Statute of Frauds

Question 1

What does the Statute of Frauds require?

Answer 1

Writing Requirement: The statute requires that there is a writing that: (i) reasonably identifies the subject matter of the contract, (ii) indicate that a contract has been made between the parties, and (iii) state with reasonable certainty the essential/material terms terms.

For an Article 2 Sale of Goods - there must be a quantity term.

For an Article 2A Lease of Goods - must state that its a lease, include the quantity, duration, and rental payments; and be signed by the defendant.

Signature Requirement: the writing must be signed by the party to be charged with breach of contract (i.e. the defendant).

Question 2

What contracts are covered by the Statute of Frauds?

Answer 2

Use the acronym MY LEGS:

• Promises in consideration of Marriage*: this applies to promises that induce marriage by offering something of value (other than a return promise to marry).
• Performance not within one Year:* A promise that by its terms cannot be performed within one year is subject - part performance does not satisfy the SOF. The date runs from the date of the agreement, not from the date of performance. Contracts measured by a lifetime do not fall under the SOF.
• Interest in Land:* A promise creating an interest in land includes sale of real property, leases for more than one year, easement of more than one year, mortgages and most other security liens, fixtures; and minerals (or the like). This DOES NOT include contracts to buy a building or fix something on the land.

Executor or Administrator Promises to Pay Estate Debts: A promise by an executor or administrator to pay the estate’s debts out of his own funds.

Sale of Goods Priced at $500 or More: A writing is sufficient even though it omits or incorrectly states a term, but the contract is not enforceable beyond the quantity of goods shown in the writing.

Suretyship Promises: this is the promise to answer for the debt or default of another - it must be collateral to another person’s promise to pay, and not a primary promise to pay. However, if the main purpose of the contract is to serve the promisor’s interest, the contract is not within the SOF.

Question 3

How does contract modification work under the Statute of Frauds?

Answer 3

The contract must be in writing only if the contract as modified (not the original contract) is within the Statute of Frauds.

Question 4

How do prohibitions on oral modifications work under the Statute of Frauds?

Answer 4

Sale of Goods: If the original written contract prohibits oral modification, the modification would have to be in writing because Article 2 allows parties to create their own private SOF.

Common Law: clauses that prohibit oral modifications are not enforceable - so you can always modify a contract orally under the common law, even if you have agreed not to.

Question 5

What are exceptions to the Statute of Fraud?

Answer 5

Real Property:

**Leases of one year or less: **legislative exception to ensure short-term leases are not invalidated

“Part Performance” Exception: Requires two of the following three facts - (i) buyer in possession, (ii) buyer made some payment; (iii) buyer made improvements.

One-Year Prong - Full Performance Exception: if one party has performed for the full time, there is less likely to be fraud. However, part performance is not enough to satisfy this exception. May be able to recover in restitution.

Sale of Goods:

Goods Accepted or Paid for By Buyer: only applies to goods accepted or paid for, not the whole contract. However, if you cannot apportion the good, the whole contract is taken out of the SOF.

Custom-Made Goods: the seller made a substantial start and it is not suitable for sale to others.

Judicial Admission: in a deposition or testimony, the parties acknowledge that there is a contract.

Merchant’s Confirmatory Memo: one party can use its own signed writing to satisfy the SOF against the other party if: (i) both parties are merchants; (ii) writing claims agreement and has quantity AND (iii) there is no written objection within 10 days.

Suretyship - “Main Purpose” Exception: If the main purpose for the promisor is to benefit his or herself, this takes it out of the SOF.