Contracts 1 | CH 4 | Casebook & Quizzing Qs

Two parties orally form a contract for the sale of land, and memorialize the contract in a properly structured but unsigned writing. The buyer pays the seller a 10% down payment in cash. Which of the following events will most likely render the contract specifically enforceable [or enforceable in an action for specific enforcement] against the seller? C (A) The buyer signed the writing. (B) The buyer made an additional 10% payment against the purchase price. (C) With the seller's consent, the buyer took possession of the property, built a house, and occupied the house. (D) On a sound recording, the seller states to the buyer that he will sell the property in accordance with the terms of the writing.

C Issue: The problem tests on exceptions to the statute of frauds for the sale of land. Rule: Restatement (Second) of Contracts § 129 (1981) A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the statute of frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement. Analysis: Here, the contract is within the statue because it involves the sale of an interest in property. However, there is no memorandum signed by the party against whom enforcement is sought—the seller. Restatement (Second) of Contracts § 129 provides an exception that is based on the actions that the buyer took in reliance of the oral agreement. (Note: The exception is often referred to as the "part performance" exception for land sale contracts; however, the term is a misnomer. The basis of the relief is on actions in reliance taken by the aggrieved party that are not part of any duties spelled out in the contract.) Here, Choice C is the best answer. The buyer's actions in reliance—taking possession, building a house, and occupying it—together with the payment of the purchase provide evidence that the contract exists. Moreover, the equitable relief is justified on the grounds of the buyer's reliance to his detriment. It is similar to the doctrine of promissory estoppel in Restatement (Second) of Contracts § 90. This problem is nearly identical to Illustration #3 in Restatement (Second) of Contracts § 129. The events described in Choices A, B, and D do not remove a land sale contract from the statute of frauds. The buyer's signature on the writing would render the contract enforceable by the seller, not by the buyer. Payment of part of the purchase price alone will not satisfy the reliance exception. Additional action is required. Choice D refers to a seller who affirms the contract by sound recording. Such a thing might, someday, qualify as a 'signature,' but it does not yet do so. Choice C refers to the kind of part performance that matters, and Choice C is correct.

Mariah is a law student and is struggling to make ends meet. She tells her uncle Morris that the bookstore will not let her purchase books on credit anymore since she has not made payments for the past two months. She needs her books for this semester as the first class is approaching. The owner of the bookstore knows Uncle Morris as they are old friends, and he knows that Morris is quite wealthy. Morris calls the owner and says, "If you will let my niece Mariah buy her books on credit, I promise that if she does not pay her bill with you by the end of the academic year, I will pay you the balance." The owner of the bookstore agrees. Morris writes a quick thank you note to the owner on his personal stationary that includes his initials at the top of the card. The note says: "Thank you for agreeing to continue to sell on credit to my niece in exchange for my promise to honor her debts." He neglects to sign the note. If the bookstore sues to enforce Morris's promise what is the likely outcome if Morris raises the Statute of Frauds as a defense, assuming the applicable state has a Statute of Frauds that mirrors the Restatement (Second) of Contracts? (A) The court will deny enforcement of the oral contract because there is no writing signed by Morris that memorializes the contract and this type of contract falls within the Statute of Frauds. (B) The court will dismiss such a defense because the Statute of Frauds does not apply to Morris's promise. (C) The court will dismiss Morris's defense, because Morris's thank you note meets the requirements of a signed written memorandum. (D) The court will determine that the Statute of Frauds applies and was not satisfied but will dismiss the defense because the store partly performed by selling books to Mariah before Morris called.

C Restatement (Second) of Contracts §130 brings promises to answer for the debts of another (suretyships) into the Statute of Frauds. Morris promises to pay the debt of Mariah and becomes a surety. The contract is within the Statute of Frauds; therefore, answer B is not correct. The contract is originally made orally but then Morris records its essential terms in his thank you note. Although he does not sign the note, it is written on a notecard with his initials on it. According to Restatement (Second) of Contracts §134, "The signature to a memorandum may be any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of the signer." Comment a. confirms that the symbol may even be "impressed into the paper" as on stationary. Thus, the signed writing requirement is satisfied, and Answer A is incorrect. For a part performance exception to apply, the party must partly perform the obligations of the oral contract after the oral promise is made. The past sales of books by the bookstore cannot therefore be part performance that would excuse compliance with the statute. Answer D is therefore incorrect. Even though the Statute of Frauds applies, it has been satisfied and therefore Morris's attempt to raise the Statute of Frauds as a defense will likely fail. Answer C is correct.

