Some Ks are required to be in writing, or at least evidenced by a signed written memo of the essential terms, as required by statute. For these Ks, no writing = unenforceable.
-Stems from English Statute of Frauds, 1677.
The point of the SOF is to prevent fraud & perjury as to the actual terms of the K & to provide better evidence of the K if a dispute arises.
Failure to comply w/ the SOF makes the K voidable but not void. (SOF relates to the remedy only & not the substantive validity of the K.)
Types of Ks which must be in writing (5):
- Suretyship: a K to answer for the debt or duty of another
- Marriage: a K made upon consideration of marriage
- Land K: a K for the sale of an interest in land
- One year: a K that cannot be performed w/n one year from its making
- UCC: Under the UCC, a K for the sale of goods for the price of $500 or more
Idaho SOF
Monday, October 27, 2008
10:04 AM
WEST'S IDAHO CODE ANNOTATED
TITLE 9. EVIDENCE
CHAPTER 5. INDISPENSABLE EVIDENCE--STATUTE OF FRAUDS
§ 9-505. Certain agreements to be in writing
In the following cases the agreement is invalid, unless the same or some note or memorandum thereof, be in writing and subscribed by the party charged, or by his agent. Evidence, therefore, of the agreement cannot be received without the writing or secondary evidence of its contents:
1. An agreement that by its terms is not to be performed within a year from the making thereof.
2. A special promise to answer for the debt, default or miscarriage of another, except in the cases provided for in section 9-506, Idaho Code.
3. An agreement made upon consideration of marriage, other than a mutual promise to marry.
4. An agreement for the leasing, for a longer period than one (1) year, or for the sale, of real property, or of an interest therein, and such agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent be in writing, subscribed by the party sought to be charged.
5. A promise or commitment to lend money or to grant or extend credit in an original principal amount of fifty thousand dollars ($50,000) or more, made by a person or entity engaged in the business of lending money or extending credit.
Current through the 2007 First Regular Session of the 59th Legislature, Ch. 369
Copr. © 2007 Thomson/West.
END OF DOCUMENT
Common Law Ks covered by Idaho Statute of Frauds, I.C. sect. 9-505
- An agreement not to be performed w/n on year of its making.
- A promise to answer for the debt of another (a suretyship)
- An agreement made upon consideration of marriage (but not a promise to marry)
- An agreement for the sale of real property or for the lease of real property for longer than one year
- A promise by a commerical lender to lend $50K or more
-these are NOT the same as the R2C!!!
IC 28-2-201:
-An agreement for a sale of goods for the price of $500 or more fall w/n the SOF
-There is no difference b/n IC 28-2-201 and UCC 2-201
Suretyship
Related cases:
- Power Entertainment v. National Football League Properties
- Langman V. Alumni Assn. of the Univ. of Virginia
Monday, October 27, 2008
11:38 AM
A surety is someone who agrees to pay a debt incurred by another.
Signed by "the person to be charged" = signed by person against whom the promise is to be enforced.
"collateral" promises-- a record is required by the suretyship clause
"original" promise-- no record is required.
- Guarantee Ks, (aka "The Suretyship Clause"): Promises to answer for or pay the debt of another. (Think Strong v. Sheffield). Note, there is a distinction b/n Ks of suretyships & Ks of guarantees.
Applies to ONLY to promises made:
1) by one who is not presently liable for the debt,
2) to a creditor,
3) in order to discharge the present or future obligations of a 3rd person
- If a promise is made to the debtor like this: "I'll pay your obligation to X" and is supported by consideration, it is enforceable even though it is oral. (R2C sect. 112)
- Novations (substitution of a new legal obligation for an old one) are not within the SOF either (R2C 115)
- The SOF does not apply to "primary promises." If the underlying K was b/n the promisor & the creditor, the promise is enforceable although oral. (R2C 114)
Ex: A orally tells C to send $100 of goods to B & "send the bill to me," the primary K is b/n A & C. B is simply a 3rd-party beneficiary & the K is enforceable.
