Chapter 12

The One-Year Rule

Date of Contract Formation One Year

If contract can possibly be performed within a year, contract does not have

to be in writing to be enforced.

If performance cannot possibly be completed within a year, contract

must be in writing to be enforceable.

Chapter 12

GENUINENESS OF ASSENT

Mistakes 1. Unilateral2. Bilateral (mutual)

FraudulentMisrepresentation

When fraud occurs, usually the innocent party canenforce or avoid the contract. The elements necessaryto establish fraud are as follows:1. A misrepresentation of a material fact must occur.2. There must be an intent to deceive.3. The innocent party must justifiably rely on the

misrepresentation.

Assent

Chapter 12

GENUINENESS OF ASSENT (Continued)

UndueInfluence

Duress

Undue influence arises from special relationships,such as fiduciary or confidential relationships, inwhich one party’s free will has been overcome by theundue influence exerted by the other party. Usually,the contract is voidable.

Duress is defined as the tactic of forcing a party toenter a contract under the fear of a threat—forexample, the threat of violence or serious economicloss. The party forced to enter the contract canrescind the contract.

Assent

Chapter 12

ContractsSubject to theStatute ofFrauds

Applicability—The following types ofcontracts fall under the Statute of Frauds andmust be in writing to be enforceable:1. Contracts involving interests in land2. Contracts whose terms cannot be

performed within one year3. Collateral promises4. Promises made in consideration of

marriage5. Contracts for the sale of goods priced at

$500 or moreExceptions—Partial performance,admissions, and promissory estoppel

Applicability—The following types ofcontracts fall under the Statute of Frauds andmust be in writing to be enforceable:1. Contracts involving interests in land2. Contracts whose terms cannot be

performed within one year3. Collateral promises4. Promises made in consideration of

marriage5. Contracts for the sale of goods priced at

$500 or moreExceptions—Partial performance,admissions, and promissory estoppel

Form

Chapter 12

Sufficiency of the Writing

To constitute an enforceable contractunder the Statute of Frauds, a writingmust be signed by the party againstwhom enforcement is sought, mustname the parties, must identify thesubject matter, and must state withreasonable certainty the essentialterms of the contract.

Sufficiency of the Writing

Form

Chapter 12

Parol Evidence Rule

Parol EvidenceRule

The parol evidence rule prohibits the introduction at trial ofevidence of the parties’ prior negotiations, prioragreements, or contemporaneous oral agreements thatcontradicts or varies the terms of written contracts. Exceptions are made in the following circumstances:1. To show that the contract was subsequently modified.2. To show that the contract was voidable or void.3. To clarify the meaning of ambiguous terms.4. To clarify the terms of the contract when the written

contract lacks one or more of its essential terms.5. Under the UCC, to explain the meaning of contract

terms in light of a prior dealing, course of performance,or usage of trade.

6. To she that the entire contract is subject to an orallyagreed-on condition.

7. When an obvious clerical or typographic error wasmade.

Parol EvidenceRule

The parol evidence rule prohibits the introduction at trial ofevidence of the parties’ prior negotiations, prioragreements, or contemporaneous oral agreements thatcontradicts or varies the terms of written contracts. Exceptions are made in the following circumstances:1. To show that the contract was subsequently modified.2. To show that the contract was voidable or void.3. To clarify the meaning of ambiguous terms.4. To clarify the terms of the contract when the written

contract lacks one or more of its essential terms.5. Under the UCC, to explain the meaning of contract

terms in light of a prior dealing, course of performance,or usage of trade.

6. To she that the entire contract is subject to an orallyagreed-on condition.

7. When an obvious clerical or typographic error wasmade.