Statute of Frauds Flashcards
Statute of Frauds
General rule in k law is that k doesn’t have to be in writing, oral and written agreements are equally enforceable.
SoF provides exception to that and makes some classes of k’s unenforceable unless reflected in a signed writing. For these classes of k’s, SoF requires that the k be evidenced by a writing signed but he party against whom enforcement is sought.
Defense which may be raised against a litigant who is arguing breach of contract.
Categories of agreements governed by Statute of Frauds
MY LEGS
M - Marriage (k upon consideration of marriage)
Y - Year (k won’t be completed within 1 year of formation)
L - Land (k for sale of interest in land)
E - Executor (k of executor/administrator to answer for duty of decedent)
G - Guarantee (k for guarantee or suretyship)
S - Sale of goods (k for sale of goods at price of $500 or more)
Some states have added categories
K’s that won’t be performed within 1 year of formation
Subject to SoF
Year at issue is measured from date of k’s formation.
If k doesn’t specify when performance must be completed - determine whether it is at all possible to complete the required performance within 1 year.
Courts typically hold that a breached/excused k would NOT be a fully performed k for purposes of one-year provision.
MAJORITY - lifetime/permanent k is not governed by 1-year provision. Employee’s death is possible within 1st year.
Land-Sale contracts (SoF)
Subject to SoF
Most courts distinguish between a k for a future sale “Contract for sale” and a present conveyance.
Contract for future sale is governed by land provision. Requires signed writing.
Present conveyance of land promised for money is held to be outside land provision.
Leases generally treated as k’s falling w/in land provision.
Most states except short-term leases (1 year or less) or k’s to lease from the land and one-year provisions of SoF. However, leases for greater than 1 year must be in writing to satisfy SoF.
Guaranty/Suretyship Agreements (SoF)
General rule is that a promise to answer for the debt of a third party is subject to SoF.
2 exceptions:
(1) when creditor discharges original debtor from obligation on the faith of a guarantee by a third party to pay the debt, agreements not governed by SoF and do not require signed writing by guarantor.
(2) Main purpose exception - If main purpose of guarantor’s promise is to protect or promote his own economic interests (rather than those of debtor) then the agreement is not within SoF and no signed writing is required. Selfish interest must be central to the promise to trigger exception.
SoF Writing Requirement
All that is necessary is that the writing be a memorandum of the actual agreement, which can be prepared before, during, or after k formation (i.e. letter describing agreement, written offer which was accepted to form the k, letter from one of the parties repudiating and therefore admitting to the agreement).
Memo only requires these terms:
(1) ID of parties to transaction
(2) nature/subject matter of k
(3) essential terms of the unperformed promises in the agreement
SoF Signature Requirement
Actual signature of the party against whom enforcement is sought is NOT necessary. Any symbol used with the intention to authenticate the writing will suffice.
Most states have adopted the Uniform Electronic Transactions Act (“UETA”) – electronic signatures considered to satisfy signature requirement.
“Tacking together”
“Tacking together” multiple docs – party may satisfy SoF by taking together several docs which, once combined, satisfy all necessary requirements for SoF.
If all docs are signed or if signed doc incorporates unsigned docs by reference - signature requirement is satisfied.
If unsigned docs are not incorporated by reference in signed doc, “tacking together” is still permissible if:
(1) at least one signed writing unambiguously establishing a contractual relationship between parties;
(2) the signed and unsigned documents clearly refer to same subject matter; AND
(3) there is clear and convincing evidence of acquiescence to unsigned docs by the party against whom enforcement is sought.
Satisfying SoF with Performance
LAND CONTRACTS - part performance will make enforceable in 2 situations:
(1) action by the buyer against the seller (NOT vice versa)
(2) action for specific performance (NOT action for $ damages)
Part performance requiring a showing of any combination, or all 3 of the following:
(1) payment of all or part of the purchase price;
(2) taking of possession; AND
(3) making substantial improvements to the property
1-YEAR K’s - Full performance of an oral k for services by the party performing the services will make the k enforceable against the paying party. Performing party may be able to recover for the reasonable value of the services actually rendered via quantum meruit.
Enforcement where common law SoF is NOT satisfied - Recovery for benefits conferred
+ Where one party bestows benefits upon another in connection with an oral k, even if the k is barred by SoF, the aggrieved party has the option of filing a cause of action for RESTITUTION, seeking to recover value of benefits conferred.
If services are involved, the party may recover on a theory of QUANTUM MERUIT - sue to recover reasonable value for services he rendered.
Enforcement where common law SoF is NOT satisfied - Promissory Estoppel
Where a party suffers losses in reliance on an oral k, but the enforcement of that k is barred under SoF, the party may be able to recover damages via promissory estoppel.
Some courts may look for more requirements on the claimant, such as:
(1) definite and substantial character of reliance, and its relationship to the remedy sought;
(2) the extent to which the reliance is corroborated by evidence of the formation/terms of the k; and
(3) the extent to which the formation and terms of the contract are otherwise established by clear and convincing evidence.
When can there be enforcement if the common law SoF is NOT satisfied?
Recovery for benefits conferred
Promissory estoppel
Satisfaction of the UCC SoF
SMIPS
S - Signed writing M - Merchant's confirmation I - In-court admission P - Part performance S - Substantial reliance by seller of specially manufactured goods
UCC SoF satisfaction through signed writing
Requires:
(1) a writing
(2) signed by the party against whom enforcement is sought (any symbol with present intent to authenticate); and
(3) which is “sufficient to indicate that a k for sale has been made between the parties (relaxed standard)
QUANTITY TERM:
+ Requires the term indicating the quantity of goods sold in the transaction. K is unenforceable beyond quantity of goods shown in writing.
+ If no quantity term, K is altogether unenforceable UNLESS:
(1) other language in the writing provides an unambiguous basis for measuring quantity; AND
(2) in the case of output/requirement K’s, the expression “output,” “requirements,” or their equivalent satisfies the quantity requirement under the UCC.
UCC SoF satisfaction through Merchant’s Confirmation
UCC SoF may be satisfied when 2 merchants enter an oral agreement and one of them sends a written confirmation of the agreement. SoF is satisfied against the recipient merchant if the latter fails to object to the confirmation in a timely fashion (within 10 days of receipt).
Valid merchant’s confirmation requires a writing that:
(1) is “sufficient against the sender”;
(2) is “in confirmation of the K”;
(3) is “sent within a reasonable time” of the making of the oral agreement; and
(4) the contents of which the receiving merchant has “reason to know”
Confirmation that never reaches intended recipient’s place of business would not be valid against recipient.
