Statue of Frauds

Question 1

Restatement § 110 Classes of Contracts Covered Classes of Contracts

Answer 1

(1) The following classes of contracts are subject to a statute, commonly called the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception:
(a) a contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision);
(b) a contract to answer for the duty of another (the suretyship provision);
(c) a contract made upon consideration of marriage (the marriage provision);
(d) a contract for the sale of an interest in land (the land contract provision);
(e) a contract that is not to be performed within one year from the making thereof (the one-year provision).

Question 2

Restatement § 110 Classes of Contracts Covered Classes of Contracts Under the UCC

Answer 2

(2) The following classes of contracts, which were traditionally subject to the Statute of Frauds, are now governed by Statute of Frauds provisions of the Uniform Commercial Code:
(a) a contract for the sale of goods for the price of $500 or more (Uniform Commercial Code § 2-201);
(b) a contract for the sale of securities (Uniform Commercial Code § 8-319);
(c) a contract for the sale of personal property not otherwise covered, to the extent of enforcement by way of action or defense beyond $5,000 in amount or value of remedy (Uniform Commercial Code § 1-206).
(3) In addition the Uniform Commercial Code requires a writing signed by the debtor for an agreement which creates or provides for a security interest in personal property or fixtures not in the possession of the secured party.

Question 3

Restatement § 110 Classes of Contracts Covered Sufficient Evidence

Answer 3

(4) Statutes in most states provide that no acknowledgment or promise is sufficient evidence of a new or continuing contract to take a case out of the operation of a statute of limitations unless made in some writing signed by the party to be charged, but that the statute does not alter the effect of any payment of principal or interest.
(5) In many states other classes of contracts are subject to a requirement of a writing.

Question 4

Restatement § 110 Classes of Contracts Covered Classes of Contracts

A and B orally agree to marry three years later.

Answer 4

The contract is unenforceable because not to be performed within a year, even though it is excepted from the provision for contracts in consideration of marriage.

Question 5

Restatement § 129 Action in Reliance; Specific Performance

Answer 5

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.

Question 6

Restatement § 129 Action in Reliance; Specific Performance

A and B agree by an unsigned writing that A will sell Blackacre to B for $5,000. B pays the price to A as agreed, and A accepts the payment but refuses to transfer the land as agreed.

Answer 6

B is not entitled to specific performance, but can recover the amount of the payment.

Question 7

Restatement § 129 Action in Reliance; Specific Performance

A orally leases A’s farm to B for five years, agreeing that B will repair the premises at prevailing wages to be credited on the rent. B takes possession of the farm and does $1,000 worth of repair work, using material furnished by A. A then seeks to evict B.

Answer 7

B is entitled to $1,000 less the fair rental of the farm for the period of his occupancy, but is not entitled to specific performance or damages.

Question 8

Restatement § 129 Action in Reliance; Specific Performance

A and B make an oral agreement for the sale of Blackacre by A to B. With A’s consent B takes possession of the land, pays part of the price, builds a dwelling house on the land and occupies it. Two years later, as a result of a dispute over the amount still to be paid, A repudiates the agreement.

Answer 8

B may obtain a decree of specific performance.

Question 9

Restatement § 129 Action in Reliance; Specific Performance

A orally promises to make a gift of Blackacre to his son B and puts B in possession. With A’s consent B builds a dwelling house on the land and lives in it for twenty years until A dies, paying all taxes on the land.

Answer 9

B may obtain a decree of specific performance against A’s heir or personal representative.

Question 10

Restatement § 130 Contract Not to Be Performed Within a Year

Answer 10

(1) Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the Statute of Frauds until one party to the contract completes his performance.
(2) When one party to a contract has completed his performance, the one-year provision of the Statute does not prevent enforcement of the promises of other parties.

Question 11

Restatement § 130 Contract Not to Be Performed Within a Year Possibility of Performance Within One Year

A, an insurance company, orally promises to insure B’s house against fire for five years, B promising to pay the premium therefor within the week.

Answer 11

The contract is not within the Statute of Frauds, since if the house burns and the insurer pays within a year the contract will be fully performed.

Question 12

Restatement § 130 Contract Not to Be Performed Within a Year Possibility of Performance Within One Year

A orally promises to work for B, and B promises to employ A during A’s life at a stated salary.

Answer 12

The promises are not within the one-year provision of the Statute, since A’s life may terminate within a year.

Question 13

Restatement § 130 Contract Not to Be Performed Within a Year Possibility of Performance Within One Year

A and B, a railway, agree that A will provide grading and ties and B will construct a switch and maintain it as long as A needs it for shipping purposes. A plans to use it for shipping lumber from adjoining land which contains enough lumber to run a mill for 30 years, and uses the switch for 15 years.

