Statute of Frauds

Question 0

What are the 3 questions that must be answered in a SoF analysis

Answer 0

1. Does the agreement fall within the SoF?
2. Is the Statute of Frauds Satisfied?
3. Is Alternative Enforcement available?

Question 1

Statute of Frauds in Operation

Answer 1

SoF provides an exception to the general rule that contracts need not be in a writing.

If a contract is governed by the SoF it must be evidenced by a writing and signed by the person against whom enforcement is sought.

A party who does not sign a contract governed by the SoF has a defense against the party seeking enforcement.

Question 2

6 Categories of Agreements Governed by the SoF

Answer 2

1. Marriage - pre-nuptial agreements, etc.
2. Year - Contracts not to be performed within one year of making
3. Land
4. Executor - Contracts for an executor or administrator to answer for a decedent.
5. Guarantee or Suretyship
6. Sale of Goods over $500 (UCC SoF)

Question 3

Contracts Not to be Performed within One Year

Answer 3

If it is POSSIBLE to complete the required performance within one year of MAKING THE CONTRACT, then SoF is NOT triggered.

Whether the contact can be breached within one year is irrelevant

Lifetime or permanent contract of employment IS POSSIBLE within one year and does not trigger SoF

Question 4

Land Sale Contracts

Answer 4

SoF Governs Future Sales and includes Leases

But present conveyance of land for money is outside the land provision of the SoF

RE Brokerage contracts are service contracts and not governed by the land provision of the SoF

Question 5

Guaranty or Suretyship Agreement - General Rule and Exceptions

Answer 5

A promise to answer for the debt of a 3rd party is subject to the SoF and must be in writing and signed by the party against whom enforcement is sought.

Except
1. When a creditor discharges the original debtor from his obligation on the faith of a guarantee from a 3rd party to pay the debt.

2. MAIN PURPOSE DOCTRINE: where the main purpose of the guarantee is to protect his own interests.

Question 6

Is the SoF satisfied - Writing Requirement

Answer 6

Parties need not put the entire agreement in writing. Writing must be some memorandum of the agreement. Can be prepared before, during, or after formation.

Question 7

Example memoranda held to satisfy the writing requirement

Answer 7

1. Letter from one party to a 3rd Party
2. Written offer, the acceptance of which would form the contract
3. Letter from one of the parties repudiating, but so admitting the existence of the contract.

Question 8

Content Requirement of a Memorandum

Answer 8

Identity of the Parties to the Transaction
Nature and subject matter of the contract
Essential terms such as price and date of performance.

Question 9

Required Description under the Land Provision

Answer 9

Older case law required formal legal descriptions including meets and bounds.

Current law suggests that address or other description is sufficient.

Question 10

What is needed for the signature requrement

Answer 10

Any symbol or mark used with the intention to authenticate the writing. Can include initials, stamped signature, or letterhead.

Question 11

Tacking of Multiple Documents - Defined

Answer 11

A writing may tack together several documents that, when combined, satisfy all the requirements of the SoF. If all documents are signed, or if one document incorporates unsigned documents by reference, the SoF is satisfied. If unsigned documents are NOT incorporated by reference in a signed document they may be tacked together if 3 requirements are met.

Question 12

Tacking Unsigned Documents that are NOT incorporated by reference in a signed document is permissible If these conditions are met

Answer 12

1. There must be at least one signed document unambiguously establishing a contractual relationship between the parties.
2. Signed and Unsigned documents clearly refer to the same subject matter.
3. There must clear and convincing evidence of acquiescence to the unsigned documents by the party against whom enforcement is sought.

Question 13

Performance Exception to the SoF Requirement

Part Performance Exception Requirements for Land Contracts

Answer 13

Requires a showing of any combination of the following

1. Payment of all or part of the purchase price
2. Taking Possession
   3, Making substantial Improvements on the property

Question 14

Performance Exception to SoF - One Year Contract

Answer 14

If a contract has been fully performed, then an oral contact not to be performed within one year becomes enforceable.

If partially performed, an oral contract not to be performed within one year is NOT enforceable.

Quantum Meruit - may provide a possible workaround for the party who would otherwise be unavailable to a remedy because of SoF

Question 15

Performance Exception to SoF - Sale of Goods Contracts

Answer 15

UCC SoF may be satisfied by part performance of a sale of goods contracts.

Question 16

Enforcement options for aggrieved party where SoF is Not Satisfied

Answer 16

If breaching party never signed a written document

May bring an action for restitution or,
if services are involved, quantum meruit for reasonable value of services performed,
or promissory estoppel

Question 17

Promissory Estoppel and SoF

Answer 17

PE may be available for detrimental reliance for losses suffered on the faith of an oral contract where enforcement is barred by the SoF.

Easy Case is where a party to an oral contract w/i the SoF promises to create a signed writing and the other party relies by failing to take steps to satisfy the Statute. courts will apply PE if the party does not create a signed writing.