- Exception: Cases where the guarantor's main purpose is to benefit herself. If thereis any showing that the promisor's main purpose is beneficial to herself, even if if the promise is "collateral," the promise is enforceable even though NOT in writing. (R2C 116)
- Novations (substitution of a new legal obligation for an old one) are not within the SOF either (R2C 115)
Power v. Nat'l Football
U.S. Ct. of Apps., 5th Circuit
Parties:
P is Power Entertainment, wants a license from D to sell football cards
D is Nat'l football,prof football league, licensor of right to use images of players & logos, etc.
Facts:
Pro Set is the former licensee but goes under
P comes forward to D, says willing to take over license AND THE DEBT
D allegedly agreed orally that it will give P the license if P agrees to pay outstanding debt owed by Pro Set
D refused to transfer the license
P sued for breach of K
PH:
Dist ct granted D's motion to dismiss on the ground that the alleged K was not in writing & P's allegations did not support an estoppel claim.
P appeals
Issue:
Does the suretyship SOF apply to an oral promise... was D's oral agreement to transfer Pro Set's license to P unenforceable when P's promise's main purpose was for its own benefit?
Analysis of appellate ct:
Usually there's no benefit for the person making the promise for the surety ship. There's a lack of consideration, so it's hard to prove the promise was made. Thus, generally, these promises should be in writing. The statute is intended to protect the promisor who receives no benefit from assuming the debts of another. The lack of benefit to the promisor (=no consideration), means the only evidence of the agreement is the promsie itself.
Rule:Main Purpose Doctrine. Three factors:
- Did P become primarily liable for Pro Set's debt rather than secondary liable for Pro Set's debt (acting as a surety).
Yes. P was primarily on thehook for the debt. This was not a trad'l surety relationship.
- Was there consideration for P's promise to pay Pro Set's debt?
Yes.
- Was getting the license the main purpose in P promise to pay Pro Set's debt?
Yes. P's motive for agreeing to pay the debt was not to help Pro Set but to induce D to give P the license for the cards.
Conclusion:
-Reversed. P is not barred by the SOF from trying to make a case that the NFL breached the parties' oral agreement. The suretyship provision in the SOF exists to proteccct those alleged to have guaranteed the debt of another… In this case, it's the alleged guarantor that is attempting to enforce the promise against the obligee rather than the obligee attempting to enforce the promise against the guarantor, so there's really no reason for the SOF to apply here.
(This is unlike the way things usually go)
Langman v. Alumni Ass'n
Parties:
P is Langman, donorD is Alumni, donee of the gift
Facts:
-D rec'd gift of commer property of an arcade & recorded the deed
-After the gift was made, the expenses for operating the property outstripped the income it produced. P was still required to make payments on the mortgage out of her own pocket
-The promisory note b/n P & the mortgage company did not change. Instead, the terms of the gift to the D was that they would cover those payments.
-This was written on the deed and agreed to hold Ps harmless from further liability on the mortgage
-P then sued D for recovery for those payments
PH:
Held for D in trial court b/c d did not knowingly accept the conditions in the deed & therefore the assumption clause was unenforceable.
P appeals
Issue on appeal:
Whether D was liable for the debt even thought it signed no written agreement to assume the mortgage
D's arg on app:
Not liable bc it had not signed a written agreement to assume the debt & such a written agreeemnt is req'd by SOF in VA.
Analysis:
A grantee who assumes an existing mortgage is not a surety. By promising the grantor to pay the mortgagee the debt owes to the grantor, the assumption becomes an original (primary) undertaking.
D agreed to the condition so it could get the property. But, instead of making money, the property did not. D was posed to receive a direct benefit and didn not merely act as a surety for the grantors.
The promise was made to P by D through the D for D's benefit…
..>Therefore, did not fall w/n SOF.
Rule:
In VA, an agreement falls w/n the suretyship provision of the SOF only if three criteria are met:
"A collateral undertaking…"
- The promisor is acting as a guarantor or surety (i.e. has not assumed primary liability for the debt)
- The promisor receives no direct benefit from making the promise
- The promisor is liable only if the debtor defaults
Common Law Ks covered by Idaho Statute of Frauds, I.C. sect. 9-505
- An agreement not to be performed w/n on year of its making.