Answer 13

The contract is not within the one-year provision of the Statute.

Question 14

Restatement § 130 Contract Not to Be Performed Within a Year Possibility of Performance Within One Year

A orally promises B to sell him five crops of potatoes to be grown on a specified farm in Minnesota, and B promises to pay a stated price on delivery.

Answer 14

The contract is within the Statute of Frauds. It is impossible in Minnesota for five crops of potatoes to mature in one year.

Question 15

Restatement § 130 Contract Not to Be Performed Within a Year Discharge Within a Year

A orally promises to work for B, and B promises to employ A for five years at a stated salary.

Answer 15

The promises are within the Statute of Frauds. Though the duties of both parties will be discharged if A dies within a year, the duties cannot be “performed” within a year. This conclusion is not affected by a term in the oral agreement that the employment shall terminate on A’s death.

Question 16

Restatement § 130 Contract Not to Be Performed Within a Year Discharge Within a Year

A orally promises to work for B, and B promises to employ A for five years at a stated salary. The agreement provides that either party may terminate the contract by giving 30 days notice at any time.

Answer 16

The agreement is one of uncertain duration and is not within the one-year provision of the Statute.

Question 17

Restatement § 130 Contract Not to Be Performed Within a Year Discharge Within a Year

A orally promises to work for B, and B promises to employ A for five years at a stated salary. The agreement provides that A may quit at any time.

Answer 17

The agreement is within the Statute.

Question 18

Restatement § 130 Contract Not to Be Performed Within a Year Discharge Within a Year

A, the maternal grandmother of a new-born illegitimate child, agrees with B, the father, that A will care for the child and B will make support payments until the child becomes 21 years old.

Answer 18

The agreement is not within the one-year provision of the Statute. If the child dies within a year, the primary object of furnishing necessaries to the child will be fully “performed”.

Question 19

Restatement § 130 Contract Not to Be Performed Within a Year Discharge Within a Year

A sells his grocery business to B, who pays part of the price and promises to pay the balance in a month, A agreeing orally not to engage in the grocery business in the same town for five years.

Answer 19

The contract is not within the one-year provision of the Statute, since A’s death within one year will give B the equivalent of full performance.

Question 20

Restatement § 130 Contract Not to Be Performed Within a Year The One-Year Period Without consideration

A promises B that, so long as B buys through A B’s requirements for gasoline and A accepts B’s orders, A will pay B an amount equal to the discount other distributors would allow B. For several years A accepts orders from B.

Answer 20

A’s promise is not within the one-year provision, since a separate contract is made each time A accepts an order.

Question 21

Restatement § 130 Contract Not to Be Performed Within a Year The One-Year Period

On December 1, 1966, A and B contract orally for A’s employment by B at a stated salary for a year beginning the following day.

Answer 21

The contract is not within the one-year provision, since the promised performance will be fully rendered before midnight of December 1, 1967.

Question 22

Restatement § 130 Contract Not to Be Performed Within a Year The One-Year Period

On December 1, 1966, A and B enter into an oral contract for the employment of A at a stated salary for the calendar year 1967. On the first working day in 1967, A presents himself for work, says “I understand these are the terms on which I am to be employed,” and restates the terms. B replies, “That is right.”

Answer 22

Though the original contract was within the Statute of Frauds, the subsequent restatement makes a new contract performable within a year.

Question 23

Restatement § 130 Contract Not to Be Performed Within a Year Full Performance on One Side

A sells and delivers goods to B in return for B’s promise to pay $1,000 in six months, $1,000 in a year and $1,000 in eighteen months.

Answer 23

B’s promises are not within the one-year provision of the Statute.

Question 24

Restatement § 130 Contract Not to Be Performed Within a Year Full Performance on One Side

A promises to pay B $5,000 in two years in return for B’s promise to render a stated performance for five years. A pays the $5,000 as agreed. B then refuses further performance.

Answer 24

The contract is withdrawn from the operation of the Statute.

Question 25

Restatement § 130 Contract Not to Be Performed Within a Year Part Performance

A and B contract orally for A’s employment by B at a stated salary for the ensuing two years. A works under the contract for 15 months when B discharges him without cause.

Answer 25

The contract is not withdrawn from the operation of the Statute, and A may not recover damages for wrongful discharge. But A may recover any unpaid salary.

Question 26

Restatement § 139 Enforcement by Virtue of Action in Reliance

Answer 26

(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires.

