Question

Lake House. Harry has two houses, a house on the lake and a house in town. Rebecca wants to buy the house on the lake. Harry and Rebecca orally agree that Rebecca will buy the house on the lake for $300,000. Harry hurriedly writes out a contract providing that he would sell "his house" to Rebecca for $300,000. Harry signs the top of the document. Rebecca does not sign at all. No merger clause is included in the contract. Harry backs out of the contract, and Rebecca sues him. He tells the judge that the statute of frauds is not satisfied because he did not sign the document at the end and because Rebecca did not sign at all. He also tells the judge that, at any rate, the agreement referred to the house in town, not the house on the lake; and that under the parol evidence rule, he had the right to identify the correct house. Which of the following is true regarding Harry's assertion that the statute of frauds is not satisfied because Rebecca did not sign the document?
1)Is there an enforceable agreement? Which elements of an enforceable agreement exist?
2)Why or why not is there an enforceable agreement? Can Rebecca sue him?
3)Can Harry testify about the $20,000 gift? Why or why not?

Answer 1

Answer:

1. Yes

2. Yes

3. No

Explanation:

1 . Yes, there is an enforceable agreement between the seller (harry) and the buyer (Rebecca).

Elements of an enforceable agreement that exist between the contracting parties are:

Offer: Harry makes an offer to sell the house on the lake to Rebecca.

Acceptance: Rebecca accepts to buy the house on the lake from Harry for a consideration.

Consideration: Both the parties agree for a consideration i.e. $300,000.

Competency: Both the parties are competent and have capacity to enter into a contract.

Lawful purpose: Agreement between the parties was to transfer the ownership of the property from seller to the buyer. Hence, it is a lawful purpose.

2.Yes, it is an enforceable agreement because even though few essential terms were missing in the written agreement, the seller Rebecca would be allowed to prove her intention under due to the fact that the contract did not include merger clause. The court will look into the evidences or oral negotiations between the parties before entering into the contract.

The following essential elements were missing in the agreement at the time of entering into a contract:

The agreement should contain essential terms of the contract: name of the parties, subject matter, consideration.

Signature of both the parties.

Harry has only mentioned to sell “his house” and did not specify which house. This ‘issue’ can be resolved by parol evidence rule – because the agreement did not contain ‘no merger clause’ the court may allow to look outside the agreement in order to identify the intention of the parties. Therefore, Rebecca, under parol evidence rule, will be allowed by the court to identify the subject matter in case of the ambiguity.

Moreover, only the seller i.e. Harry signed the contract and not both the parties. This issue can be resolved by parol evidence rule. The court will look into the intention of the parties at the time of entering into the contract and hence, can make out that Rebecca wanted to buy the house on the lake.

Rebecca, therefore, can sue Harry.

3 . No, Harry cannot testify about the $25,000 gift because of the operation of the parol evidence rule. According to the parol evidence rule, any oral or written agreement (oral in this case) between the parties will not be taken into consideration that contradicts or varies the written contract.

Hence, Harry cannot testify about the $25,000 housewarming gift.