Statute of Frauds

Question 1

What is MY LEGS?

Answer 1

Marriage—when marriage is consideration for promise (e.g., “If you marry my son, I will buy you a car”)

Year—promises that cannot be performed within one year from date of contract

Land—promises creating interests in land (e.g., leases, easements, fixtures, mineral rights, mortgages)

Executors and administrators—promises to pay estate debts from own funds

Goods—contracts for sale of goods for a price of $500 or more (except for specially manufactured goods, good accepted, or paid for)

Suretyship—promise to answer for debt of another

Question 2

Builder alleges that W orally agreed to have him build a fence around his ranch.

Is this enforceable?

Answer 2

This is enforceable. The oral promise does not fall within the SoF because there is no transfer of interest in real property.

Question 3

W authorizes an agent to sell the ranch. Must the agent’s authorization be in writing?

Answer 3

Yes, the agent’s authorization must be in writing because this involves the transfer of an interest in real property. It must satisfy the SoF.

Question 4

B alleges that W orally agreed to lease him a cabin on the ranch. Is this enforceable?

Answer 4

No. A lease is a transfer of interest in property and falls within the SoF.

Question 5

S orally agreed to employ B for the rest of this life. Is a writing required?

Answer 5

No. B could complete his employment for S within the year and so it does not fall under the SoF.

Question 6

In May 2018, Club orally agreed to have E perform at its NYE Gala on December 31, 2019. Is their oral agreement enforceable?

Answer 6

No. The duration of the performance is irrelevant - the contract itself cannot be completed within a year. SoF applies.

Question 7

A orally agreed to buy a phone for $500. Is a writing required?

Answer 7

Yes. For the sale of goods $500+, a writing is required because it falls under the SoF.

Question 8

H contracted in writing to buy $400 worth of shampoo. LO claims that they and H later agreed to modify the contract to buy $800 worth of shampoo. Does the modification have to be in writing?

Answer 8

Yes. The modification must be in writing because it involves the sale of goods at least $500 and falls within the SoF.

If the modification was $499.99 worth of shampoo, the modification would not need to be in writing because it would not fall within the SoF.

Question 9

H contracted in writing to buy $400 worth of shampoo. LO claims that they and H later agreed to modify the contract to buy $800 worth of shampoo.

The original contract prohibited oral modification. What is the result?

Answer 9

The modification needs to be in writing, regardless of the amount because of the prohibition against oral modifications.

Question 10

T/F: Under common law, clauses that prohibit oral modification are not enforceable.

Answer 10

True.

Question 11

How do you satisfy the writing requirement for the sale of goods?

Answer 11

To satisfy the writing requirements for the sale of goods, you just need to specify the quantity and it is signed by the would-be defendant.

Question 12

How do you satisfy the writing requirements for non-sale of goods contracts?

Answer 12

For all other contracts, you must have all material terms and be signed by the defendant.

Question 13

BG alleges that R orally agreed to sell him R’s island for $400,000. BG has paid R the entire $400,000. Does BG’s full payment satisfy the SoF?

Answer 13

No. BG paying the full amount for the orally-agreed upon island does not satisfy the SoF. To satisfy the SoF, BG must have two of the following: payment, possession, and/or improvements. BG just has payment.

Question 14

What is the merchant’s confirmatory memo?

Answer 14

The merchant’s confirmatory memo is when 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/has quantity; and
(iii) there is no written objection within 10 days

Question 15

YSL sends CK a signed letter “confirming our oral agreement for the sale of 9 gowns for $2.7M.” CK does not respond.

Will YSL’s letter satisfy the SoF against CK?

Answer 15

Yes. This satisfies the SoF requirement that is otherwise needed for the sale of goods at least $500.

The merchant’s confirmatory memo applies because: both YSL and CK are merchants, there is a written confirmation with the quantity and claims agreement; and there is no indication that CK objected within 10 days.

Question 16

Which of the following contracts must be evidenced in writing?

A– A contract to build a building

B– A mortgage contract

C– A six-month lease of a parcel of land

D– A contract between business partners to buy and sell real estate and divide the profits

Answer 16

Under the SoF, a promise creating an interest in land must be evidenced by a writing. This includes not only agreements for the sale of real property, but also other agreements pertaining to land, such as a mortgage contract.

