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Chapter 10

BU231 Chapter Notes - Chapter 10: Wayne Gretzky, The Motor, Oral Contract


Department
Business
Course Code
BU231
Professor
Valerie Irie
Chapter
10

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1
READING NOTES
CHAPTER 10: The Requirement of Writing
There are also serious legal consequences for failing to keep written records of
contract. The Statute of Frauds and Consumer Protection Act in Ontario require
that contracts be put into writing to be enforceable.
Distinction Between Substance and Form
Benefits of a written record
oThe substance – the terms of a contract – may have a variety of physical
forms (written), or even no form at all (in the minds of the parties)
Categories of form
Entirely oral
Some terms are oral, others written
Entirely written, may be spread across multiple documents
oThe terms of a contract remain the same whatever from they take, but its
always best to have them in written form
Words are slippery, need to determine what parties agreed to,
words have different interpretations
Statute of Frauds
oDesigned originally in England in 1677, statute required written evidence
to eliminate perjured testimonies in lawsuits concerning land
oMade judges unhappy from the beginning
Since been replaced in BC and Manitoba
Consequences of the Statute of Frauds
oEffect of the statute is in rendering certain types of contracts
UNENFORCEABLE (loss falls where it lies), unless they are in writing…
meaning that neither party may sue on contract GRRR!
oResult is that parties to oral contracts are often able to avoid their
obligations solely because the contracts fall within confines of the statute
while perfectly valid in every other respect
oIt is for this reason that courts have tried to limit the application of the
statute wherever possible
oEg. Guy buys girl car, fixed up her house, lives with her for four years…
Problem was that he understood they were long term until she
dumped him…
When he wanted his stuff back there was no contract, (o/a/c/i) nor
was there a written cohabitation agreement which would’ve saved
his ass, see Agreements in Consideration of Marriage
Types of Contract Affected by Statute of Frauds (see explanations below)
Executor’s Promise
Guarantor
Agreements in Consideration of Marriage

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Interest in Land
Agreements Not to Be Performed by Either Party Within a Year
Executor’s Promise
oIf you want the executor to pay for something him/herself then you need it
in writing, otherwise you spend the deceased person’s money until nothing
is left
Guarantor vs. Indemnity
oIn case of a guarantor a bank trying to collect on their debt needs to
exhaust remedies on the first guy before going after the guarantor
Needs to be written for the Statute of Frauds
oIn contrast to this, a promise to indemnify someone makes you a primary
debtor, whereby the bank can go for you or your friend first
Does not need to be written, outside statute
Agreement made in Consideration of Marriage
oDesigned not with respect to the marriage itself, rather to the bringing
together of assets as common property
oReplaced in Ontario with regulations like the Cohabitation agreements
which are long term and sticking with tradition…. must be in writing!
Concerning Interest in Land
oLand is immobile, permanent and indestructible, hence it is essential to
have verified written records affecting interests in land available over
many years
oTo this end, we have a system of public records in order to determine
claim
oTwo interesting stipulations:
Agreements to build a house or obtain room and board are outside
statute
Agreements for leasing land or houses are within the statute
Eg. Oral agreement to rent is unenforceable, while an oral
agreement to repair the apartment is enforceable
oEg. Wayne Gretzky
Final agreement in a long series of agreements was agreed to orally
rather than written, because of this the contract was considered
unenforceable
Agreement not to be performed by either party within one year
oParliament decided that a one year limit is the extent of trust on memory
Thus, oral applies for anything under a year, must have written for
anything over a year
oIf a contract is designed to extend beyond one year then it is governed by
the statute
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