To say that a contract "falls within the Statute of Frauds" is to say that? A. it is recorded in a writing signed by both its parties. B. it is not recorded in a writing signed by either party. C. it is recorded in a writing signed by one of its parties. D. it is unenforceable unless recorded in a writing signed by the party against whom enforcement is sought.

D ANALYSIS. The question tests only your understanding of the phrase "within the Statute of Frauds." That phrase applies to contracts that are enforceable only if set forth in a writing signed by the defendant—"the party to be charged." That a contract is "within the Statute of Frauds" does not tell us that its parties have or have not recorded it in writing, or that either or both have signed one. That a contract is "within the Statute of Frauds" means only this: It's one of the contracts that the Statute of Frauds "talks about"; it's unenforceable unless recorded in a writing, signed by the defendant.

Carlos has a collection of rocks that he collected when he was a child. Carlos did not know if any of them were valuable. Carlos invited a mineral and gem dealer over to assess the worth of the collection. The dealer examined the collection, took some pictures, and later emailed Carlos stating, "I will purchase your entire collection for $475." The dealer signed the email. Carlos called the dealer on the phone and asked if the dealer would give Carlos $500 for the entire collection. The dealer agreed. Later the dealer came to pick up and pay for the collection; however, Carlos refused to complete the transaction. Carlos said he changed his mind and wanted to keep the collection as a memory of his youth. If the dealer brings a breach of contract claim against Carlos, can Carlos successfully assert the statute of frauds as a defense? (A) Yes, because the statute of frauds writing requirement has not been satisfied (B) Yes, but only if Carlos's expertise in minerals qualifies him as a merchant (C) No, because the dealer's email satisfies the statute of frauds as a merchant's confirmatory memo (D) No, because the statute of frauds only applies to sales for over $500

Issue: The issue is whether Carlos can assert the statute of frauds defense. Rule: See UCC § 2-201 Analysis: Under these facts, the transaction is subject to UCC § 2-201 statute of frauds because it involves the sale of goods for the price of $500 or more. Here, the sale was for exactly $500. Choice D is wrong because it incorrectly states the statute of frauds as requiring a transaction of over $500. Since the statute of frauds applies, UCC § 2-201 requires "some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought." However, Carlos never communicated with the dealer in writing; therefore, Carlos can use the statute of frauds as a defense to avoid the oral agreement. Choice A is correct. Choices B and C revolve around the merchant rules. First, Carlos is not a merchant. As a child, Carlos collected rocks but never knew their worth. Even if Carlos was a merchant, that would not be a rationale for being able to assert the defense. Choice B is incorrect for that reason. Choice C is also incorrect. The merchant's confirmatory memo exception under UCC § 2-201(2) provides that "Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received." This fails for two reasons. First, as noted above, Carlos is not a merchant. Second, even if Carlos were a merchant, the email was an offer and not a confirmatory memo of an oral contract. Moreover, in the phone call, Carlos proposed a counteroffer that terminated the dealer's offer.

In the spring, Jack, a farmer, orally agrees to sell his bean crop for this year to Grocer for $200. The beans are still growing, and under the agreement, Grocer must harvest the crop. Must the agreement be in writing?

No. This problem actually turns on which body of law is applied—(1) the UCC statute of frauds, or (2) the land sale provision of the common law statute of frauds. Growing crops are treated differently than unextracted minerals for the purposes of which body of law applies to their sale. Growing crops are not considered an interest in land regardless of who harvests the crops. UCC §2-107(2) defines "growing crops" as goods that are subject to the provisions of the UCC. Therefore, the UCC's sale-of-goods statute of frauds provisions apply. See §2-201. If the price is $500 or more, the contract would have to be in writing. But here, since the total price is under $500, the oral agreement is enforceable.

Dealer is a used car dealer. Buyer wanted to purchase a new car and found one on Dealer's lot that had a price of $5,000 on the windshield. After a lengthy negotiation, Buyer and Dealer agreed to the sale of the car for a purchase price of $3,000, plus a trade-in vehicle that Buyer owned. Buyer signed a written agreement that provided all of these details—the car, the purchase price, and the trade-in. In addition, Buyer paid Dealer $50 cash as a deposit. Dealer did not sign the written agreement. Buyer returned one week later with the balance of the money due and the trade-in. However, Dealer refused to complete the transaction. Buyer sued for breach of contract. Dealer asserted a statute of frauds defense. If Buyer wins, it is mostly likely because a court determined that: (A) the $50 deposit satisfies the partial payment exception to the statute of frauds. (B) Buyer could be classified as a merchant given her expertise and knowledge about cars. (C) Buyer returned to complete the transaction within 10 days before Dealer objected. (D) Dealer's oral agreement is enforceable since the transaction involved only a $50 deposit and is therefore outside the statute of frauds.

