2-a. Statute of Frauds Flashcards
What is the Statute of Frauds?
It is a statute designed to prevent fraudulent claims of the existence of a contract by requiring claimants to have objective proof beyond simple testimony that a contract exists before the case may make it to court.
What are the proof requirements of the SOF?
Generally proof of (1) performance or (2) a writing signed by the defendant.
The Four Contracts within the SOF:
1) Promises to answer for the debts of another [suretyship]
2) Service contracts not capable of being performed within a year from the time of the contract.
3) Transfers of interest in real estate (exception for leases of a year or less)
4) Sales of goods for $500 or more.
Promises to Answer for the Debts of Another and the Statute of Frauds.
“Answer for” is not merely a promise to pay someone else’s debts, but rather a promise to pay another person’s debts only if that person does not herself pay. Look for a Guarantee. If the main purpose of the obligation was to benefit the guarantor, that still is within the SOF.
Service Contracts extending beyond a Year and S/F.
S/F applies to contracts with specific time periods of more than a year and specific time periods that are more than a year from the date of the contract. HOWEVER, tasks are not within the S/F because, with unlimited resources, any task could be completed in less than a year. Life contracts are also not within the S/F as a person could die the next day.
Transfers of Interests in Real Estate and S/F.
Real Estate Transfers are within the S/F. Be careful, however, as leases of a year or less are not within S/F.
Sale of goods for $500 or more and S/F.
$500.01 will need more objective proof before a plaintiff gets into court.
What is the S/F essentially doing.
S/F is looking to whether the plaintiff has enough objective proof to have their day in court. Remember, it is not a win/lose doctrine. Raising the S/F defense does not mean the defendant automatically wins. Satisfying the S/F does not mean the plaintiff automatically wins.
If an agreement is within the Statute of Frauds then,
the defendant can file a motion to dismiss or a motion for summary judgment based on the S/F defense. Plaintiff must then provide objective proof, i.e. higher burdens.
How is the S/F satisfied?
1) Performance; 2) Writing; 3) Judicial Admission; 4) Estoppel.
Satisfying S/F via Performance. (#1, Transfer of Real Estate)
Performance and transfer of real estate satisfies the S/F if two of these three conditions are met: 1) improvements were made to the land, 2) payment was made on the land; 3) possession was taken of the land.
Satisfying S/F via Performance. (#2, Services Contracts, Full Performance)
FULL performance by either party involved in a services contract satisfies the statute of frauds.
Satisfying S/F via Performance. (#3, Services Contracts, Part Performance)
PART performance of a services contract DOES NOT satisfy the statute of frauds.
Satisfying S/F via Performance. (#4, Sale of Goods Contracts, Part Performance)
General rule is that part performance of a contract for the sale of goods satisfies the Statute of Frauds, but only to the extent of the part performance. Look to see if inquiry is about delivered goods (no S/F defense) or undelivered goods.
Satisfying S/F via Performance. (#5, Seller’s Part Performance, special goods)
S/F is satisfied as soon as seller makes a substantial beginning into the manufacture of specially ordered/customized goods. Must be clear from seller’s conduct that the work is on something custom made/made to order.
Satisfying S/F via Writing.
A writing satisfies the S/F so there is no S/F defense if the writing satisfies the all material terms test [meaning it discusses the “who and what”] and has been signed only by the defendant, i.e. the person who would be asserting the S/F defense. Logical, because otherwise the defendant seeking to use S/F defense could just make up a fake contract and sign it themselves. Need to have
Satisfying S/F via Writing under UCC.
The writing must simply indicate that there is a contract for the sale of goods and CONTAIN THE QUANTITY TERM. Generally must be signed by defendant; exception between merchant-merchant transaction with delay in response.
Satisfying S/F via Judicial Admission
If the defendant asserting S/F defense admits in a pleading, testimony, or in discovery that he had entered into an agreement with plaintiff, S/F satisfied, the defense is stricken.
Satisfying S/F via Estoppel
Some cases hold that the plaintiff’s reliance on the defendant’s oral promise can estop the defendant from asserting a S/F defense.
When do Rules of Law require an individual have written authorization in order to legally execute a contract for someone else?
The authorization only must be in writing if the contract to be signed is within the S/F, meaning the authorization must be of “equal dignity” with the contract.
S/F and Proof of Contract Modification
Whether written proof of alleged modifications is needed is determined by (1) looking at the deal with the alleged change and (2) determining whether the deal would be within the S/F. If it would be within S/F, the alleged modification agreement must be in writing.
S/F and Contract provisions requiring written modification
1) Under Common Law, contract provisions requiring that all modification be in writing are not effective.
2) Under UCC, contract provisions requiring written modifications are effective unless waived.
