for $100,000 Ted considers this he goes I know Bob's
an an honorable person I think this is a good plan so Bob and Ted shake on it
they're trusting people a handshake is good for them they go about their
business Bob moves moves on to the land the next
day the land is undeveloped and so there is no building to live in but Bob
decides he's gonna pup tent put up a tent there and live off the land for a
little while and in all of his spare time he starts improving the land he
cuts down some trees he levels some of the land he gets a backhoe to kind of
smooth out the dirt he puts in a driveway he puts up a fancy does some
landscaping he digs a well he does all the things that he needs to to get ready
to build his house and in fact he actually starts building the house he
gets a foundation poured he hires an architect he even gets the framing of
the house done all of this in the first we'll say five months of the period of
time of this lease period of time Ted happens to drive right by this parcel
and every day going to and from work so he's seeing the changes in the land
Bob drops off the thousand dollar check at the beginning of each month and so
Bob and Ted had a brief conversation that time and Bob kind of updates ten on
what's going on hey and I put in a septic tank or hey I planted some new
trees or whatever the thing is that he did that particular month and so Ted is
pretty well aware of the efforts that Bob has been making Bob has paid
promptly every single month he's been the model tenant to be honest so now
we're in the last month and also bob has been telling Ted every every month
you're kind of what the status is with the estate and bob has told Ted
that it looks like the estate is just about ready to be finalized and he's
expecting to get the money certainly within the next very few weeks okay so
about this time so Ted is thinking this is gonna work out great he's gonna get
the hundred thousand dollars but about this time Ted I the blue gets a call
from a land man and a land man says hey Ted I was noticing how you do not have
that parcel land on Smith Street under any type of lease or gas lease and take
us well no I don't and the the old man says are the lam and says well we we
think that there is a very significant oil deposit under that land and we would
be willing to pay you an initial amount of $100,000 to get a lease on your land
and we'd be willing to pay you a significant amount of royalty payments I
mean it's all going to pan a movie we draw a limb but we have every reason to
think that she'll be getting tens of thousands of dollars a month maybe even
more than that every month once once you sign this lease agreement and Ted is
dumbfounded he had no idea that this was going to happen and the land man says
yes we'll be willing to sign the sign you up for this deal if you're
interested in in about six weeks what's heads heart breaks at this point
what and he's seen himself but I won't own the land in a hobble on the land Bob
will pay me a hundred thousand dollars and then immediately turn around and get
a hundred thousand dollars plus you'll still own the land and he'll get those
monthly royalty checks ted is so distraught he can't believe this
predicament so Ted goes to his attorney he says hey you know is there any way to
get out of this contracting the attorney says well why don't you show me the
contract that you and Bob signed I'll see if there's any way that we can get
out of it and take us oh you know Bob and I didn't sign a contract we just
shook hands over and I mean you know we know each other forever
that I can take with the terms of it our and the that the attorney goes I say you
didn't sign a contract you don't have any written document describing the deal
oh no we just talked about it you turn you guys huh statute of frauds all right
that's the way out of this mess for you you don't have any document that's
signed and we can see going back here that this is it is a contract for the
sale of real estate and so we need to have this in writing so that's your
strategy to get out so Ted feels much relief so the next day Bob comes in to
see Teddy was hit and he says 2:10 hey Ted great news I just talked to my the
attorney the executor of the estate of Grand name email and he told me I should
have the check in seven days let's go ahead and set up a time where we can
transfer ownership of this parcel of land and I can do it any time this month
you tell me when and Ted goes oh you know what Bob you have been such an
awesome tenant thank you so much for paying promptly for maintaining the
property in good condition I really do appreciate it couldn't ask for a better
tenant than you and and III know that the lease that you and I had was going
to expire in a few weeks two or three weeks maybe four weeks so at the end of
that I'm gonna need you to move out because the lease will be over and I
will need possession land at that time Bob looks like he's crazy he's like what
what are you doing uh yeah we had a lease but that was just the first part
of this deal now it's time for me to buy it why do you think I was putting up
fences and putting in septic tanks and framing houses I didn't do that to build
you a house I built it to build me a house and so so the issue is what is the
predicament you can see in this situation that Ted
is using the statute of frauds to commit a fraud on Bob he's saying there is no
agreement to avoid a true agreement that Ted and Bob genuinely entered into so
Bob trusted Ted and Ted is using this statue frauds offensively to basically
defraud Bob remember I said the beginning of this lecture how the statue
