Contracting Part II

Earlier in the year an article was written as Part I of contracting; pointed towards businesses who rely on self-drafted contracts. For review, generally contracts are a set of promises, made orally or written, that the law allows a remedy if the promises are breached. The base law of contracting is divided between the Sale of Goods (Uniform Commercial Code Article 2) and common law (or law of the courts).

The Sale of Goods Contracts.
Sales are those contracts that transfer title of movable things, or goods. Therefore, the sale of goods do not include real estate, services, construction contracts, or other intangible things. Article 2 of the Uniform Commercial Code (UCC A2) governs remedies, breaches, warranties, and other aspects of sales involving goods.

The Non-Good Contracts.
Common law governs contracts of everything other than the sale of goods.

Hybrid Contracts.
Where there are services involving goods, such as a mechanic working on a car, the courts will decide which law to apply, though the assistance of several rules used to determine which law to apply (common law or UCC A2). Often times the law applied won’t change the outcome and no decision of law must be made.

The Statute of Frauds.
Most (actual) contracts that are oral will be enforceable. However, there are some contracts that must be written, due to its’ nature. The writing requirement of the statute of frauds does not in actuality require that the contract is written, merely that the material terms are written and signed.  The following agreements must all be evidenced by a writing:

  • An executor’s promise to personally pay the debts of an estate.
  • Suretyship or a promise to pay the debt of another.
  • A promise in consideration of Marriage.
  • A promise creating an interest in land.
  • An agreement that by its terms cannot be performed within one year.
  • The sale of goods in Michigan for $1000 or more.

When contracting in Michigan be certain that you follow the rules of contracting precisely, failure to do so often results in high cost to defend, resolve, or remedy.