A Rationale: Issue: This is a statute of frauds problem that turns on whether the partial payment provision of UCC § 2-201(3)(c) applies. Rule: UCC § 2-201 Analysis: Under these facts, the transaction is subject to the requirements of UCC § 2-201 statute of frauds because it involves the sale of goods for the price of $500 or more. Here, the sale was for a car that was priced at $3,000 plus a trade-in. Since the statute of frauds applies, UCC § 2-201 requires "some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought." Dealer is the party against whom enforcement is sought; however, Dealer has not signed any documents evidencing the contract. If Buyer wins, it is most likely because a court holds that the partial payment exception applies. Under UCC § 2-201(3)(c), "A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable ... with respect to goods for which payment has been made and accepted or which have been received and accepted." The official comment notes that "Receipt and acceptance either of goods or of the price constitutes an unambiguous overt admission by both parties that a contract actually exists." If a buyer sends only a partial payment then the court might just enforce the sale to the extent of the goods purchased. For example, if the sale were for some commodity (e.g., fruits, vegetables, etc.) then the court might just enforce the sale to the degree that it was paid. However, this transaction is for one car which is not divisible. If Buyer wins at court, then the only logical rationale for that result (from the choices given) would be the partial payment exception. Consequently, Choice A is the correct answer. Choice B is incorrect because nothing in the facts suggests that Buyer has any expertise in cars. Choice C suggests facts that are not relevant. Choice D is incorrect since the sale price is well over $3,000 (when you include the value of the trade-in); consequently, the transaction is within the statute. The problem is based on Truex v. Ocean Dodge, Inc., 219 N.J. Super. 44, 529 A.2d 1017 (App. Div. 1987).

Which of the following contracts, if breached by A, is enforceable by B? 1) An oral contract, whereunder A agrees to sell land to B 2) A written contract, signed only by B, whereunder A agrees to employ B for a period of two years 3) A written contract, signed only by A, whereunder B agrees to employ A for two years 4) A written contract, signed by both parties, whereunder A guarantees payment of her son's debt to B 5) A written contract, signed only by A, whereunder B agrees to marry A's daughter and A agrees to pay B $500,000

B ANALYSIS. All of these contracts are within the Statute of Frauds, meaning that all are of a type to which the Statute of Frauds applies. Some are written and signed by A. Those are the ones B can enforce. Option I describes a contract for the sale of an interest in land. The contract falls within the Statute of Frauds. B, who wants to sue A for breach, cannot show a writing signed by A. B can't enforce the contract (and neither, for that matter, can A). Option II tells of a contract that falls within the Statute of Frauds' one-year provision. It is set forth in a writing signed by B but not by A—"the party to be charged." Hence, B can't enforce it against A. (Yet, because B signed, A would be able to enforce it against B.) Option III describes a contract between A and B that falls, also, within the Statute of Frauds' one-year provision. The contract is recorded in writing and signed by A. B can enforce the contract against A (but because B did not sign, A would not be able to enforce it against B). In option IV, we read of a contract that falls within the Statute of Frauds' suretyship provision. It is recorded in a writing, signed by A and B. Consequently, it's enforceable by B against A (and would be enforceable by A against B as well). Option V describes a contract made in consideration of marriage. It's recorded in a writing signed only by A. The contract is enforceable by B against A (but would not be enforceable by A against B). Party B can enforce contracts III, IV, and V, but not contracts I or II.

