Defenses to enforcement: statute of frauds

Question 1

Scope of application

Answer 1

The statute of frauds applies to contracts involving:

(1) Marriage;
(2) Suretyship;
(3) Contracts that cannot be performed within a year;
(4) UCC contracts for $500 or more; and
(5) Real property.

Question 2

Satisfaction by performance: service contracts and real estate

Answer 2

The statute of frauds may be satisfied by performance:

(1) For one-year contracts by full performance by either side;
(2) For real estate contracts, two of:

(a) possession,
(b) payment, or
(c) improvements to the land.

Question 3

Satisfaction by writing: service contracts and real estate

Answer 3

For service contracts at common law and for real estate contracts, the statute of frauds is satisfied if the writing:

(1) covers the fundamental facts—i.e., the fact of formation, the parties, and the essential elements of the deal;
(2) is signed by the party against whom enforcement is sought.

Question 4

Satisfaction by writing: UCC

Answer 4

A UCC contract satisfies the statute of frauds if:

(1) There is a signed writing with at least a quantity term; or
(2) Between merchants, there is a confirming memo—independently satisfying the statute of frauds—that the recipient fails to object to within ten days.

Question 5

Equal dignity rule

Answer 5

If an agent to be able to form a contract within the ambit of the statute of frauds, the contract creating agency must also satisfy the statute of frauds.

Question 6

Contract modification

Answer 6

A contract modification need not satisfy the statute of frauds if the modified deal would not fall within the ambit of the statute of frauds.

Question 7

Satisfaction by performance: UCC

Answer 7

The statute of frauds may be satisfied by performance by:

(1) Part performance, but only for the quantity delivered and accepted; or
(2) A substantial beginning toward the manufacture of custom-made goods—but only if the goods are not suitable for sale to others in the ordinary course of the seller’s business.

Question 8

Oral suretyship agreements

Answer 8

Oral suretyship contracts can be enforced if they are:

• Indemnity contracts; or
• Contracts wherein the surety’s main reason for paying the debt is the surety’s own economic advantage.