IV. Statute of Frauds
Third Question: Is there an Alternative Basis for Enforcement of a UCC SoF?
(1) Majority of courts: hold that promissory estoppel is available as a workaround if a strong case is shown. (2) Minority of courts: hold that the express language of the UCC SoF precludes promissory estoppel. (3) Construction contractors: Virtually all courts have protected a general contractor via promissory estoppel
Third Question: Is there an Alternative Basis for Enforcement?
(1) Recovery for Benefits Conferred (2) Promissory Estoppel
Contracts Not to Be Performed within a Year: Frequently Tested Situations
(a) Contracts that can be breached or excused within a year of its formation: This is irrelevant. (b) A lifetime or permanent contract of employment: is not governed by the one-year provision because the employee's death is possible within a year
"Tacking Together" Multiple Documents to satisfy SoF
(a) If all documents are signed, or if a signed document incorporates unsigned documents by reference: then the statute of frauds is satisfied. (b) If unsigned documents are not incorporated by reference in a signed document, "tacking together" the signed and unsigned documents to satisfy the SoF is nevertheless permissible if: 1) there is at least one signed writing unambiguously establishing a contractual relationship between the parties. 2) the signed and unsigned documents clearly refer to the same subject matter 3) there is clear and convincing evidence of acquiescence to the unsigned documents by the party against whom enforcement is sought.
SoF and Performance: One-Year Contracts
(a) If fully performed: then an oral contract not to be performed within one year becomes enforceable despite the SoF. (b) If only partially performed: then an oral contract not to be performed within one year is not enforceable.
Writing Requirement: Required Description under the Land Provision
(a) Older case law suggests: you need a legal description of the land (b) More current decisions suggest: that an address or some other description of the property may suffice.
Land-Sale Contracts
(a) The present conveyance of land promised for money: is held to be outside the land provision of the SoF (b) Real estate brokerage agreements: Although land is involved, these are SERVICE contracts (c) Lease of real property: Is a contract falling within the land provision
Under the common law, the following memoranda have been held to satisfy the writing requirement
(a) a letter from one of the parties to a third party describing the agreement. (b) the written offer, acceptance of which formed the contract (c) a letter from one of the parties repudiating, and so admitting, the agreement.
The first way: Signed Writing (aka the "old-fashioned way") Requirements
1) a writing - a "writing" under the UCC = Any intentional reduction to tangible form. 2) Signed by the party against whom enforcement is sought. - a "signature" under the UCC = Any symbol executed or adopted by a party with present intention to authenticate a writing. 3) Sufficient to indicate that a contract for has been made between the parties
Requirements for a Valid Merchant's Confirmation?
1) confirmation has to be sufficient against the sender (signed + quantity terms) 2) the writing is in confirmation of the contract 3) Time-frame for sending (reasonable time) 4) Recipient's "reason to know" *Exception with the recipient's objecting response: The recipient must send a written notice of objection within 10 days of receipt in order to keep his SoF defense
The fifth way to satisfy the UCC Statute of Frauds: The Problem of Specially Manufactured Goods 5 Elements
1) the goods are to be specially manufactured for the buyer; 2) the goods are not suitable for sale to others in the ordinary course of seller's business; 3) seller has substantially begun to manufacture, or made commitments to procure, the goods; 4) the actions undertaken to begin to manufacture or procure occurred under circumstances which reasonably indicate that the goods are for the buyer; and 5) the actions undertaken to begin to manufacture or procure occurred before seller received notice of buyer's revocation.
Analyzing Problems Under the Statute of Frauds
1. Is the Contract within the Statute of Frauds? 2. Is the Statute of Frauds Satisfied? 3. Is Alternative Enforcement Available?
Second Question: Is the UCC Statute of Frauds Satisfied? five ways to satisfy the UCC Statute of Frauds:
1. Signed Writing (aka the "old-fashioned way") 2. Merchant's Confirmation (aka "Speak Now or Forever Hold Your Peace") 3. The In-Court Admission 4. Partial Performance 5. The Problem of Specially Manufactured Goods
Who has a Statute of Frauds defense?
A party who does not sign a contract that is governed by the Statute of Frauds
The Signature Requirement
Any symbol or mark with the intention to authenticate the writing. Examples: Initials; a typed, stamped, or pre-printed signature; or letterhead.