- A promise to answer for the debt of another (a suretyship)
- An agreement made upon consideration of marriage (but not a promise to marry)
- An agreement for the sale of real property or for the lease of real property for longer than one year
- A promise by a commerical lender to lend $50K or more
-these are NOT the same as the R2C!!!
IC 28-2-201:
-An agreement for a sale of goods for the price of $500 or more fall w/n the SOF
-There is no difference b/n IC 28-2-201 and UCC 2-201
Main Purpose Doctrine:
Applies when the pecuniary interests of a promise in a commerical K replacce the gratuitous elements often present in the suretyship.
-What's going on its probably a novation where one party has offered to substitute itself for one dead beat debtor for another.
Note: "Yes" is not required to each of these, but enough have to be satisfied for the court to get the feeling that the main purpose was to gain a benefit.
One-year clause
- Hemingway
- Christensen
- Remlinger
Tuesday, October 28, 2008
10:54 PM
Ks that cannot be performed w/n one year must be in writing.
Applies to ALL Ks
Suggested Rationale for rule: | "It is apparently founded on a concern w/ the tendency of evidence to go stale w/ the passage of time, but the foundation is weak b/c the limitation applies even if the promise is broken the day after it is made & the suit on it is brought immediately." --ct opinion Goldstick |
The one-year period begins from the date the K is made (execution of the K), not when performance is promised.
Ex: If on July 1, 1990 Star promises Network that Star will appear on a one-hour show that will take place on September 1, 1991, the K is unenforceable if oral b/c it cannot be performed w/n one year of the day it was made. (The fact that actual performance will take only one hour is irrelevant.)
Complete performance of the K w/n one year must be impossible. The fact that it is "highly unlikely" is not enough.
The possibility of performing w/n one year must be judged as of the time the K was made, not "knowing better" in hindsight. (When the parties enter the K, they have to think it will take less than a year if agreeing orally)
It's applicability w/n the SOF hinges on "performance" & not "discharge." If a K is dischanged b/c of reasons other than performance… like frustration, impossibility, etc. it is NOT enough to take a K out of the one-year provision. "Performance" is the key. (Is this a built-in allowance for excuses?)
How to tell the difference: | Fulfillment of principal purpose is the test. If yes-->there has been performance. If no-->there has NOT been performance. |
-Personal service K for multiple years= fall w/n rule if for more than one year (unenforceable if not in writing) , regardless of the fact the K would terminate if the employee died.
Reason: | When employee dies, K is discharged, not performed |
-Lifetime employment= Probably NOT w/n the one-year provision since if the employee dies, the essential purpose of guaranteeing him a job forever has been satisfied. So an oral promise here is probably OK.
-Non-compete= NOT w/n one-year rule since if the seller dies w/n a yar the buyer has rec'd the benefit of his full performance (benefit= knowing that seller won't be competing w/ him)
-Termination= split; cts treat termination clauses differently.
Ks where performance w/n one year is possible but unlikely: | Some Ks will prbably take more than one yar to form, but performance is theoretically possible w/n one year. These Ks are not w/n the SOF. (Payment of $250,000 to P over ten years. It's possible to pay P $250000 in ONE year, but highly unlikely)…. Another example is a performance K w/ a business. If A enters a K w/ B to have B supply his requirements of raw materials & no time limit is stated. The K is not w/n the SOF (& therefore not unenforceable b/c not in writing) b/c there is a possibility that A could go out of business w/n one year & no longer have requirements. |
Ks to make a will & Ks to be performed after death: | In some states, the SOF is also applied to all Ks not to be performed during the lifetime of the promisor (even though this performance could occur w/n one year) & to agreements to make a will or devise or bequeath property. |
Exception: | Even if a K cannot be performed w/n one year, most courts hold that if it is fully executed (performed) on one side, this will take the entire K out of the SOF & make the oral promise enforceable. Rationale=equity concerns (think promissory estoppel) |
Cases mentioned in text: Hamer v. Sidway
Fractions of a day are disregarded in computing one-year period
Hemingway v. Gruener
Supreme Ct of Idaho, 1984
Parties:
P = Mary Hemingway
D= Gruener & Lawns
Background:
Summer of 1976 P discusses & later pays by check ($7500) for property (2.2 acres). P also then pays D's real estate agent commission of $750
Both checks were cashed
Later, P contact's D's atty & requests the deed to include add'l land necessary to provide access to other land owned by P
D's atty complies & adds 60' of land (.6 acre) to the 2.2 acre parcel.