frauds can be used to commit a fraud well this is an example of that I said
how you and Great Britain they no longer have a statue frauds well one of the
reasons is that slippery people who know about the statue frauds sometimes
tricked people into entering into oral agreements the slippery person then
could decide later on whether the agreement was good or bad for him if it
was good then maybe he'd continued to honor the agreement but if ended up no
longer being good for that particular sneaky person then he would change his
mind and set statute of frauds we'd all have a contract after all now we can see
though in this case that bob is probably going to be okay because he's made some
improvements on the land there's some other situations that we'll talk about I
won't talk maybe I don't have them listed here so let me show you some
share with you some other situations under the quasi contract theory that
might give Bob relief one could be partial performance of the contract
terms now the deal that we have here is actually you could look at this as one
big deal and so we could say that Bob partially performed by paying the one
thousand dollars a month or you go look at it as two separate contracts if you
look at it as two separate contracts then bob hasn't performed any of the
obligations under the BI for one hundred thousand dollars so this could be a
matter of how you characterize this to D at two separate deals or one big deal a
third thing that could give Bob some relief is the fact that Ted can be put
under oath in court and if he admitted yes I agreed to these terms orally agree
these terms of the contract you know let's assume that ten was unwilling to
perjure himself by lying then the court could say well if you orally admit that
these are the terms then we're going to go ahead and honor the contract even
though it wasn't in writing so there are some ways to get around the statute of
fraud requirement for a real estate deal again it's designed to prevent a fraud
from happening by following the requirements of statue fraud so now I've
covered the the five categories for statute of frauds that are covered in
our textbook but now we're going to talk about that will category that's unique
to Texas enough it's unique there may be other states that have it but it's it's
not certainly the scenario textbook it's not a very important one so I don't
spend a lot of time on it and here is the language an agreement promise or
contract or warranty of cure relating to medical care and results there have made
by a physician or healthcare provider as defined by this category so the term
healthcare provider is defined in this statute but we're just going to rely on
this term physician here this section does not apply to pharmacist so imagine
that I go to see my doctor and my doctor says you know if groover let's say I
have some illness I have pain in my shoulder and the doctor says River if
you just go to physical therapy for five sessions that you'll get over that pain
and so I go to the doctor I go to the physical therapist for five sessions and
you know what I'm still in pain well if we didn't have a statute of frauds I had
the potential to sue my physician because he gave me a warranty of cure
police I thought it was a warranty of cure and it didn't actually work now the
reality is it wasn't that the physician gave me bad advice it's just that
everybody's body is different and sometimes treatments work better on one
than another and we don't really want our physicians to run around costly
saying well you know I'm not making a promise here but you know this might
work for you might not we don't want them to give you a disclaimer every
single time they make a suggestion hey for anything exercise more but that may
not work either be sure to get in I see but that's not going to protect you
either don't smoke I mean we don't want those just we don't want the physician
to be kind of burdened with constantly giving us disclaimer each time and so
what we say is if we're going to hold it doctor to a promise of some kind of cure
and we're gonna require that the promise be reduced into writing as a practical
matter is a doctor going to reduce that type of promise into writing no this is
a strategy designed to reduce the likelihood that a physician is going to
be held responsible when the cure isn't necessarily completely effective this
doesn't apply to malpractice situations of course that's a different category
you'll see the textbook talks about the equal dignity rule that is not the rule
in Texas so I'm not going to spend time talking about this other than to let you
know that the terms principal and agent are terms that you're responsible for
knowing of course the principal is the person who the agent acts for and the
agent becomes the living embodiment of the principle I like to refer to the
principal as Al in my story and I usually well I have my story where
Al is a principal and Aggie is the agent so imagine that al hires
Aggie maybe to be a real estate agent you hear the term agent there hey that's
pretty cool all right anyway so al hires Aggie to run his business but al decides
hey you know what I'm gonna retire to the south of France I don't want to deal
with the nitty-gritty details a business so Aggie is the one running the business
on a day-to-day basis Aggie interest into some contracts she
hired some people she fired some people she does a lot of different things maybe
some of them good maybe some not so good and it ends up to some
people sue ow ow can't say uh well I didn't sign that no he can't because
