Statute of Frauds

Question 1

When is a writing required for a contract to be enforceable? (5 MBE, 2 NY specific)

Answer 1

1. Transfer of an interest in real property
2. Impossible to complete performance in 1 year
3. Sale of goods for $500 +
4. Suretyship
5. Contract modification if modified contract would fall within the statute of frauds

NY Specific:

1. Lease of goods for $1,000+ (Art. 2A)
2. Miscellaneous NY provisions

Question 2

If parties orally agree to transfer an interest in real property, the contract is …?

Answer 2

Unenforceable because it violates the SOF.

Question 3

What is the equal dignities rule?

Answer 3

Authorizing an agent to transfer an interest in real property must be in writing.

Question 4

Does this contract require a writing?: A contract to prune all of the trees in California.

Answer 4

No. Because it is THEORETICALLY possible to do this in less than a year with unlimited resources, a writing is not required to make it enforceable.

Question 5

Must a lifetime contract be in writing (e.g. to perform a service for the rest of someone’s life)

Answer 5

MBE: No, oral lifetime contracts are enforceable
NY: Yes, there must be a writing in order for a lifetime contrat to be enforced.

Question 6

Most this contract be in writing?: employment contract for 364 days to begin in 10 days.

Answer 6

Yes. The 1 year clock starts ticking at the time of the contract, no matter how long the actual contract is for.

Question 7

Must a contract for a sale of goods of exactly $500 be in writing to be enforceable?

Answer 7

Yes - any sale of goods for exactly $500 or more will have to be in writing to be enforceable.

Question 8

Must a contract for a lease of goods be in writing?

Answer 8

NEW YORK: Yes, under Article 2A, if those goods are worth $1,000+
MBE: only sale of goods worth $500+ (not lease) requires writing.

Question 9

Define suretyship.

Answer 9

The promise to pay the debt of another if that person doesn’t pay.

Question 10

If A promises C that she will pay B’s debt if B doesn’t pay, this is called …

Answer 10

A suretyship, and it must be in writing to be enforceable. B is primarily liable, A is secondarily liable.

Question 11

A says “C, I will pay B’s debt for him.” This is …

Answer 11

Not a suretyship. A becomes primarily. A promise to pay for the benefit of another is not a suretyship and can be enforceable if made orally.

Question 12

When must a contract modification be in writing?

Answer 12

When the modified contract would fall within the SOF whether or not the original contract did.

Also in NY: a contract can be modified without new consideration if reduced to a signed writing.

Question 13

Is a “no oral modification” clause enforceable?

Answer 13

Article 2: YES

Common law: NO

Question 14

What are the miscellaneous NY provisions that must be in writing?

Answer 14

1. assignment of an insurance policy
2. promise to pay a discharged debt
3. agreement to pay a finder’s fee or broker’s commission (unless the person is an attorney, auctioneer, or licensed real estate agent).

Question 15

What is a satisfactory writing for a sale of goods contract?

Answer 15

1. contains a quantity term, and

2. signed by the party to be charged with breach (the defendant).

Question 16

What is a satisfactory writing for lease of goods (in NY)?

Answer 16

1. states that it is a lease
2. includes the quantity
3. includes the duration
4. includes rental payments
5. signed by the defendant (person it’s being enforced against)

Question 17

What is a satisfactory writing for common law contracts?

Answer 17

1. contains all material terms

2. signed by the person it’s being enforced against (the defendant).

Question 18

Must a lease of real property for 1 year or less satisfy the statute of frauds?

Answer 18

No. While the general rule is that a conveyance of real property must be in writing, this is an exception.

Question 19

What is the Past Performance Exception?

Answer 19

An oral agreement for a conveyance of real property will be enforceable when two of the following three are satisfied:

1. buyer is in possession of the property
2. buyer has made some payment
3. buyer has made improvements to the property

Question 20

When is an oral contract for more than 1 year enforceable?

Answer 20

If full performance has been given but one party is refusing to pay, the SOF requirement is waived, and the oral contract will be enforceable.

Question 21

What happens when there is an oral services contract for more than 1 year, and one of the parties perform in part.

Answer 21

No exception to the SOF, but the party who performed can get restitution, aka the reasonable value of the benefit they conferred.

Note: you can’t get free services by making an oral contract and refusing to pay part-way through.

Question 22

What happens when there is an oral contract for sale of goods over $500 and the buyer accepts or pays for the goods?

Answer 22

The oral contract is enforceable only as to the goods the buyer has accepted or paid for.

Question 23

What result if there’s an oral contract for goods over $500, and the seller has made a substantial start making custom goods, the goods are not suitable for sale to others in the ordinary course of business, and buyer breaches?

Answer 23

The contract will be enforceable. When a seller begins performance on an oral contract for custom made goods, even though it should have been in writing under the SOF, there’s an exception here.

Question 24

When a party admits in deposition or testimony that an oral contract that should have been in writing exists, what result?

Answer 24

The contract will be enforceable against that party, who was denying enforceability due to violation of the SOF.

Question 25

What are the requirements of a merchant’s confirmatory memo? And what is its purpose?

Answer 25

1. both parties are merchants
2. the writing claims there was an agreement and has a quantity term
3. there was no written objection by the other party within 10 days

This satisfies the SOF writing requirement. The party seeking enforcement can use their own writing to prove the existence of the contract.

Question 26

What is the main purpose exception to suretyships under the SOF?

Answer 26

MBE: if the main purpose of agreeing to the suretyship is for ones own benefit (rather than for the benefit of the primary debtor), suretyship is enforceable if made orally.

NY: no exception. Suretyships must always be in writing to be enforceable.