Transcript Part 3 – The Law of Contract

Part 3 – The Law of Contract
Chapter 10
The Requirements of
Form and Writing
Prepared by Douglas Peterson,
University of Alberta
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Overview
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Formal and Simple Contracts
The Statute of Frauds
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Executors and Administrators
Guarantees
Contracts concerning an interest in land
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Overview
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Requirements for the Written Memo
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Parol evidence
Condition precedent
Implied terms
Collateral agreements
Subsequent agreements
Reduction to Writing
Sale of Goods Act
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Formal and Simple Contracts
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2 general classes of contracts
1.
Formal (derives its validity from its form)
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2.
Not common
Informal (simple) (most common)
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Implied
Oral
written
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Formal and Simple Contracts
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Power of Attorney
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A legal document usually signed under seal in which a
person appoints another to act as his or her attorney to
carry out the contractual or legal acts specified in the
document.
Example of a formal contract
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Statute of Frauds
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Characteristics
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Introduced from the UK into Canada as a colony
Still exists in some provinces, in others it has been
repealed but incorporated into other statutes
Certain contracts if not in writing are not enforceable
Still valid and existing contracts for other purposes (not
void or prohibited)
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Types of Contracts
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Following contracts covered by the Statute of
Frauds
1.
2.
3.
4.
Contracts by Executors and Administrators
Guarantees
Assumed liability for a tort
Contracts concerning an interest in land
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Contracts by Executors/Administrators
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Executor or administrator of an estate is not generally
liable for the debts of the testator (the estate)
Can personally assume such debts but only if such
contract is in writing
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Guarantees
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Guarantee
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A collateral promise (in writing) to answer or the debt of
another (the principal debtor) if the debtor should
default in payment
3 parties in a guarantee
 Creditor
 Debtor (Primary liability)
 Guarantor (Secondary liability)
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Guarantees
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Consideration required to enforce the guarantee
Alberta (Alberta Guarantees Acknowledgment Act) the
guarantee must also be notarized
Must distinguish between guarantees and indemnities
 Guarantees must be in writing
 Indemnities need not be in writing
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Assumed Liability: Tort
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Concept
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Any agreement whereby a third party promises to
answer for the tort of another
 Must be in writing
 Signed by the party to be charged
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Land Contracts
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Land Contracts
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Contracts concerning an interest in land
 Vague concept
 Includes sale of land or lease of land
 Does not include those things ancillary to the land or
remote (repairs, renovations, etc)
 Does not include room and board contracts
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Land Contracts
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Part Performance (equitable doctrine)
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A doctrine that permits the courts to enforce an
unwritten contract concerning land where certain
conditions have been met
Requirements
1. Acts performed relate to land in question
2. Lack of a written memo would perpetuate a fraud and a
hardship on the person
3. Agreement must relate to an interest in land
4. Agreement must be valid and enforceable apart from the
requirement of writing and verbal evidence must be
available to establish the existence of the agreement
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Requirements for a Written Memorandum
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Requirements
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Need not be in a formal document
Need all terms of contract (3 P’s: parties, property,
price)
Can be an exchange of letters – 2 letters together can
constitute an agreement in writing
Must be signed by the party against whom it is being
enforced
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Parol Evidence Rule
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Rule
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A rule that prevents a party from introducing evidence
that would add to or contradict terms of a contract
Limits the kinds of evidence that may be used to prove
terms of a contract
Cannot contradict a clear unambiguous contract
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Exceptions to the Parol Evidence Rule
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Condition Precedent
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A condition that must be satisfied before a contract may
come into effect
Contract is in a state of suspension until the condition is
met, not met, or waived by the party who inserted it
If the condition is not met then the contract is cancelled
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Exceptions to the Parol Evidence Rule
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Doctrine of Implied Term
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The insertion by the court of a standard or customary
term omitted by the parties when the contract was
prepared
Implied terms cannot conflict with express terms
Usually implied in order to implement the agreement
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Exceptions to the Parol Evidence Rule
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Collateral Agreement
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An agreement that has its own consideration, but
supports another agreement
Could alter or add to the main agreement
Courts usually don’t allow unless one can prove it exists
as a separate and complete agreement with its own
consideration
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Exceptions to the Parol Evidence rule
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Common Factor
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All exceptions to the parol evidence rule; the modifying
term precedes, or is concurrent with the formation of
the written agreement
Subsequent Agreement
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An agreement made after a written agreement that
alters or cancels the written agreement
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Reduction to Writing
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Negotiations
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Issue of when a contract agreed to orally becomes
enforceable if it is never reduced to writing
Issue of interim enforceability between time of oral
agreement and being put into writing
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Sale of Goods Act
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Writing Requirement
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Certain transactions over a certain value if not in writing
are unenforceable
Methods of enforcement (without written requirement)
 Payment of a deposit
 Acceptance of delivery of part of the goods
 Giving of something “in earnest” (such as a trade in)
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Summary
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Formal or Informal Contracts
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Most contracts are informal
 May be in writing, oral or implied
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Statute of Frauds
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Certain type of contracts must be in writing or they are
unenforceable
Parol Evidence Rule
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Several exceptions exist
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