On December 1, 2015, Sabrina and Barry form an oral contract under which Barry is to (a) decorate Sabrina's retail store for Christmas Day 2016 and then, after Christmas, (b) take the decorations down. Sabrina is to pay Barry $15,000 on or before December 1, 2016. Twelve months later, on December 1, 2016, Sabrina comes to Barry with her $15,000 check. Barry refuses to accept it and tells Sabrina that he will not perform; he won't decorate her store for Christmas. Sabrina sues Barry for breach. Barry moves to dismiss the suit, citing the fact that he signed no contractual writing. Should the court grant his motion? A. Yes, because the agreement exacts no consideration from Sabrina B. Yes, because the Statute of Frauds renders the contract unenforceable C. Yes, because the agreement reflects a bargain in which neither party suffers a legal detriment D. No, because Sabrina, if she wished, might have paid Barry before December 1, 2016

B The parties form their contract on December 1, 2015. It's possible, of course, for Barry to decorate Sabrina's store for Christmas of 2016 in late November 2016, which time will fall within one year of December 1, 2015. Yet, Barry is to take down the decorations after Christmas. As a matter of logic, it is not possible that December 26, 2016, should fall within one year of December 1, 2015. Sabrina is to pay Barry on or before December 1, 2016, meaning she might pay him one hour, one day, one week, or one month after the parties form their contract. She can complete her performance within one year of December 1, 2015. Yet, in order that a contract not fall within the Statute of Frauds, it must be possible that both parties complete performance within the one-year period. Barry can't do that. Since the contract is within the Statute of Frauds, and the parties have created no writing at all, neither can enforce it against the other. Choices A and C refer to lack of consideration, but each party did provide consideration to the other; Sabrina promised to pay, and Barry promised to decorate. A and C are wrong. D is wrong too. Although one contracting party might possibly perform within the one-year period, the contract is, nonetheless, within the Statute of Frauds if the other cannot. B tells us that Sabrina can't enforce the contract because the Statute of Frauds renders it unenforceable. That's exactly correct. B is right.

Milo likes to plan ahead. His son will be graduating from college in three years. He contacts Engaging Events, a venue that hosts and caters large parties. Milo and Rachel, an employee of Engaging Events, agree orally that Milo will host his son's graduation party at their venue on June 10, three years from the date of their conversation, for $20,000, to be paid on the day prior to the event. No writing satisfying the Statute of Frauds exists. A year prior to the agreed party date, Rachel calls Milo and tells him that they have a request for a wedding that will net the venue much more money and so they cannot host Milo's party. Can Engaging Events successfully raise the Statute of Frauds as a defense, assuming the applicable state has a Statute of Frauds that mirrors the Restatement (Second) of Contracts? (A) Yes, because the contract is for an amount greater than $500. (B) Yes, because the contract cannot be performed within one year. (C) No, because the contract will only take one day to perform and therefore can be performed within one year. (D) No, because the contract does not involve employment services that extend for more than one year.

B This problem tests the application of the One Year Provision of the Statue of Frauds. Restatement (Second) of Contracts §130 (1) states that the writing requirement applies to a situation in which "any promise in a contract cannot be fully performed within a year from the time the contract is made." Even though performance will only take one day (June 10 in three years) to perform, that performance cannot be completed within one year of the time the contract is made. Thus, the One Year Provision can be used by Engaging Events as an affirmative defense and answer B is correct and answer C is incorrect. The $500 threshold is only relevant for sales of goods under UCC §2-201 and this contract does not involve a sale of goods. Thus, Answer A is incorrect. Although the One Year Provision is often an issue in contracts for employment, its scope is not limited to the employment contracts and thus Answer D is incorrect.

SA: Pope orally agrees to sell his country place, Santa Maria del Grazie, to da Vinci. da Vinci gives Pope a down payment and Pope conveys the property to da Vinci. da Vinci moves in and begins to paint a giant mural, "The Last Supper," on one of the walls. da Vinci subsequently decides he doesn't like the décor of the place and moves out without paying another lira. Can Pope enforce the agreement?

Yes. It's true that contracts for the sale of land normally require a writing. But where the seller has made the contracted-for conveyance, he can recover the contract price even though the original agreement was not in writing.

SA: Minnie and Mickey decide to get married. The Etty-Kette Paper Goods Company orally agrees to custom-make 350 party hats with Minnie and Mickey's names printed on them for the wedding for $675. After Etty-Kette begins to manufacture the hats, Minnie decides Mickey is a rat, and cancels the wedding. She also tries to cancel the hat contract. Can Etty-Kette enforce the oral agreement? System Font16px

Yes. There is an exception to the "sale of goods" provision of the Statute of Frauds for goods that are "specially manufactured." § 2-201(3)(a). As long as the seller has made a "substantial beginning" on their manufacture, or has made "commitments for their procurement," the oral agreement will be enforceable. Since the facts tell us that Etty-Kette has begun manufacture, this condition is satisfied.