Question 27

Restatement § 139 Enforcement by Virtue of Action in Reliance Determining Factors

Answer 27

(2) In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant:
(a) the availability and adequacy of other remedies, particularly cancellation and restitution;
(b) the definite and substantial character of the action or forbearance in relation to the remedy sought;
(c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;
(d) the reasonableness of the action or forbearance;
(e) the extent to which the action or forbearance was foreseeable by the promisor.

Question 28

Restatement § 139 Enforcement by Virtue of Action in Reliance Avoidance of Injustice

A is lessee of a building for five years at $75 per month and has sublet it for three years at $100 per month. A seeks to induce B to purchase the building, and to that end orally promises to assign to B the lease and sublease and to execute a written assignment as soon as B obtains a deed. B purchases the building in reliance on the promise.

Answer 28

B is entitled to the rentals from the sublease.

Question 29

Restatement § 139 Enforcement by Virtue of Action in Reliance Avoidance of Injustice

A is a pilot with an established airline having rights to continued employment, and could take up to six months leave without prejudice to those rights. He takes such leave to become general manager of B, a small airline which hopes to expand if a certificate to operate over an important route is granted. When his six months leave is about to expire, A demands definite employment because of that fact, and B orally agrees to employ A for two years and on the granting of the certificate to give A an increase in salary and a written contract. In reliance on this agreement A lets his right to return to his prior employer expire. The certificate is soon granted, but A is discharged in breach of the agreement.

Answer 29

The Statute of Frauds does not prevent recovery of damages by A.

Question 30

Restatement § 139 Enforcement by Virtue of Action in Reliance Particular Factors

A orally promises to pay B a commission for services in negotiating the sale of a business opportunity, and B finds a purchaser to whom A sells the business opportunity. A statute extends the Statute of Frauds to such promises, and is interpreted to preclude recovery of the reasonable value of such services.

Answer 30

The promise is not made enforceable by B’s reliance on it.

Question 31

Restatement § 139 Enforcement by Virtue of Action in Reliance Partial Enforcement; Particular Remedies

A renders services to B under an oral contract within the Statute by which B promises to pay for the services.

Answer 31

On discharge without cause in breach of the contract, A is entitled to the reasonable value of the services, but in the absence of additional circumstances is not entitled to damages for wrongful discharge.

Question 32

Restatement § 131 General Requisites of a Memorandum

Answer 32

Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which

(a) reasonably identifies the subject matter of the contract,
(b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party,

and (c) states with reasonable certainty the essential terms of the unperformed promises in the contract.

Question 33

Restatement § 131 General Requisites of a Memorandum Types of Documents

A publishes in a newspaper an offer to buy certain goods, stating the terms of his proposal, and his name is printed under the advertisement. B accepts the offer.

Answer 33

The advertisement is a sufficient memorandum to charge A.

Question 34

Restatement § 131 General Requisites of a Memorandum Types of Documents

A writes and signs in pencil a receipt for $1,000 which recites that the money is received from B as part payment of the price of $5,000 for a parcel of land.

Answer 34

The receipt is a sufficient memorandum to charge A on the agreement recited.

Question 35

Restatement § 131 General Requisites of a Memorandum Subject Matter

A and B enter into an oral contract by which A promises to sell and B to buy such of A’s iron in his millyard as he may decide to sell. A memorandum describes the subject matter of the contract as “all A’s iron which he may decide to sell.”

Answer 35

The description is sufficient.

Question 36

Restatement § 131 General Requisites of a Memorandum Subject Matter

A and B enter into an oral contract for the sale and purchase of Blackacre. An otherwise sufficient memorandum, signed by A and B, describes the subject matter as “the land on the corner of X and Y Streets,” omitting any statement as to the city or state.

Answer 36

A owns only one of the four lots at the intersection. The description is sufficient.

Question 37

Restatement § 131 General Requisites of a Memorandum Subject Matter

A and B enter into a written contract for the employment of B as A’s sales manager for a term of two years. At the end of the two years, A and B orally agree to extend the employment for three more years at an increased salary. A year later A signs the following memorandum: “It is understood that the arrangements made for employment of B in our business on January 1, 1977, for a period of three years from that date at a salary of $30,000 per year, continues in force until January 1, 1980.”

Answer 37

The memorandum sufficiently identifies the nature of B’s employment.

Question 38

Restatement § 131 General Requisites of a Memorandum Contract Between the Parties

A and B are negotiating for the sale of A’s restaurant to B. B gives A a check for $500 bearing the notation “Tentative deposit on tentative purchase of 1415 City Line Ave., Phila. Restaurant, Fixtures, Equipment, Good Will.” Later A and B orally agree on terms of sale.

Answer 38

The quoted memorandum is not sufficient to indicate that a contract for sale has been made.

