Post on 16-Dec-2015
Prepared by Douglas Peterson, Prepared by Douglas Peterson, University of AlbertaUniversity of Alberta 10-10-11
Part 3 – The Law of ContractPart 3 – The Law of Contract
Chapter 10Chapter 10The Requirements of The Requirements of
Form and WritingForm and Writing
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OverviewOverview
Formal and Simple ContractsFormal and Simple Contracts The Statute of FraudsThe Statute of Frauds
Executors and AdministratorsExecutors and Administrators GuaranteesGuarantees Contracts concerning an interest in landContracts concerning an interest in land
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OverviewOverview
Requirements for the Written MemoRequirements for the Written Memo Parol evidenceParol evidence Condition precedentCondition precedent Implied termsImplied terms Collateral agreementsCollateral agreements Subsequent agreementsSubsequent agreements
Reduction to WritingReduction to Writing Sale of Goods ActSale of Goods Act
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Formal and Simple ContractsFormal and Simple Contracts
2 general classes of contracts2 general classes of contracts1.1. Formal (derives its validity from its form)Formal (derives its validity from its form)
Not commonNot common
2.2. Informal (simple) (most common)Informal (simple) (most common) ImpliedImplied OralOral writtenwritten
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Formal and Simple ContractsFormal and Simple Contracts
Power of AttorneyPower of Attorney A legal document usually signed under seal in which a A legal document usually signed under seal in which a
person appoints another to act as his or her attorney to person appoints another to act as his or her attorney to carry out the contractual or legal acts specified in the carry out the contractual or legal acts specified in the document.document.
Example of a formal contractExample of a formal contract
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Statute of FraudsStatute of Frauds
CharacteristicsCharacteristics Introduced from the UK into Canada as a colonyIntroduced from the UK into Canada as a colony Still exists in some provinces, in others it has been Still exists in some provinces, in others it has been
repealed but incorporated into other statutesrepealed but incorporated into other statutes Certain contracts if not in writing are not enforceableCertain contracts if not in writing are not enforceable Still valid and existing contracts for other purposes (not Still valid and existing contracts for other purposes (not
void or prohibited)void or prohibited)
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Types of ContractsTypes of Contracts
Following contracts covered by the Statute of FraudsFollowing contracts covered by the Statute of Frauds1.1. Contracts by Executors and AdministratorsContracts by Executors and Administrators
2.2. GuaranteesGuarantees
3.3. Assumed liability for a tortAssumed liability for a tort
4.4. Contracts concerning an interest in landContracts concerning an interest in land
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Contracts by Executors/AdministratorsContracts by Executors/Administrators
Executor or administrator of an estate is not generally Executor or administrator of an estate is not generally liable for the debts of the testator (the estate)liable for the debts of the testator (the estate)
Can personally assume such debts but only if such Can personally assume such debts but only if such contract is in writingcontract is in writing
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GuaranteesGuarantees
GuaranteeGuarantee A collateral promise (in writing) to answer or the debt of A collateral promise (in writing) to answer or the debt of
another (the principal debtor) if the debtor should another (the principal debtor) if the debtor should default in paymentdefault in payment
3 parties in a guarantee3 parties in a guarantee CreditorCreditor Debtor (Primary liability)Debtor (Primary liability) Guarantor (Secondary liability)Guarantor (Secondary liability)
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GuaranteesGuarantees
Consideration required to enforce the guaranteeConsideration required to enforce the guarantee Alberta (Alberta Guarantees Acknowledgment Act) the Alberta (Alberta Guarantees Acknowledgment Act) the
guarantee must also be notarizedguarantee must also be notarized Must distinguish between guarantees and indemnitiesMust distinguish between guarantees and indemnities
Guarantees must be in writingGuarantees must be in writing Indemnities need not be in writingIndemnities need not be in writing
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Assumed Liability: TortAssumed Liability: Tort
ConceptConcept Any agreement whereby a third party promises to Any agreement whereby a third party promises to
answer for the tort of anotheranswer for the tort of another Must be in writingMust be in writing Signed by the party to be chargedSigned by the party to be charged
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Land ContractsLand Contracts
Land ContractsLand Contracts Contracts concerning an interest in landContracts concerning an interest in land
Vague conceptVague concept Includes sale of land or lease of landIncludes sale of land or lease of land Does not include those things ancillary to the land or Does not include those things ancillary to the land or
remote (repairs, renovations, etc)remote (repairs, renovations, etc) Does not include room and board contractsDoes not include room and board contracts
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Land ContractsLand Contracts
Part Performance (equitable doctrine)Part Performance (equitable doctrine) A doctrine that permits the courts to enforce an A doctrine that permits the courts to enforce an
unwritten contract concerning land where certain unwritten contract concerning land where certain conditions have been metconditions have been met