The fourth way to satisfy the UCC Statute of Frauds: Partial Performance.
Despite the absence of a signed writing, an otherwise valid contract is enforceable with respect to: 1) goods for which payment has been made and accepted 2) goods which have been received and accepted.
Guaranty/Suretyship Agreements
Exception #1: When the creditor discharges the original debtor from his obligation on the faith of a guarantee by a third party to pay the debt, the guarantee agreement is not governed by the Statute of Frauds. Exception #2: The "Main Purpose" Doctrine → Where the main purpose of the guarantor is to protect his own economic interests, the guarantee agreement is not governed by the SoF
UCC Statute of Frauds
First Question: Is the Contract within the UCC Statute of Frauds? Second Question: Is the UCC Statute of Frauds Satisfied?
Second Question: Is the Statute of Frauds Satisfied?
If a contract falls within the Statute of Frauds, then the general rule is: the contract is unenforceable unless evidenced by a writing signed by the party against whom enforcement is sought.
IV. Statute of Frauds
If a contract is governed by the Statute of Frauds, then: the contract must be evidenced by a writing and signed by the party against whom enforcement is sought
First Question: Is the Contract within the Statute of Frauds?
MY LEGS (1) Marriage contracts (2) Contracts not to be performed within one Year of their making (3) Contracts for the sale of Land (4) Contracts of an Executor or administrator to answer for a duty of a decedent (5) Contracts of Guarantee or suretyship (6) Contracts for the Sale of goods at a price of $500 or more (UCC 2-201)
SoF and Performance: Land Contracts
Part performance requires a showing of any combination, or all three, of the following: 1) payment of all or part of the purchase price 2) taking of possession 3) making substantial improvements to the party
SoF and Performance
The Statute of Frauds may be satisfied with respect to some of the categories of governed contracts via part performance.
First Question: Is the Contract within the UCC Statute of Frauds?
The UCC Statute of Frauds is Section 2-201, which by its terms governs agreements "for the sale of goods for the price of $500 or more."
The second way to satisfy the UCC Statute of Frauds: Merchant's Confirmation (aka "Speak Now or Forever Hold Your Peace")
The UCC Statute of Frauds may be satisfied when two merchants enter an oral agreement and one of them sends the other a written confirmation of the agreement.
Limitations of the SoF
The contract may still be valid and enforceable for other purposes. a. The oral contract may provide evidence in establishing an element of a legal claim apart from breach of contract. b. The oral contract may provide evidence establishing a defense to a legal claim apart from breach. c. The oral contract may provide evidence of the value of the services already rendered.
Contracts Not to Be Performed within a Year
The year at issue under the one-year provision is measured from: the date of MAKING the contract rather than the date of the beginning of performance. - Standard: Whether, at the point of formation, it is at all possible to complete the required performance within a year's time.
Promissory Estoppel
This may be available for detrimental reliance, for loses suffered on the faith of an oral contract that is unenforceable. - Easy case: Where a party to an oral contract within the Statute promises the other party he will create a signed writing, and the party relies by not taking other steps to satisfy the statute, most courts will apply promissory estoppel if the promising party does not create such a signed writing. - Hard Case: Where no specific assurances of creating a signed writing are made, but the reliance is instead simply on the underlying oral contract itself.
Signed Writing (aka the "old-fashioned way") Written Offers
Under the UCC: a written offer does not satisfy the writing requirement because it is insufficient to reveal that a contract has been made. - Unless a firm offer is created
The third way to satisfy the UCC Statute of Frauds: The In-Court Admission
a party admits in his pleading, testimony, or otherwise in court that a K for sale was made. - The contract is only enforceable: up to the quantity admitted.
The Writing Requirement
all that is necessary is that the writing be a memorandum of the agreement, which can be prepared before, during, or after contract formation. Only the following terms are required: (a) the identity of the parties to the transaction; (b) the nature and subject matter of the contract; and (c) the essential terms of the agreement, such as price and date for performance
Signed Writing (aka the "old-fashioned way") Required TERM
you need a quantity term to satisfy the SoF, and the contract is unenforceable beyond the quantity stated in the writing. If there is no quantity term, the contract is altogether unenforceable, subject to two exceptions: Exception #1: where other language is in the writing provides an unambiguous basis for measuring quantity. Exception #2: output of requirements contracts, which satisfies the quantity requirement under the UCC