The other contracts do not fall within the SoF. A contract that has an end result involving land does not apply (for a building or to buy and real estate with a partner). A lease of a parcel of land for more than one year is also covered by the Statute, but a six-month lease is not.

Question 17

A man and a woman met in a bar. While the two enjoyed a couple of drinks, the woman told the man that she greatly admired the diamond stickpin he had in his lapel. “Oh, this,” the man laughed. “It’s no diamond; it’s only a piece of glass.” The woman acknowledged his statement, but kept commenting on how nice it looked. After further conversation, the man orally agreed to sell the stickpin to her for $500. They agreed that in four days, the man would bring the stickpin to the same bar, and the woman would bring the $500 in cash. The woman wrote down her name and phone number on a napkin and asked the man to call her if there were any change in plans. The man duly appeared with the pin, but the woman failed to appear. The man filed suit against the woman for $500.

What would be the woman’s best defense?

Answer 17

A promise for the sale of goods priced at $500 or more is not enforceable under the SoF unless evidenced by a writing signed by the party to be charged. Here, the woman is the party to be charged, and her promise to pay $500 was only oral. The napkin with the woman’s name and number would not be sufficient to satisfy SoF. To satisfy the SoF, the UCC requires that the writing indicate that a contract has been made and specify the quantity term. Here, the napkin does not indicate that there is a contract. It merely contains a name and phone number. A court could not enforce a promise based on the writing. Thus, the woman’s promise is unenforceable.

Question 18

On April 15, a wholesaler of tulip bulbs telephoned a local nursery and offered to sell to the nursery 80 gross of tulip bulbs for $8,000, not including delivery charges. The nursery accepted immediately. On April 17, the nursery sent the wholesaler an email confirming the deal for the sale of 80 gross of tulip bulbs for $8,000, and stating that it anticipated a waiver of the delivery charges because of the size of the order. On May 3, the wholesaler telephoned the nursery and stated that, due to a poor growing season for tulips, it would not be able to supply any tulip bulbs to the nursery.

If the nursery brings suit against the wholesaler and the wholesaler asserts the Statute of Frauds as a defense, will the nursery prevail?

Answer 18

Because the quantity was stated in the April 17 email, the SoF is satisfied and the nursery may prevail. SoF requires that a contract for the sale of goods for $500 or more be evidenced by a writing signed by the party to be charged. This writing must contain the essential elements of the agreement. The quantity term is the key to the sufficiency of a memorandum, and here the writing includes the quantity term.

In a deal between merchants, a writing confirming the deal sent by one party will bind both parties, unless the other party objects in writing within 10 days. Here, the wholesaler did not object within 10 days, and so the nursery’s email confirmed the deal. Thus, the wholesaler can be charged even though the wholesaler has not signed the memorandum.

Question 19

A landowner and a purchaser orally agreed that the landowner would convey 20 acres of his 160-acre farm to the purchaser. At the time of their agreement, the landowner wrote on the back of an envelope, “I hereby promise to convey the northern 20 acres of my farm to [the purchaser] for $10,000.” One month later, the purchaser tendered $10,000 to the landowner, but the landowner refused to convey the 20 acres.

If the purchaser sues the landowner to convey the land and the landowner prevails, what will be the most likely reason?

Answer 19

If the landowner prevails, it will be because the writing was not signed by the landowner. Under the SoF, to be enforceable a contract for the sale of land must be evidenced by a writing signed by the party sought to be charged. Here, the landowner is the party that the purchaser is seeking to charge, so his signature is required on the writing.

Question 20

A landowner advertised in the newspaper that he wished to sell 40 acres of land at $10,000 per acre. A rancher who was looking to expand his holdings was interested, so he came out to inspect the property. After the inspection, the rancher agreed to purchase the land for $400,000. A contract for the sale of the 40 acres was prepared and signed by the landowner and the rancher. The contract failed to state the purchase price. Later, the rancher had a change of heart and refused to complete the purchase.

In the landowner’s lawsuit for breach of contract, for which party would the court likely hold?