SA: Lear agrees to lease his Castle to Cordelia for nine months, with the lease to begin six months from the signing of the contract. A) Must the lease be in writing under the Statute of Frauds? B) Say instead that the lease is to begin immediately and to last for nine months. Must the lease be in writing?

Yes. What counts is not the length of the lease once it begins, but the time from the making of the lease until its full performance (its expiration). Although the lease itself is only for nine months, the contract cannot be performed within one year from the execution of the contract, so a writing is required. No. Now no writing is required because the contract can be fully performed within one year of its making. (Remember that leases for one year or less in duration do not constitute an "interest in land," so the "Land Contract" provision of the Statute of Frauds would not come into play here, either.)

The Rosebud General Contractor agrees to build a fabulous home, Xanadu, for Charles Foster Kane, on Kane's land, in return for $750,000. Will the contract have to comply with the statute of frauds?

No. First, building a house is considered a service, no matter how much the materials involved cost. As a service, the contract is not subject to the statute of frauds under the UCC. (So the UCC provision, §2-201, requiring contracts for the sale of goods for more than $500, doesn't apply.) Next, although this contract "involves" land, it isn't for the sale of an "interest in land," just for the provision of services in connection with land. That's not enough to bring the contract within the land provision. Since there's no other statute of frauds provision that applies, the contract is enforceable though oral.

Romulus leases Rome to Remus for nine months, the lease to begin the following day. The agreement provides that at the end of the nine months the lease shall automatically be renewed for six-month intervals thereafter, unless either party terminates. Will the lease require a writing to be enforceable?

No. If the initial contract itself may be performed within a year—as here—extensions that are each for 1 year or less do not require a writing either.

Without a writing, Kevin as seller and Taylor as buyer contract for the purchase and sale of Kevin's farm. Thereafter, Kevin declines to proceed with the sale, and Taylor sues for specific performance. Which of the following additional facts, if proven, would most likely allow Taylor to sustain his action against Kevin? A. Before Kevin announced his intention not to proceed, Taylor, with Kevin's permission, moved onto the farm and built a new barn. B. Eight persons saw and heard the parties form their contract, and each is willing to so testify. C. After the parties formed their contract, Taylor prepared and signed a writing that accurately described the agreement. D. Before the parties formed their contract, each, by signed writing, declared to the other his tentative interest in concluding an agreement for the sale of the farm.

A Without a writing, these parties formed a contract for the sale of land. Their contract falls within the Statute of Frauds. Ordinarily, then, neither would be entitled to enforce it against the other. However, where two parties contract for the sale of an interest in land, part performance often "removes" the contract from the Statute, allowing the buyer to enforce it against the seller (but not (usually) the seller to enforce it against the buyer). The two circumstances most likely to remove the contract from the Statute are that (1) the buyer fully pays the purchase price, or (2) with the seller's permission, the buyer occupies the land and makes improvements to it. B refers to witnesses who saw and heard the parties form their contract. No such circumstance will remove it from the Statute of Frauds. Neither, certainly, would a writing have any such effect if signed only by Taylor, the plaintiff. Hence, B and C are wrong. D reports that before forming their contract, the parties wrote, signed, and exchanged invitations to deal. To that we say, "so what?" No such fact removes any contract from the Statute of Frauds. According to A, Taylor, with Kevin's consent, moved onto the premises and made improvements to it. That means he has given such part performance as (in most states) is sufficient to remove the contract from the Statute of Frauds. A is right.

Seller has listed a specific piece of land for sale. Buyer sends Seller a signed letter indicating that Buyer wishes to purchase Seller's land for its listed price of $300,000 to be paid by certified check at a closing in one month. Using a pen, Seller writes on Buyer's letter, "I will sell you the referenced property for $300,000 on the terms that you indicated in your letter.' At the bottom of that paper, Seller attempts to write her initials, but the pen has run out of ink. However, the tip of the pen does make, on the paper, an etching of her initials. By fax, Seller sends (an image) of the paper to Buyer. On the fax, as received by Buyer, Seller's initials are not at all visible. Buyer responds by telephone call. 'Thanks very much. I will see you in one month at the closing.' Before the closing date, Seller contacts Buyer and announces that Seller will not sell the land to Buyer. Buyer sues for breach of contract, and Seller pleads the statute of frauds as an affirmative defense. Assume that both the fax and the hard copy of the letter are admitted into evidence. What is the most likely result and rationale? (A) Seller wins, because a writing is not considered "signed" unless the signed copy is delivered. (B) Seller wins, because, to be effective, a signature must include the last name of the party to be charged and not just initials. (C) Buyer wins, because any writing, even if undelivered, is considered signed if there is a mark made to authenticate it. (D) Buyer wins, because of the doctrine res ipsa loquitur, i.e., the thing speaks for itself.

