[k1zuna]

On December 1, Gem orally contracted with Mason for Mason to manage Gem’s restaurant for one year starting the

following January 1. They agreed that Gem would pay Mason $40,000 and that Mason would be allowed to continue

to work for Gem if “everything worked out.” On June 1, Mason quit to take a better paying job, alleging that the

contract violated the statute of frauds. What will be the outcome of a suit by Gem for breach of contract?

a. Gem will win because the contract was for services not goods.

b. Gem will lose because the contract could not be performed within one year.

c. Gem will lose because the contract required payment of more than $500.

d. Gem will win because the contract was executory.

Explanation

Choice “b” is correct. As a general rule, under the statute of frauds, a contract that cannot be performed within one

year from the time of its making is unenforceable absent proof of its material terms in a writing signed by the party

being sued. Here, the contract by its terms could not be performed within a year from the time it was made and Gem

cannot prove the material terms of the contract through a writing signed by Mason. Therefore, Gem would lose its

breach of contract action.

====================================================================

Why does Becker say that the contract cannot be performed within 1 year? Doesn’t the contract explicitly say it’s for 1 year? so it doesn’t have to be in writing to be enforceable????????????

FAR - Passed
AUD - Passed
BEC - Passed
REG - 8/22/2013

[mangos]

I hate the wording of these questions too.

A contract is required if performance can't be performed WITHIN one year.

So I guess anything that is 1 year OR more will require a contract.

FAR (5/07/13): 96

[k1zuna]

mangos, what would I do without you? 🙂

FAR - Passed
AUD - Passed
BEC - Passed
REG - 8/22/2013

[MCLKT]

The one year requirement is as of the agreement date, not when work begins. So, it would have to be complete before 12/1 the following year.

OR if the agreement had been for one year starting 12/1 then Gem would have won.

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[k1zuna]

@MCLKT, the question didn't say when the work will end/be performed… so how do we know? I'm confusing myself

FAR - Passed
AUD - Passed
BEC - Passed
REG - 8/22/2013

[barelystayingsane]

The work will be performed “for one year starting the following January 1.”

[Gerg, CPA]

k1zuna, it says that the Mason would manage the restaurant for a year, starting on January 1st. So Mason's work will end on December 31st. But the agreement was on December 1st, which is when the year starts for the statute

FAR - 1/26/2012 - PASSED (78, but Lost credit), re-do 11/27/2013 - PASSED (87)!
AUD - EPIC FAIL, 71, 69; 68; 5/25/2013 - PASSED (85)!
REG - 10/1/2012 - 72; 7/1/2013 - 73 UGH, 10/1/2013 - PASSED (85)!
BEC - 2/28/2013 - PASSED (82)!
Licensed CPA!

Used Becker self-study materials (just this for FAR original & REG #1), WileyTestBank, NINJA notes/audio, and Roger cram course for AUD #5, REG #3 & FAR reboot. CPA!

[k1zuna]

ok got it. Thanks guys

FAR - Passed
AUD - Passed
BEC - Passed
REG - 8/22/2013

[Anonymous]

If I remember correctly from law school, the contract must be able to be completed within 1 year. Thus the contract must be able to be completed by December 1 of the next year. So, if M's employment starts one moth after the agreement was reached, by definition when he completes his contract one year later it “has to be past the one year from the previous Dec. 1st. Thus outsidethe SOL.

[Author]

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