RequirementsRequirements1.1. Acts performed relate to land in questionActs performed relate to land in question2.2. Lack of a written memo would perpetuate a fraud and a Lack of a written memo would perpetuate a fraud and a
hardship on the personhardship on the person3.3. Agreement must relate to an interest in landAgreement must relate to an interest in land4.4. Agreement must be valid and enforceable apart from the Agreement must be valid and enforceable apart from the
requirement of writing and verbal evidence must be requirement of writing and verbal evidence must be available to establish the existence of the agreementavailable to establish the existence of the agreement
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Requirements for a Written MemorandumRequirements for a Written Memorandum
RequirementsRequirements Need not be in a formal documentNeed not be in a formal document Need all terms of contract (3 P’s: parties, property, Need all terms of contract (3 P’s: parties, property,
price)price) Can be an exchange of letters – 2 letters together can Can be an exchange of letters – 2 letters together can
constitute an agreement in writingconstitute an agreement in writing Must be signed by the party against whom it is being Must be signed by the party against whom it is being
enforcedenforced
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Parol Evidence RuleParol Evidence Rule
RuleRule A rule that prevents a party from introducing evidence A rule that prevents a party from introducing evidence
that would add to or contradict terms of a contractthat would add to or contradict terms of a contract Limits the kinds of evidence that may be used to prove Limits the kinds of evidence that may be used to prove
terms of a contractterms of a contract Cannot contradict a clear unambiguous contractCannot contradict a clear unambiguous contract
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Exceptions to the Parol Evidence RuleExceptions to the Parol Evidence Rule
Condition PrecedentCondition Precedent A condition that must be satisfied before a contract may A condition that must be satisfied before a contract may
come into effectcome into effect Contract is in a state of suspension until the condition is Contract is in a state of suspension until the condition is
met, not met, or waived by the party who inserted itmet, not met, or waived by the party who inserted it If the condition is not met then the contract is cancelledIf the condition is not met then the contract is cancelled
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Exceptions to the Parol Evidence RuleExceptions to the Parol Evidence Rule
Doctrine of Implied TermDoctrine of Implied Term The insertion by the court of a standard or customary The insertion by the court of a standard or customary
term omitted by the parties when the contract was term omitted by the parties when the contract was preparedprepared
Implied terms cannot conflict with express termsImplied terms cannot conflict with express terms Usually implied in order to implement the agreementUsually implied in order to implement the agreement
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Exceptions to the Parol Evidence RuleExceptions to the Parol Evidence Rule
Collateral AgreementCollateral Agreement An agreement that has its own consideration, but An agreement that has its own consideration, but
supports another agreementsupports another agreement Could alter or add to the main agreementCould alter or add to the main agreement Courts usually don’t allow unless one can prove it exists Courts usually don’t allow unless one can prove it exists
as a separate and complete agreement with its own as a separate and complete agreement with its own considerationconsideration
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Exceptions to the Parol Evidence ruleExceptions to the Parol Evidence rule
Common FactorCommon Factor All exceptions to the parol evidence rule; the modifying All exceptions to the parol evidence rule; the modifying
term precedes, or is concurrent with the formation of term precedes, or is concurrent with the formation of the written agreementthe written agreement
Subsequent AgreementSubsequent Agreement An agreement made after a written agreement that An agreement made after a written agreement that
alters or cancels the written agreementalters or cancels the written agreement
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Reduction to WritingReduction to Writing
NegotiationsNegotiations Issue of when a contract agreed to orally becomes Issue of when a contract agreed to orally becomes
enforceable if it is never reduced to writingenforceable if it is never reduced to writing Issue of interim enforceability between time of oral Issue of interim enforceability between time of oral
agreement and being put into writingagreement and being put into writing
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Sale of Goods ActSale of Goods Act
Writing RequirementWriting Requirement Certain transactions over a certain value if not in writing Certain transactions over a certain value if not in writing
are unenforceableare unenforceable Methods of enforcement (without written requirement)Methods of enforcement (without written requirement)
Payment of a depositPayment of a deposit Acceptance of delivery of part of the goodsAcceptance of delivery of part of the goods Giving of something “in earnest” (such as a trade in)Giving of something “in earnest” (such as a trade in)
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SummarySummary
Formal or Informal ContractsFormal or Informal Contracts Most contracts are informalMost contracts are informal
May be in writing, oral or impliedMay be in writing, oral or implied Statute of FraudsStatute of Frauds
Certain type of contracts must be in writing or they are Certain type of contracts must be in writing or they are unenforceableunenforceable
Parol Evidence RuleParol Evidence Rule Several exceptions existSeveral exceptions exist