The deed conveying 2.8 acres was then executed by D on Sept. 3, 1976 but was held by D's atty pending an agreement b/n the parties re: adjusted price & on D's request to reserve an easement.
Five days later, D's atty wrote P a letter stating he felt the price should be adjusted to reflect the add'l acreage included at her request.
P never responded to the letter & the deed was never delivered.
Three years later, D executed a warranty deed conveying portions of the same property to another party, the Lawns. This deed was recorded April of 1979.
PH:
P brought suit against D in Sept. of 1979 seeking specific performance of the alleged K, or in the alternative, damages for the deprivation of title.
Dist. Ct granted summ J for D on March 25, 1982 b/c: | "D & P failed to reach a meeting of theminds sufficient to form a K; that ther was never an actual agreement; that the deed was never delivered to P; that D did not intend the deed to be delivered to P; that atty D was not authoized to deliver deed to P and even if an oral agreement were to exist, it would not be enforceable b/c of SOF and that P did not take possession of the property or make any imporvements or pay taxes" |
But… | The court ordered D to reimburse P for amt of purchase + agent commission w/ interest |
P's argument on appeal:
-Dist ct erred in granting summ J b/c there were issues of material fact regarding the existence of an oral K, delivery of the deed to her & P's requested deed information.
-The warranty deed held by d's atty & his letter to P should be read in conjunction w/ the check in order to take this transaction out of SOF since it specifically referred to in the letter written by D's atty …
Court says this is wrong (see #1 of 3 doctrine options below)
-Says SOF does not apply b/c there has been sufficient partial performance of the K
Ct says nope b/c P did not take possesion of land
D's argument on appeal:
Enforcement of any oral K would be barred by the SOF & hence the lower court did not err.
Issue on appeal:
Is this oral K, if it existed, unenforceable under Idaho's version of SOF?
Rules:
- In Idaho, agreement for sale of land is invalid unless the agreement is in writing & subscribed by the party charged or his agent.
Failure to comply = oral agreement unenforceable in both actions in law for damages and in an equity suit for specific performance.
- If there is a memo signed by both, and another unsigned memo supplying some of the essential terms of the entire agreement, an express reference to the unsigned memo must be found in the signed memo.
- Unlike the majority of jxs which require only the memo be signed by the party against whom enforcement is sought, jIdaho requires both parties to a bilateral K sign the memo
- Although no particular form of lang. is req'd, the memo must plainly set forth:
- Parties to K
- Subj matter thereof
- The price or consideration
- A description of the property
- The essential terms & conditions of the agreement
- Parties to K
- There are three doctrines that allow unsigned writings to be read together w/ a signed writing in other jxs:
- Express reference in a signed writing to an unsigned writing
- Implied reference b/n a signed & unsigned writing
- Physical connection of an unsigned writing to a signed one
Idaho follows the first.
Analysis:
-The only signed writing by both the parties is the check for $7500 that D endorsed.
Caselaw says this is not enough b/c it does not contain the essential element (#4e) of the oral agreement.
Held:
District ct's factual findings & application of law OK… affirmed. Case remanded for disposition of further issues… Costs to Ds.
- Express reference in a signed writing to an unsigned writing
Warranty deed?