C Issue: This is a statute of frauds question because it involves the sale of real property. The issues involve whether (1) initials are considered a signature, and (2) whether delivery of the signed writing is required. Rule: Court will enforce a contract that is subject to the statute of frauds only if the contract is set forth in a writing signed by 'the party against whom enforcement is sought' or if there is an exception. Analysis: In this case, Seller is the party against whom enforcement is sought. If Seller has 'signed' the writing, the contract is enforceable. Otherwise it's not. In this context, as to the word 'signature,' the law is very flexible. Almost any mark, stamp, or imprint is a signature, if it's intended to identify the party who makes it. There is no requirement that a full last name be used. Initials or even some other symbol can be used if the intent of the party making the mark was to authenticate the writing. Therefore, Choice B is a wrong answer. Additionally, if the etched letters are visible then a mark has been made. It does not matter that the pen ran out of ink so long as we can see the mark. An additional issue here is delivery. Buyer did not receive a copy of the acceptance that was "signed" since Buyer could not see the signature. However, Comment (b) of Restatement (Second) of Contracts § 133 provides that, "There is no requirement that a memorandum be communicated or delivered to the other party to the contract, or even that it be known to him or to anyone but the signer." Consequently, the fact that only Seller has a copy of the acceptance with a clear signature is enough to satisfy the writing requirement. According to the Restatement, the writing requirement under these facts could be satisfied even by a diary entry or a signed letter to a third party. Therefore, Choice A is wrong, and Choice C is correct. Choice D is not relevant to the issue presented. Res ipsa loquitur is Latin for "the thing speaks for itself" and is most commonly used in reference to the tort of negligence. This legal doctrine has no application here.

Bernard Bailey and Sahar Scott are long-time friends and business associates. For several months, Bernard has spoken to Sahar about the possibility of purchasing a parcel of Sahar's land. As Bernard and Sahar sit together one evening at a (dull) Chamber of Commerce meeting, Bernard takes hold of a wet cocktail napkin. On it he writes, in crayon, "About your land, 28 Pate Street, Addington, MT 78420 (Volume 909 land books, page 187), I'll buy it for $940,000—let's close by the end of the week. Deal?" Bernard passes the napkin to Sahar. Sahar reads the message and takes from her pocket a piece of crumpled notepaper, personalized with her full name printed at its top. On the paper, with an eyebrow pencil, she circles her name, and writes, "Okay." Sahar passes her message to Bernard. On the following day, Bernard calls Sahar by telephone. "Let's set a date for closing, so I can pay you the $940,000 purchase price and you can hand me a deed to the Pate Street property." Sahar responds that she has changed her mind: "I'm not going to sell." Can Bernard sustain an action against Sahar for breach of a contract to sell the land? A. Probably not, because Bernard did not sign his name on the cocktail napkin B. Probably not, because the napkin and notepaper constitute two separate writings C. Probably, because Sahar "signed" her notepaper D. Probably, because the contract falls outside the Statute of Frauds

C Of this, there's no doubt: Bernard offers to buy Sahar's land and Sahar accepts; these two form a contract. The contract provides for the sale of an interest in land, meaning that it's within the Statute of Frauds. Neither party can enforce the contract unless it is recorded in a "writing" "signed" by the other (his or her defendant/the party to be charged). In all states, the words "writing" and "signed" are (very) liberally construed. Here, the cocktail napkin and the notepaper together constitute a writing. Sahar's name printed at the top of the notepaper qualifies as her "signature." That she drew a circle around it makes that all the more certain. The parties did, therefore, record their contract in a "writing," "signed" by Sahar. That means the answer is "yes." Bernard can enforce the contract against Sahar. A and B say "no," so they're wrong. As for A, it's true that Bernard has not signed the writing, but it's also irrelevant. When a contract falls within the Statute of Frauds, one party can enforce it against the other whether he himself has or has not signed a writing. It is necessary only that his defendant have signed one. As for B, two or more separate papers addressing the same subject qualify as "a writing." B is wrong. D correctly answers "yes," but its reasoning is "way" wrong. This contract does fall within the Statute of Frauds. It's enforceable because it conforms to the relevant requirements; it is recorded in a writing (the napkin and notepaper together), signed by the party to be charged (via Sahar's name, printed (and, moreover circled)). C tells us that Bernard can enforce this contract because Sahar "signed" the writing, which is true because her name appears on the notepaper. Her name there printed and circled qualifies as her "signature." Without it, Bernard would be unable to enforce the contract, and so C is right.