Question 39

Restatement § 131 General Requisites of a Memorandum Terms; Accuracy

A and B enter into an oral contract for the sale of Blackacre by A to B. A memorandum is made and signed which states sufficiently the parties, subject matter and terms of the oral bargain except that, though the parties in fact orally agreed that the price should be payable on delivery of a deed, the memorandum contains no statement as to when the price is payable.

Answer 39

The memorandum is sufficient.

Question 40

Restatement § 131 General Requisites of a Memorandum Terms; Accuracy

A and B enter into an oral contract for the sale of Blackacre by A to B, and both sign a memorandum providing for a “purchase money mortgage in the amount of $18,000 payable for 15 years at 5%.” B claims a right to pay $142.35 per month; A claims a payment of $100 a month plus monthly interest at 5%. No usage is shown.

Answer 40

The memorandum is not sufficient to support an action by B for specific performance on his terms.

Question 41

Restatement § 132 Several Writings

Answer 41

The memorandum may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction.

Question 42

Restatement § 132 Several Writings Several Signed Writings

A signs and sends to B a letter stating that he is interested in leasing a parcel of land from B. After six months of negotiations A and B orally agree on an eight-year lease of the parcel with an option to purchase, and both sign a memorandum which is sufficient except that it does not identify the land.

Answer 42

The two documents together constitute a sufficient memorandum to charge A.

Question 43

Restatement § 132 Several Writings Reference to Unsigned Writing: Physical Connection

A and B enter into an oral contract within the Statute. A memorandum of the contract is made on two sheets of paper. The contents of the sheets do not show that they belong together, but A signs one and then fastens the sheets together with a clip.

Answer 43

Even though the clip is later removed, the fastening is a sufficient adoption of A’s signature with reference to both sheets to charge A, but only if the evidence of the fastening is clear and convincing.

Question 44

Restatement § 134 Signature

Answer 44

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.

Question 45

Restatement § 134 Signature Place of Signature; “Subscribed”

A and B make an oral contract within the Statute. A sends to B a written acceptance, stating the terms, on a form bearing A’s name as a printed heading. At the foot of the form is the word “Accepted” followed by a blank space for signature, which is not filled in.

Answer 45

In the absence of other evidence of intention, the form is not signed by A.

Question 46

Restatement § 134 Signature Place of Signature; “Subscribed”

A and B make an oral contract within the Statute. A writes a memorandum stating the terms which begins, “I, A, make the following contract with B.” A then delivers the memorandum to B.

Answer 46

This is A’s signature if the trier of fact infers A’s intent to authenticate the writing.

Question 47

Restatement § 134 Signature Place of Signature; “Subscribed”

A and B make an oral contract within the Statute. A clerk makes a written statement of the contract, and A writes at the top thereof—“O.K.” followed by A’s initials.

Answer 47

This is a signature by A.

Question 48

Restatement § 134 Signature Time of Signing; Blanks and Alterations

A has a number of forms of letters printed ending with the words, “Yours very truly, A.” With A’s authority a clerk fills in one of the forms with the terms of an offer to B and sends it to B. B accepts orally.

Answer 48

A’s printed name is his signature.

Question 49

Restatement § 135 Who Must Sign

Answer 49

Where a memorandum of a contract within the Statute is signed by fewer than all parties to the contract and the Statute is not otherwise satisfied, the contract is enforceable against the signers but not against the others.

Question 50

Restatement § 136 Time of Memorandum

Answer 50

A memorandum sufficient to satisfy the Statute may be made or signed at any time before or after the formation of the contract.

Question 51

Restatement § 137 Loss or Destruction of a Memorandum

Answer 51

The loss or destruction of a memorandum does not deprive it of effect under the Statute.

Question 52

UCC § 2-201. Formal Requirements; Statute of Frauds $500 or More

Answer 52

(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is 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 or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.

Question 53

UCC § 2-201. Formal Requirements; Statute of Frauds Between Merchants

Answer 53

(2) 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.

Question 54

UCC § 2-201. Formal Requirements; Statute of Frauds Validity

Answer 54

(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable
(a) 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; or
(b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
(c) with respect to goods for which payment has been made and accepted or which have been received and accepted.

Question 55

Statute of Frauds

Answer 55

Must be in writing. Applies to

• Marriage: contracts made under consideration of marriage
• Year: contracts unable to be performed within one year
• Land: contracts for the sale of an interest in land
• Executory: contracts that transfer the duty of a decedent to an executor
• Goods: contracts for the sale of goods exceeding $500 (UCC)
  
  • Exception: If the contract is between merchants, an oral contract is sufficient if written confirmation of the agreement is sent within a reasonable time thereafter, unless the other sends a written objection.
• Surety: contracts to answer for the duty of another