Business Law and the Legal Environment 7th Edition by Jeffrey Beatty,Susan Samuelson

Exercise 2

YOU BE THE JUDGE WRITING PROBLEM Because of his success in a big case, a lawyer named Melbourne promised his assistant, Barbara, a large bonus. After the case settled, Melbourne met with Barbara to discuss when and how much he would pay her. In the conversation that she secretly recorded, Melbourne agreed to pay Barbara $1 million, plus $65,000 for a luxury automobile. Payments were to be made in monthly installments of $10,000, for 10 years. Melbourne also agreed to sign a document confirming his promise. Barbara's lawyer drafted the writing, but Melbourne never signed it. He did pay nine monthly installments, along with an extra payment of $100,000. Did Melbourne and Barbara have a valid contract? Argument for Barbara: The Statute of Frauds exists to prevent fraud. The fear that a plaintiff would lie about a contract is not an issue here. We know what Melbourne agreed to do because we heard him. Argument for Melbourne: If there was an agreement, it could not have been performed in one year because it had ten years' worth of installment payments.