Distributor purchases food from farmers, packages it, and then resells it to grocery stores. Supermarket is a large supermarket chain. On January 2, Supermarket and Distributor negotiate an oral agreement where Supermarket will purchase and Distributor will sell 200 metric tons of packaged oranges for $500 a ton. Under the agreement, Distributor is to deliver the oranges to Supermarket's warehouse on January 30, at which time Supermarket will pay Distributor the agreed price. On January 10, Supermarket sends Distributor by email a written "purchase order" confirming the terms of the oral agreement and which is signed by Supermarket. Distributor receives the purchase order the same day and reads it, but does not respond. At the end of January, Distributor refuses to deliver the oranges. If Supermarket brings a breach of contract suit against Distributor, what is the likely outcome? (A) Distributor wins, because no contract ever formed since Distributor never accepted the offer made by Supermarket when Supermarket sent the January 10 purchase order. (B) Distributor wins, because Distributor can use the statute of frauds as a defense since the agreement was oral. (C) Supermarket wins, because under the UCC, the purchase order was a confirmation of an oral agreement and therefore satisfies the statute of frauds. (D) Supermarket wins, because Distributor's silence was acceptance of Supermarket's purchase order.

C Rationale: Issue: This problem focuses on the statute of frauds under the UCC and the merchant's confirmatory memo exception. Rule: UCC § 2-201 Analysis: Under these facts, the transaction is subject to the requirements of UCC § 2-201 statute of frauds because it involves the sale of goods for the price of $500 or more. Here, the sale was for 200 metric tons of oranges for $500 a ton; consequently, the transaction is for well over the threshold amount. Since the statute of frauds applies, UCC § 2-201 requires "some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought." Here, Distributor is the party against whom enforcement is sought; however, Distributor has not signed any documents evidencing the contract. However, Supermarket may use the merchant's confirmatory memo exception. UCC § 2-201(2) provides that "Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received." Both Distributor and Supermarket are merchants because through their occupation, they hold themselves "out as having knowledge or skill peculiar to the practices ... involved in the transaction." Additionally, Supermarket's January 10 purchase order would be satisfactory to hold Supermarket accountable if Supermarket were in breach. The purchase order has all of the relevant terms and is signed by Supermarket. Distributor received and read the purchase order but did not respond with an objection within the 10-day time limit. Consequently, Supermarket can use the merchant's confirmatory memo exception to satisfy the statute of frauds writing requirement. Supermarket wins and Distributor cannot escape liability through a statute of frauds defense. Choice C is correct. Choice B is incorrect for the reasons stated above. Choices A and D are incorrect because both treat the January 10 purchase order as an offer. In fact, the purchase order was a confirmation of an oral agreement—not an offer.

TireCo manufactures bicycle tires. BikeCo manufactures high-end bicycles for professional racers. The president of BikeCo met with the head of TireCo, and the two parties agreed that TireCo would design and manufacture the tires for a new experimental bicycle that BikeCo planned to build. The tires were of a unique size and shape and only fit the BikeCo's experimental racing bicycle. After a prototype tire had been designed, BikeCo's president called the head of TireCo and ordered 1,000 sets of the tires at an agreed upon price of $100,000. TireCo manufactured 500 sets of the tires. BikeCo's president then called the head of TireCo and told him that he was halting manufacture of the new bicycle because he found out that professional racing rules restricted the overall size of bicycle tires. BikeCo's president refused to pay for any of the tires TireCo had manufactured. TireCo is unable to sell the tires to any other party since the tires do not fit any other type of bicycle. TireCo sues BikeCo for breach of contract. As a defense, BikeCo asserts the statute of frauds. What would be TireCo's best response to the statute of frauds defense? (A) TireCo relied to its detriment on BikeCo's promise to pay for the tires. (B) BikeCo was operating in bad faith by repudiating the contract. (C) BikeCo acted negligently by not checking the racing rule before asking TireCo to manufacture the tires. (D) TireCo had made substantial progress in manufacturing unique goods that were not suitable for sale to other parties.