Answer 20

Under the SoF, contracts for the sale of land must be in writing. The writing must contain all essential terms, and the price is considered an essential term.

Although the parol evidence rule might not bar the testimony, the SoF will prevent recovery.

Question 21

In a contract for a sale of goods priced at $500 or more, if the goods are _________ or __________, the contract will be enforced even if there is no writing.

Answer 21

If goods are either received and accepted or paid for, the contract is enforceable without a writing. However, the contract is not enforceable beyond the quantity of goods accepted or paid for. Thus, if only some of the goods called for in the oral contract are accepted or paid for, the contract is only partially enforceable.

Question 22

T/F: A contract for specially manufactured goods, i.e., goods that are to be specially manufactured for the buyer and are not suitable for sale to others by the seller in the ordinary course of his business, can sometimes be enforceable without a writing, but only under circumstances where the seller has reasonably indicated that the goods are for the buyer and made a substantial beginning in their manufacture or committed for their purchase before notice of a repudiation was received. There is no exception to SoF for unique goods.

Answer 22

True.

Question 23

What does the SoF require?

Answer 23

The SoF requires only one or more writings that (i) reasonably identify 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 terms.

*The party to be charged (defendant) needs to have signature on writing.

Question 24

How does SoF relate to land?

Answer 24

Land: promise creating an interest in land

(i) leases for more than one year
(ii) sale of real property
(iii) easements of more than one year
(iv) mortgages
(v) fixtures
(vi) minerals or structures severed by the buyer

SoF does not relate to items that do not create an interest in land, such as a contract to build a structure or to find a buyer for a seller.

*Full performance by the seller also takes the contract out of SoF and buyer’s part performance can take the contract out of SoF if there is two of the following: payment, possession, and/or valuable improvements.

Question 25

How does SoF relate to goods at least $500?

Answer 25

Goods $500 and up.

(i) unless it pertains to specially made goods (substantial beginnings of manufacture)
(ii) if goods are either received and accepted or paid for

Question 26

How do you remember the SoF exceptions?

Answer 26

To remember the SoF exceptions, try SWAP.

• Specially made goods
• Written confirmation by a merchant
• Admission in court
• Performance

Question 27

T/F: Where parties orally agree to an installment land contract, possession + payment does not unequivocally indicate a contract for sale.

Answer 27

True. When parties orally agree to an installment land contract, possession and payment does not mean that this satisfies buyer’s part performance. Instead this could just be consistent with a lease and the buyer actually just paying rent as normal.

Question 28

How does part performance take the sale of goods out of SoF?

Answer 28

Part performance takes the sale of goods out of SoF when:

(i) goods have been specially manufactured OR
(ii) goods have been either paid for or accepted

*If a sales contract is only partially paid for or accepted, the contract is enforceable only to the extent of the partial payment or acceptance.

Question 29

The father of a high school senior who had poor grades his junior year offered to pay his son $1,000 if he quit playing video games for the rest of the school year. The son agreed to quit that very day. But the son had doubts his father would pay, so he told his mother. The mother told him, “Go ahead and quit - if your father won’t pay, I’ll see that you get the money he promised you from my own account.”

The son quit playing video games for the rest of the school year, but his parents did not live to see him complete this.

The father’s estate was unable to pay the $1,000. The son then filed a claim against his mother’s estate for the $1,000 based on the promise his mother made to pay the amount if his father did not.

What is the best argument for the probate court’s rejection of this claim against the mother’s estate?

A - The contract between the mother and son was illusory.

B - The contract between the mother and son was oral.

Answer 29

B. The estate’s best defense is that the contract was oral. This contract falls under the Statute of Frauds because it involves one party promising to pay the debt of another (suretyship promise) and must be in writing.

There is valid consideration. The father’s offer was a unilateral offer that could only be accepted by performance, which had not yet begun. The son had not yet performed when his mother made her promise to pay him if his father did not, so the son had not yet accepted his father’s offer and was not bound by his promise to quit playing video games. The surety such as the mother will be bound by her promise to pay another’s debt as long as she makes her promise before the creditor/her son performs or promises to perfect; the surety need not receive any separate consideration.