Christensen v. Ransom
Ct of Apps, Idaho 1992
Parties:
P is Christensen
D is Ransom
Issue:
Whether a K was formed (for the sale of farm equipment)
Case ackground:
P allegedly bought 2 tractors, 2 drills & a baler from D for $40,000
P claims that he agreed to lend $40,000 to D to help finance a lawsuit against FmHA
P sued Ds for the payment of an alleged promissory note
D counterclaimed for the payment on the K for the sale of farm machinery
PH:
-Bench trial @ district ct. found that a K for the sale of machinery had been formed & P owed D $20,000
-P appeals, arguing the dist ct erred legally & factually.
Facts:
Oct of 1984: Ds needed add'l $$ to pay atty fees for their lawsuit.
Ds discussed their lawsuit & need for $$ w/ P's nephew. Nephew arranges mtg. During their 1st & subsequent meetings, the parties discuss different options, including a $20K load or in the alternative, a sale & purchase of farm equipment. The parties did not negotiate a written agreement during the fall of 1984.
March of 1985: P & D reenter negotiations.
Testimony is conflicting of the negotiations, but a bill of sale (value = $40,000) was prepared by D's atty & on march 22, 1985 it was signed by D & notarzied @ the office of any atty chosen by P.
P did NOT sign the bill of sale but he DID have it recorded in the county recorder's office
D's atty also prepared a document called "Agreement for Option to Repurchase Machinery" which would allow D the option to repurchase the farm machinery for the same price at which it was sold two years from the date the agreement was signed. (Why the hell would P agree? Machinery depreciates but would this option mitigate his ownership rights? From the facts, P doesn't "owe" D anything-- the parties just met)
P refused to consider this agreement
March 14, 1985: D signed a 2nd document which was typed on a form w/ name & address of P's business that stated:
We, D rec'd $20K plus other valuable considerations for the following machinery…(listed all)…Bill of Sale recorded Bingham Cty, Blackfoot, Idaho.
-this 2nd document is the source of the dispute over the purchase price of the equipment
Trial ct later concluded this was a receipt for the 1st $20K on the $40K debt.
P did not take possession of the equipment at the time he made the $20K payment. Instead he stated since he had no immediate need for the equipment that D could use the grain drills if they kept track of the usage. P also asked that another farmer be allowed to use the grain drills. P said he would make the final payment when he came to pick up the equipment.
-P never made that final payment
March 1987: P & his nephew went to d's ranch to take the equipment.
D's refused to allow P to take the equipment b/c they had not rec'd final payment.
P, according to D, threatened to sue D for breach of a promissory note. From his truck window, P then held up a copy of a signed promissory note for $40,000.
The note never made it to court.
Later that month, P filed his suit for breach of K for the sale of farm equipment. Alleged price of purchase = $20K. P also alleged D had agreed to repurchase the farm equipment in one year for $40K. P attached a copy of the bill of sale as an exhibit to his complaint.
D answered the comlaint & filed their counterclaim. In their answer, they denied the $20K price & asserted the affirmative defense of unconscionability the SOF , lack of consideration, failure to perform condition precedent, fraud, constructive fraud & duress. Sought for the court to rescind the alleged K to repurchase. In the counter claim, D alleged a breach of the purchase K. They alleged the price of the farm equipment was $40K & NOT $20K & that P had only paid $20K. The counterclaim allowed for a cost-offset for D's use of the equipment but requested an add'l offset of D's storage of the equipment.
In reply to the counterclaim, P denied the price for the equipment was $40K & denied that he only partially performed to the K. P did NOT raise any affirmative defenses to the counterclaim.
At the time of the trial, however, P changed his position & alleged that the transaction was actually a loadn which was secured by the farm equipment in question.
Lower Ct:
Rules: | Article 2 of UCC, I.C. sect. 28-2-201 |
Holding: | Parties entered a K for the sale of farm equip for $40K. Even though P had not signed a bill of sale, the K was not governed by SOF b/c: -P had admitted the existence of the K in his complaint & -The conduct of the parties showed that they recognized the K. Further, P took possession ("effective possession") by authorizing other ppl to use the equipment. Risk of loss & depreciation passed to P at the time D delivered the bill of sale. The document signed on March 14, 1985 was a receipt for the $20K payment that had been rec'd. Court found that P BOC'd and orded P to pay the balance of the K. Ct did allow an offset of $247.80 for the rental value of the equipment for the time D used it & interest, costs & atty fees to D. |
Issue on Appeal:
P asserts the lower ct erred in its conlcusion that the sale K was not barred by SOF.