Aggie is his agent he agreed for Aggie to have this role
and he becomes responsible even for bad decisions that Aggie has made so these
terms apply in Texas obviously we have principal and agents agent relationships
the equal dignity rule doesn't apply generally but you do need to know these
two terms so we have now covered the minute a contract that can't be
performed within a year is covered by the statue frauds a co-signing contract
is covered by statue frauds and the executives promise to pay the estate's
debts is covered by statute of frauds a contracting consideration of marriage is
covered by the statue frauds any contract involving real property is
karma statue frauds then we talked about the physician warranty if cure it's
covered by statue frauds the last one I said before there is one more we had
talked about it's not part of the statute of frauds but it is part of the
UCC little refresher the UCC stands for the Uniform Commercial Code the Uniform
Commercial Code is clearly a separate statute from the statute of frauds but
we do lump this together with the statute of frauds just because it's the
part of the UCC that has a writing apart it's actually two writing requirements
for the UCC we're just going to focus on one right now and that is whenever we we
are selling goods that are worth more than $500 that agreement has to be in
writing so this is the only one of our requirements that has a dollar amount
associated with it so if I'm if I'm gonna sell you my car for $1000
UCC applies we have to have it in writing if I'm selling you my television
for four hundred and ninety nine dollars the UCC doesn't apply we don't have to
have that right so you do need to know this $500
amount it has to do with a cell of good so we're not talking about we'll talk
about exactly what a good is at a in a later lecture but we're not talking
about real property for example and we're not talking about services time
out stuff things you can touch so said UCC here okay so we've talked about the
eight categories I guess one we should call a cash I guess seven categories
that's humor yeah seven categories under the statute frauds by the way you're
responsible for knowing all of these and knowing kind of their ins and outs
you're responsible for ninety exceptions we talked about here and the exception
that we talked about here so when we do need a writing when the statute of
frauds applies what kind of writing do we need to me me do we need a hundred
page contract that's been notarized and stamped and sealed and filed no usually
speaking the writing requirement is quite a bit more minimal the textbook
will say that we need these four things we need to identify the parties to the
contract so going back to Bill and Ted's Bob and Ted's contract we need have Bob
we need to have title identifying the document usually we don't need to have
their full legal and let's say Bob's full name is Robert Edward Smith and
tencel name is Edward Robert Smith we wouldn't actually have to have their
names on the contract but we would have to have a sufficient amount of the name
but it was clear in the context who this person is then we need to describe the
subject matter of the agreement I described the parcel the parcel located
in the corner of Smith and Jones Street that is approximately you know a hundred
acres or whatever the particulars of that particular part of land is we'd
have to add the material terms for example the price going back to the
leasing situation the one thousand dollars a month due on the first day of
the month and the purchase price of $100,000 and
then we need to have the signature of the party being charged in other words
in this case Bob is trying to enforce the contract with respect to Ted Bob
wants it to be a binding contract Ted's trying to get out of it because Ted
sucker donor so the only signature we need is Ted's because Bob isn't
disputing the validity of the contract now obviously both consigned but Bob's
signature is irrelevant and the signature is a pretty mild
requirement in and of itself it could be initials it could be a wet signature it
could be an electronic signature it could be typed names it could be a mark
let's say that Ted is a broken arm or maybe Ted doesn't know how to write it
could be his ex something along those lines here we're going to return to the
first part of the statute of frauds let's just show you where that is here
for a second here we have a mattress this is this section right here this is
the section a so promise or agreement must be in writing a promise or
agreement described in Subsection B that's where we list the the eight
categories for the statute of frauds it's not enforceable unless the promise
or agreement or a Memorandum of it is in writing and signed by the person to be
charged of the promise or agreement or by someone law three lawfully are
authorized to sign for him this is just a fancy word phrase for agent right okay so I'm going to compare the requirements
that we saw here up against the Texas statute so we have to identify the
parties where do we have them the Texas statute the agreement is in writing so
we don't have actual language that says the parties have to be identified now we
need to signature one in the party so there's a little bit of identification
there and we say the agreement has to be in writing so presumably if you're
reducing agreement to writing you're going to identify the parties we also
the requirement according to the textbook the subject math agreement has
to be in writing the Texas language would work on we would rely upon for
that same requirement would be the agreement is in writing the material
