Statute of Frauds

Question 1

What satisfies a contract that falls under the SOF categories?

Answer 1

1. Performance or Writing - depends on UCC or CL

Question 2

Which sorts of contracts are subject to SOF?

Answer 2

MYLEGS

M = marriage
Y = terms cannot be performed within one year
L = Land
E = Executor
G = Goods for $500 or more
S = Surety

Question 3

True or false: All land contracts are subject to SOF

Answer 3

False. Only contracts transferring an interest in land

Question 4

True or false: partial performance of a service contract satisfies SOF

Answer 4

False. Must be performance in full under CL

Question 5

Under CL, what sort of writing prevents SOF claims?

Answer 5

1) Any sort of writing (doesn’t need a formal contract)

2) Signed by the party against whom the contract is asserted

3) Showing that the contract had been made

4) Identify the parties

5) Contains essential elements

Question 6

Will a signed writing satisfy SOF for real estate transactions?

Answer 6

Yes

Question 7

Will performance satisfy SOF requirements for real estate transactions?

Answer 7

Yes, IF 2/3 of the following elements are met

1) Possession
2) Payments
3) Improvement of the land

Question 8

Under the UCC, does a signed writing backing up the sale of goods over $500 satisfy SOF?

Answer 8

No, Writing must mention quantity.

Question 9

True or false: partial performance for goods over $500 satisfies SOF?

Answer 9

True, but only for the quantity delivered and accepted.

Question 10

Are specially made goods subject to SOF?

Answer 10

Specially manufactured goods are exempted from SOF. Makers can satisfy SOF as soon as a substantial beginning towards making the goods has commenced.

Question 11

True or false: a judicial admission does not satisfy SOF requirements for contracts involving goods over $500

Answer 11

False. Judicial pleadings, including a statement in a pleading or during testimony, etc. are sufficient for UCC SOF purposes.

Question 12

What happens when one merchant sends another merchant a memo confirming the sale of goods over $500 and the other merchant does not object?

Answer 12

SOF is satisfied because

1) Both parties are merchants
2) The merchant who received the memo did not object within 10 days.

Question 13

What is the equal dignity rule under SOF?

Answer 13

Requires signed writing to authorize an agent to form a contract in a SOF category.

Question 14

How do parties determine if an initial contract that meets SOF requirements and then is modified needs additional SOF requirements?

Answer 14

Ask: Whether the deal, with the alleged modification, would be fall under SOF category?

Yes = the Statute of Frauds requirements must be met for the modification

No = There is no Statute of Frauds requirement, even though the initial deal was in SOF world

Question 15

An adult daughter called a local restaurant to place a large delivery order. The restaurant generally requires a credit card for all delivery orders, but the daughter’s father, who is a regular at the restaurant and happened to be there when the daughter placed the order, told the clerk that, in the event the daughter failed to pay for the food, he would do so.

The restaurant delivered the order to the daughter, who, having decided to order something else instead, refused to accept or pay for the food.

Can the restaurant collect from the father?

Answer 15

No, because the father’s promise was made orally.

The Statute of Frauds applies to suretyship agreements (i.e., one person’s promise to pay the debts or be responsible for an obligation of another)

Question 16

In anticipation of the holiday season, a toy store owner sent a signed, written order for 100 dolls at a cost of $100 per doll to a manufacturer.

The manufacturer initially refused to accept the order due to the owner’s bad credit, but shipped the doll to the owner when an investor, who had previously loaned the toy store owner $25,000 in order to keep the store afloat, called the manufacturer and guaranteed that if the owner failed to pay for the dolls, she would do so.

The investor was worried that without this wildly popular doll, the store would not attract sufficient customers for the holidays, and the investor would lose her investment when the owner was forced to close the store.

Due to discounts offered on the doll by larger competing retailers, the owner only sold ten dolls. The owner paid the manufacturer $1,000 for the dolls that were sold, but refused to pay the remaining $9,000. When the manufacturer contacted the investor for payment, the investor also refused to pay the manufacturer the remaining $9,000.

If the manufacturer sues the investor to recover the $9,000, will it likely prevail?

Answer 16

Yes, because the investor’s purpose in agreeing to pay the manufacturer was to protect her investment in the toy store.

if the main purpose of a surety in agreeing to pay the debt of the principal is the surety’s own economic advantage, rather than the principal’s benefit, then the contract does not fall within the Statute of Frauds, and an oral promise by the surety is enforceable.

Question 17

A daughter wanted to go to law school after she graduated from college. She took out a loan of $150,000, intending to use it to pay for her law school tuition. When she told her father about the loan and her plan, the father told her, “I think that is a very wise career choice, and I want to support you. If you go to the same law school I attended, when your loans go into repayment in three years, I will handle it.” T

he daughter did not reveal that she had been accepted by the same law school as her father and had already enrolled there. Instead, she thanked him and went to the law school.

After two and a half years, the daughter decided she did not want to practice law. She dropped out and used the remainder of her loan to travel the world. Her loan went into repayment three years after the father made his promise. She asked her father to start making the loan payments on her behalf. The father refused. The daughter has brought an action against her father to enforce his promise to repay the daughter’s loan.

Is the daughter likely to succeed in her action?

Answer 17

Yes, because the daughter fully performed by attending the same law school as her father.

full performance by either party to the contract will generally take the contract out of the Statute of Frauds

Question 18

In a telephone conversation, a real estate investor promised to pay a home owner $500,000 for the owner’s two-story house. The investor gave the owner $100,000 and told the owner he was going to have a crew come over to do renovation work on the house.

Over the next three weeks, the investor’s crew gutted the house’s kitchen and replaced it with high-end cabinets and appliances, laid new flooring, installed new insulation, and rewired the electrical system in the entire house. When the agreed-upon date arrived for closing, the owner told the investor that he had changed his mind and would not sell the house. T

he investor sued for enforcement of the real estate sales contract. Will he likely prevail?

Answer 18

Yes, because the investor had partially performed the contract.

Most jurisdictions require two of the three following acts to establish sufficient part performance:
(i) payment of all or part of the purchase price;
(ii) possession by the purchaser; or
(iii) substantial improvement of the property by the purchaser.