Bus-115 (Business Law): Chapter 11 Guide
Contractual elements: Capacity, legality and written contracts
Learning Objectives
After reading this chapter, students should be able to accomplish the following objectives:
- Identify the goals of the Statute of Frauds.
- Identify those contracts that must be in writing.
- List the information that must be in the writing.
- Explain the Standard Construction Rule.
- Discuss the Parol Evidence Rule.
- Explain the exceptions to the Parol Evidence Rule.
- Explain the Best Evidence Rule.
- Discuss the Equal Dignities Rule.
- Explain the problems associated with cyber-commerce.
- Outline the latest cyber-commerce statutes.
Major Concepts
11-1. The Statute of Frauds
The Statutes of Frauds outlines six types of contracts that must be in writing to be enforceable. These include contracts that cannot be completed within one year, contracts transferring real property rights, contracts for the sale of goods of $500 or more, certain contracts entered by executors and administrators, contracts by one party to pay a debt incurred by another party, and contracts in consideration of marriage.
11-2. Legal Rules for Written Contracts
The legal system has developed certain basic criteria that make the construction and interpretation of written contracts consistent. These four criteria are (1) the standard construction rule, (2) the parol evidence rule, (3) the best evidence rule, and (4) the equal dignities rule.
11-3. Formalities of Construction
Certain formalities are followed in the formation of contracts. Written agreements need not be signed by both parties. However, any agreement signed by only one party would obligate only that party. Facsimile signatures are allowed on a contract if the contract states that such signatures are valid.
Some states have statutes allowing facsimile signatures. Persons who are illiterate usually sign written contracts with an X. Several states have begun to revise the basic requirements for the written expression of (1) contracts for the sale or lease of residential real estate and (2) real property construction projects, especially involving private homes.
