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Elements of Common Contract Actions

1. Generally

A contract is defined generally as an agreement between two or more persons upon sufficient consideration either to do or not to do a particular act. Stated another way, there must be an offer and an acceptance accompanied by valuable consideration. These principles govern contract formation.

An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. Restatement (Second) of Contracts § 24 (1981). The offer identifies the bargained for exchange and creates a power of acceptance in the offeree. Restatement (Second) of Contracts § 29 (1981). An acceptance is the exercise of power conferred by an offer by performance of some act.

Generally, a contract may be either oral or written. In some instances the law requires the contract to be in writing in order to be enforceable. For example, if an oral contract is incapable of performance within a year or if it is an oral contract for the sale of land, it is barred by the Statute of Frauds. (See § 32-3-10).

2. Parole Evidence Rule

The parol evidence rule states that "where the terms of a written instrument are unambiguous, clear and explicit, extrinsic evidence of statements made contemporaneously with or prior to its execution are inadmissible to contradict, vary or explain its terms." Ray v. South Carolina Nat'l. Bank, 281 S.C. 170, 314 S.E.2d 359 (1984). In certain situations of ambiguity of terms, parol evidence may be used to explain the terms of the agreement.

3. Defenses

The following comprises a list of some but not all the defenses available in contract actions:

a) Capacity
The parties to the contract must be competent to make a contract, and not incapacitated by mental incompetency, infancy, or the like.

b) Statute of Frauds
Any contract for an interest in land or any agreement that is not to be performed within one year must be in writing and signed by the party against whom it is seeking to be enforced. (§ 32-3-10(4)). Failure to put such a contract in writing renders it void. (§ 27-35-20). Moreover, a contract required to be in writing by the Statute of Frauds cannot be orally modified. Windham v. Honeycutt, 279 S.C. 109, 302 S.E.2d 856 (1983) (court held evidence of oral modification of the real estate contract as violative of the Statute of Frauds).

c) Failure of Consideration
A promise not supported by any consideration (defined as some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, or loss suffered or undertaken by another) does not amount to an enforceable contract. There is a failure of consideration when one party has not received the value, performance or promise of the other party, nor has he undertaken or suffered any loss or encumbrance.

d) Caveat Emptor (Let the buyer beware)
The purchaser of goods is charged with the duty to examine and judge the fitness of such goods prior to purchase. If the seller has not warranted the condition of the goods, or if the contract of sale included a clause that the purchaser would accept the goods "as is," the seller can invoke the doctrine of caveat emptor as a defense to a complaint by the purchaser that the goods are defective. However, caveat emptor cannot protect a seller who is guilty of fraud in concealing the defects from the purchaser. MacFarlane v. Manley, 274 S.C. 392, 264 S.E.2d 838 (1980).

4. Uniform Commercial Code

The Uniform Commercial Code (UCC) is the body of rules contained in Title 36 of our codes which was established for the purpose of governing commercial transactions (including sales and leasing of goods, transfer of funds, commercial paper, bank deposits and collections, letters of credit, bulk transfers, warehouse receipts, bills of lading, investment securities, and secured transactions).