More difficult is where the parties rely on the underlying oral contract itself

Question 18

Split on PE enforcement of contract barred by SoF

Answer 18

Slim majority holds that PE is available provided there is strong evidence of reliance.

Minority view is that the CL doctrine of PE is preempted by the SoF

Question 19

Analysis under the UCC SoF

Answer 19

1, Is the contract within the UCC SoF - Sale of goods +$500

2. Is the UCC SoF satisfied?
3. Is there an alternative basis for enforcement?

Question 20

List the 5 ways to Satisfy the UCC SoF

Answer 20

1. A signed writing
2. Merchants Confirmation
3. In Court Admission
4. Partial Performance
5. Problem of Specially Manufactured Goods

Question 21

Elements of A Signed Writing Sufficient to satisfy the UCC SoF

Answer 21

1. A writing - any intentional reduction to tangible form
2. Signed by a party against whom enforcement is sought. Signature is any symbol executed or adopted by a party with the present intent to authenticate a writing.
3. Must be sufficient to indicate that contract for the sale of goods HAS BEEN MADE between the parties.

Question 22

How to satisfy the UCC SoF requirement that the writing be sufficient to indicate that a contract for the sale of goods was made between the parties?

Answer 22

Writing must provide a basis for believing that the offered oral evidence rests on a real transaction.

Question 23

Required Term to Satisfy UCC SoF Writing Requirement

and Exceptions

Answer 23

Quantity Term is required. The contract will be unenforceable beyond the stated term.

EXCEPT

Where there is language in the contact provides an unambiguous basis for measuring quantity. OR

Contract provides for an output or requirements contract.

Question 24

Written Offers under the UCC

Answer 24

Are not sufficient to satisfy the SoF writing requirement because they are not sufficient to show that a contract has been made.

EXCEPT

Where requirements of the UCC firm offer rule are met, this will be fully enforceable against the one making the offer

Question 25

Merchants Confirmation

Answer 25

SoF may be satisfied where 2 merchants enter into an oral agreement and one sends the other written confirmation of the agreement. In such circumstance if the other merchant FAILS to object to the confirmation within 10 days, the statute will be satisfied against the receiving merchant

Question 26

Requirements for a Valid Merchants Confirmation

Answer 26

1. Confirmation must be sufficient against the sender - signed and contains a quantity term.
2. Writing is in confirmation of the contract
3. Time Frame for Sending is within a reasonable period of time from formation
4. Recipients Reason To Know - confirmation must be based on an actual agreement or discussion between the parties and must be actually received by the party.

Question 27

Exception with Merchants Objecting Response

Answer 27

Recipient of a merchants confirmation must send a written notice of objection within 10 days of receipt to keep a SoF defense.

Question 28

Merchants Confirmation and the Admitting Memorandum

Answer 28

The SoF is satisfied against the sender of an admitting memorandum

Question 29

Satisfaction of the UCC SoF - In Court Admission

Answer 29

A party admitting in a pleading, testimony, or otherwise in court that a contract for sale was made will be sufficient for the SoF.

The Contract will be enforceable only up to the quantity admitted

Question 30

Satisfaction of the UCC SoF - Partial Performance

Answer 30

Despite the absence of a signed writhing an otherwise valid contract will be enforceable with respect to:

1. Goods for which payment has been received and accepted or
2. Goods that have been received and accepted.

Part Performance will only apply where there are actions by both parties demonstrating that a contract exists.

Question 31

UCC SoF - Part Performance - Divisible Goods vs Indivisible Goods

Answer 31

Divisible Goods - contract is enforceable oly as to the goods actually delivered and paid for./

Indivisible Goods - Partial Payment renders the contract fully enforceable.

Question 32

UCC SoF - Specially Manufactured Goods - 5 elements necessary to satisfy the Statute

Answer 32

1. Goods are to be specially manufactured for buyer
2. Goods are not suitable for sale to others in the ordinary course of business.
3. Seller has substantially begun to manufacture or made commitments to procure the goods
4. Actions undertaken to begin to manufacture or procure under circumstances that reasonably indicate that goods are for the buyer
5. Actions undertaken to begin to manufacture occurred before seller received notice of buyers revocation

Question 33

2 Critical Concerns with Specially Manufactured Goods

Answer 33

1. Can the manufacturer resell the goods in the ordinary course of business?
2. Was the manufacturers detrimental reliance complete before buyers notification of withdrawal.

Question 34

Is there an alternative basis for enforcement?

UCC SoF

Answer 34

Majority Courts make PE available if a strong case is shown.

Minority view is that SoF express language precludes PE

Construction Contractors - GC’s are protected via PE even if the contract is for goods greater than $500

Question 35

Limitation of SoF

Answer 35

The effect of a successful SoF defense is to defeat enforcement of the contract against the non-signing party. Contract may still be valid for:

1. Evidence establishing an element of a legal claim apart from breach of contract
2. Evidence of a defense to a legal claim apart from breach
3. Oral contract may provide evidence of the value of the services already rendered.