Rule:
UCC I.C. 28-1-101 through 28-10-104 ..> The parties to a K for the sale of goods must memorialize their K in writing in order for it to be enforceable. …
P's arg on appeal:
-The K for the sale of farm equipment is unenforceable bc there is no writing, signe dby him, which indicates that the K was formed.
Analysis:
P's arg on app fails b/c UCC provides that a K not satisfying the SOF is enforceable regardless if the party against whom enforcement is sought admits in his testimony that a K was made.
-This happened here.
However, though P's admission prevents him from asserting SOF, it does not establish the terms of the K.
To figure this one out, ct first looks at writings & then at conduct.
Here, there is substantial evidence to support trial ct's factual findings which is all that is necessary for them to remain unchanged.
Conclusion:
J of district ct is affirmed. Costs & atty fees to D
What's the significance of having a bill of sale recorded? Title protection?
Why not have value appraised of machinery & go from there???
Battle of the forms
Remlinger v. Dravo Corp.
Supreme Ct of Idaho, 1971
Parties:
P/appellant = Remlinger
D/respondent= Dravo
PH:
Action in K brought by P against D for $14,300 in damages for failure to comply w/ the terms of an employment K.
-District ct permitted P to amend his complaint 3 times & then after a 3rd motion for summ J, granted it since the pleadings, depos & admissions indicated the absence of an issue of material fact.
-P appeals.
Facts:
P's story
-Alleged K formed subsequent to a discussion w/ D, P held himself at the readiness to work & moved his family to the construction site to do concrete for the Dvorshak Dam.
-On July 12, 1968 D make a K w/ him at the rate of $5.75/hr. K was to run from that day until the dam was completed.
-P was injured on the job & was unable to work for about a week in Oct. of 1968
-Nov. 6, 1968 D discharged him thereby breaching the K.
D's story
-P was hired on July 9, 1968 at a rate of $4.10/hr
-No written K had been entered into
-At-will employment agreement
-Nov. 6: P refused or failed to report for work & D then terminated him
Issue:
Whether a valid K, either oral or written, was formed b/n the parties
-P believes (as stated in interrogatory) the K was oral & was for the length of the project which was 4 or 5 years
P's argument on appeal: | The oral K pursuant to which he was hired was NOT violative of the SOF by relying on a boiler plate union K which he contends is a memo or writing embodyingn the oral agreement |
-Court rejects this "boiler plate" argument as irrelevant for several reasons:
- The labor union agreement fails to mention the duration period
- It fails to discuss terms of payment
- It neglects to ID parties
Rules:
The rules in Idaho mandate specificity in these written instruments… Parol evidence is NOT sufficient.
One-year rule for SOF:
P's argument: | Oral K under which P claims damages does not violate SOF b/c it can be performed w/n ONE year from its making… |
Rule: | To avoid the bar of the SOF by the showing of a possibility of performance w/n one year of te making of the K, the showing must be the possibility of actual performance. |
Ct's analysis: | P's answers to the interrogatories however, indicate that P thought the K would last longer than 1 year (he thought 4 or 5). D also took the depo of P & asked him the shortest time it would be possible to place the concrete for the dam… P refused to respond. Later, at the time of the hrg for the 3rd summ J motion, P filed an affidavit stating that he now thought the time for the job could be completed w/n one year. This conclusion was in direct conflict w/ his own prior testimony given an answer to interrogatories & in his deposition. It also does not comply w/ IRCP 56e … An adverse party must answer in detail as specific of that of the moving paper setting forth material facts as he believes them to be. If he does not so answer under oath, summ J shall be entered against him. An affidavit NOT made on the affiant's personal knowledge but on his conclusion is inadmissiable to show a genuine issue of material fact |
Conclusion | No geniune issue of fact… Summ j entered below is affirmed. Costs to respondent. |
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