Chapter 18 and 19 Notes
Chapter 18 and 19 Notes ACCT 324 - 002
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This 3 page Class Notes was uploaded by Kendall Davis on Friday September 9, 2016. The Class Notes belongs to ACCT 324 - 002 at University of South Carolina taught by Julius David Johnson (P) in Fall 2016. Since its upload, it has received 7 views. For similar materials see Survey of Commercial Law in Accounting at University of South Carolina.
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Date Created: 09/09/16
Chapter 18 Notes September 9, 2016 Contracts Subject to Statute of Frauds Contracts that have to be in writing acronym: MY LEGS: Marriage: prenuptial agreements Year: contract that cannot be performed fully in one year has to be in writing; *lifetime contracts do not have to be in writing (because you could die, lifetime is not guaranteed so it is possible to be done in a year); only if the contract is impossible to be performed within a year Land: any contract for the sale or purchase of land Executor: contracts in which the executor promises to pay the debt of an estate with the executor’s own money Goods: contracts for the sale of goods totaling more than $500 Suretyship: paying for the debt of another o Main Purpose Document: the only exception is when the person who is paying is only doing it to benefit themselves Writing requirements for Statute of Frauds o Common Law written contract must clearly indicate: Parties to contract Subject matter/purpose of agreement Consideration given by both parties Significant terms (price, quantity, etc.) Signature of party plaintiff seeks to hold responsible under contract (i.e. signature of defendant) o Uniform Commercial Code (UCC) Written contract for sale of goods must include: Quantity of goods Signature of defendant o No specific form that the writing has to take Can be in separate documents; a memo; even an email Exceptions to Statute of Frauds Writing Requirement o Admission: statement made in court, under oath, or at some state during a legal proceeding in which defendant admits that oral contract existed (even though contract was originally required to be in writing) o Partial Performance Ex. if parties agree to exchange land for money; not in writing but one party has “partially performed” and given money and started making changes to the land; similar to promissory estoppel o Promissory Estoppel: Legal enforcement of otherwise enforceable contract, due to party’s detrimental reliance on contract Ex. someone moving out to California with the oral promise of a job o Miscellaneous exceptions recognized by Uniform Commercial Code (UCC): Examples—Oral contracts between merchants, oral contracts for customized (“specially manufactured”) goods Ex. shirts with company logo/monogram Parole Evidence Rule: common law rule stating that oral evidence of agreement made before or contemporaneously with written agreement is inadmissible o Lends stability, predictability and integrity to written contracts o Exceptions If contracts are subsequently modified If contracts conditioned on orally agreedupon terms If contracts are not final, part written and part oral If there are ambiguous terms Incomplete contracts, left out something Obvious typographical errors; ex. spelled out different number than typed numerically Void or voidable contracts; ex. minors Evidence of prior dealings of usage of trade Integrated Contracts: written contracts within statute of frauds intended to be complete and final representation of parties’ agreement o General rule: anything previously discussed doesn’t matter unless its in the contract Chapter 19 Third Party Rights Obligor: Contractual party who owes duty to other party in privity of contract Obligee: Contractual party owed duty from other party in privity of contract o In bilateral contracts, both parties are both an obligee and obligor Assignment: rights; transfer of rights under a contract to a third party Assignor: party to contract who transfers his/her rights to a third party Assignee: party (not in privity of contract) who receives transfer of rights to a contract o Most contract rights are assignable o Except: Rights that are personal in nature Rights that would increase obligor’s risks/duties Rights in a contract that, by its terms, expressly forbids assignments Rights whose assignment prohibited by law/public policy Delegation: Duty; transfer of duty under a contract to a third party Delegator: party to a contract who transfers his/her duty to third party Delegatee: party (not in privity of contract) who receives transfer of duty to a contract Contractual duties that cannot be delegated o Duties personal in nature: ex. If you wanted Van Gogh to paint your painting, he cannot delegate it to someone else o Duties resulting in performance substantially different from that which obligee originally contracted (i.e. delegates performance will vary significantly from delegator’s); ex. a lawyer with years of experience cannot delegate his duties to a new lawyer o Duties with an antidelegation clause Third Party Beneficiary Contracts: o Intended Beneficiary: o Promisor: party to contract who made promise that benefits third party o Promisee: party to contract who owes something to promisor in exchange o Example: when Joe promises the professor that he will pay his debt at bar none if the professor cuts his grass Joe: promisor Professor is promisee Bar none is intended (creditor) beneficiary o Donee beneficiary: Ex. if you name your wife your beneficiary for your life insurance policy, your wife is your donee beneficiary o Vesting: maturing of rights, such that a party can legally act on the rights o Incidental beneficiary: third party who unintentionally gains benefit from contract between other parties. Ex. if you want to build a house at the beach on a lot that is trashed, and enter into a contract to build a house because the benefit they would receive of their property value going up was incidental