terms have to be in writing that's according the textbook we're going to
rely upon that same language from the statute where we see in Texas the
agreement is in writing and then again we the the fourth element here we do
have in the statute signed by the person be charged for the promise so you can
see the Texas statute is a little bit more vague than the text the textbook
might have expected it to be but with the case law gloss that we have these
same ideas definitely have to be present in a contract to satisfy the statute of
frauds even in Texas so let's talk about I kind of already covered these I'm not
going to spend a lot of time on these these are the three equal remedies that
allow one to get out of the writing requirement and I talked about this with
respect to the and Bob situation these are the three
scenarios one is that part performance remember I said how if we saw the
contract between Bob and Ted as a singular contract in other words it was
just one contract the first part was the lease for a thousand dollars a month the
second part was purchasing for a hundred thousand dollars if we see that is one
big agreement then we would say that Bob engaged in partial performance and that
means that by our Ted can't get out of it if bob has partially performed even
if the agreement is just oral of course it has to be partial performance by the
person who's trying to enforce the oral agreement so if Ted partially performs
that's not going to help Bob enforce the agreement against at this particular
category partial performance is recognized in Texas then we have the
promissory estoppel this is when when Bob goes out and puts the fence in
starts building the house but it's in the septic tank he's relying upon the
fact that the tenant is going to honor his agreement and he's relying that
that's gonna work out okay you know based upon the circumstances a couple
estoppel isn't exactly the circumstances that we had in this case because in the
snare that I presented with Ted and Bob when Ted and Bob initially entered into
the agreement they both thought that they were just going to follow the
agreement neither one had any evil intentions at that time but let's just
switch up the facts a bit and let's make Ted much more evil than we initially had
him be now lets us assume that when Ted and Bob were negotiating Ted know about
the statute of frauds and knew that the agreement needed to be reduced into
writing maybe he had actually already been contacted by the Landman and he's
thinking maybe this will work out but maybe it won't work out because he'd
been contact in the past by land men and they
maybe's floated these numbers they had never panned out and so he he wasn't
sure whether he wanted actually sells land about I mean obviously if the land
may actually delivered this money he didn't want to have a real contract with
Bob but it's also possible and men would would change his mind and and not
actually entered in the contract under that scenario he did want a contract Bob
and so Ted might say hey you know what well that ought to do is enter into an
oral contracts Bob Bob doesn't know about the writing requirement if it ends
up as advantageous to me I'll just go ahead and act like it's an enforceable
deal but you know what if it ends up that it's not a meant Aegis for me I'll
just plead statute of frauds well that would be a situation where the defendant
led the plaintiff to believe that a writing is not required he he knew about
the requirement and didn't require and led their the person to think that it
wasn't necessary so the course would apply the doctrine of equitable estoppel
here let's look at the term estoppel for a second you can see in the middle of
the word estoppel you have the word stop of course we have the word equitable we
know from the equity as a category of law just assuming category that is
separate from the law and this is where the courts really look at being just
being fair those are the ideas so we see I could well think an emphasis upon
justice so the court is going to stop the use of the statute of frauds because
it interferes with the ideas of justice it's not right
if I did perverts the whole idea the search for the frauds is design are
supposed to prevent fraud and now some money is using it to commit a fraud
I wasn't able to find a case where this has actually played out and the Texas
courts have said yes this doctrine is something we're willing to apply but I
think it's very very likely in the Texas courts would be willing to apply this so
you can see these three categories are designed to prevent a crafty person from
using such a fraud to trick or take advantage
of Bob the naive person I don't have on this list the situation where where Ted
is called to testify and he admits to the oral contract but that isn't a
fourth one that you will commonly see on this list as well so now we have covered
our statue frauds I hope that this lecture has been helpful for you in
mastering these terms and our next lecture we'll discuss the interpretation
rules for contracts generally and also the parole Evidence Rule I appreciate
your attention and of course as always if you have questions about the material
please feel free to drop me an e-mail message or even better come by my office
hours so we can talk at great length sorting through those problems again I
thank you for your attention and have a wonderful day

Chapter 8

As found on YouTube

Looking to see what kind of mortgage you can get? Click here to see

Leave a reply

Your email address will not be published. Required fields are marked *