D Issue: This problem asks students to evaluate the strength of different defenses and identify the best argument under the UCC to satisfy the statute of frauds requirement. Rule: UCC § 2-201(3)(a) Analysis: The contract is for the sale of goods of $500 or more; therefore, under UCC § 2-201 there either needs to be a sufficient memorandum or one of the exceptions must be present. Here, the entire agreement was oral. However, the specially manufactured goods exception found in UCC § 2-201(3)(a) will allow TireCo to enforce the oral contract. UCC § 2-201(3)(a) provides for enforcement "if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement." Here, TireCo is halfway through the manufacture of the order and the goods cannot be sold elsewhere given the nonstandard size. Consequently, TireCo will be able to enforce the oral agreement through the specially manufactured goods exception in UCC § 2-201(3)(a). Choices A, B, and C all make correct factual statements; however, these facts do not give rise to an exception to the writing requirement.

SA: Mayor of Munchkinland owns property next door to property owned by Dorothy. Mayor says to Dorothy, "Anytime you or your successors in interest to your property want to use the yellow brick road across my property, you're free to do so. This easement will be permanent." The next day, Mayor changes his mind, before Dorothy has ever used the road. May Dorothy have the easement enforced?

No. An easement is considered an "interest in land." Therefore, a promise to convey it falls within the general rule that a promise to convey an "interest in land" must be in writing.

Heathcliff orally agrees to support Catherine, the mother of his illegitimate child, "for the rest of your life." Catherine is 30 at the time, and in perfect health. Does the contract violate the statute of frauds?

No. You might think that this contract would fall within the one-year provision, which requires a writing for contracts that are incapable of performance within 1 year from the date of agreement. After all, it's highly likely that a 30-year-old in good health would live more than a year, in which case Heathcliff's obligation could not be fully performed within a year. But to take the case out of the one-year provision, all that's required is that full performance could possibly occur within 1 year, no matter how unlikely that outcome is. See Rest. 2d §130, Comment a: "[T]he enforceability of a contract under the one-year provision does not turn on the actual course of subsequent events, nor on the expectations of the parties as to the probabilities. Contracts of uncertain duration are simply excluded; the provision covers only those contracts whose performance cannot possibly be completed within a year." Therefore, since there is some chance, however, small, that Catherine will die within a year, that's enough to take the case out of the one-year provision and make it enforceable even though it is oral.

Owner grants Neighbor an easement to walk across Owner's property. Must the easement be in writing to be enforceable?

Yes. An easement is considered an interest in land. Therefore, a promise to create or transfer an easement must be in writing to satisfy the statute of frauds. NOTE: Licenses, which are considered "personal" and not an interest in land (e.g., attending a concert), need not be in writing (even if they are irrevocable licenses).

Buyer orally agrees to buy 250 Statue of Liberty rubber erasers from Seller for $750. Buyer receives the erasers, inspects them, and keeps them for one month. Then, when Seller sends a bill for $750, Buyer refuses to pay on the grounds that the agreement is unenforceable under the statute of frauds, but offers to return the erasers. Is the agreement enforceable by Seller?

Yes. Even though the agreement should have been in writing (because it involved the sale of goods for $500 or more), the UCC statute of frauds is satisfied by "partial performance," i.e., receipt and "acceptance" of the goods by the buyer (or, conversely, partial or full payment accepted by the seller). See UCC §2-201(3)(c), saying that a contract that does not satisfy the statute of frauds is enforceable "with respect to goods for which payment has been made and accepted or which have been received and accepted." Goods are deemed "accepted" under §2-606 if the buyer "fails to make an effective rejection . . . , but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them[.]" Under §2-602(1), a rejection of goods "must be within a reasonable time after their delivery or tender [and] is ineffective unless the buyer seasonably notifies the seller." So when Buyer received the erasers and silently kept them for a month, his failure to "seasonably" (i.e., promptly) notify Seller that he wanted to return them meant that Buyer failed to reject the goods. Buyer's failure to reject the goods meant that he "accepted" them. Since the goods were "accepted," Buyer was required to pay the orally-agreed-upon price. His offer to return them came too late to undo this effect. (If Buyer had promptly upon receipt returned the goods or offered to return them, this would have been a timely and thus proper "rejection," and would have prevented §2-201(3)(c) from making the contract enforceable based on part performance.)