Statute of Frauds Flashcards
What is statute of frauds?
Most times, oral K is valid.
However, certain K’s by statute must be EVIDENCED by a WRITING SIGNED BY THE PARTY TO BE BOUND
In general, when does statute of frauds apply?
MY LEGS
M - promises in consideration of marriage
Y - promises that by its terms CANNOT be performed within one year (running from date of agreement)
L - promises creating an interest in land
E - promise by executor (or admin) to pay estate’s debts out of his own funds
G - goods priced at $500 or more
S - surety promises (unless it serves one’s own pecuniary interest)
What are examples of promises creating an interest in land?
- purchase of real property
- leases for more than 1 year
- mortgages and other security liens
- fixtures
- minerals/structures
NOT:
- contract to build building
- contract to find buyer/seller (broker contract)
with regards to land K, what will remove it from statute of frauds?
- full performance by seller
- part performance by buyer
With regards to K that cannot be performed within 1 year , what are the rules that apply?
- date runs from date of agreement (not performance)
- part performance does not satisfy SOF
- full performance by one party WILL remove it from statute of frauds
- WATCH for contract measured by lifetime (bc it’s capable of performance within 1 year)
What are the special rules to know re: goods priced at $500 or more?
- writing is sufficient even if it omits or incorrectly states a term, but K is NOT enforceable beyond QUANTITY of goods stated in writing
SPECIAL EXCEPTIONS (SWAP) - 1. "specially manufactured goods" - if seller has made substantial beginning in manufacture or commitments before notice of repudiation is given
- “written confirmation btwn merchants” - only if btwn merchants and if recipient has:
(i) reason to know of contents; AND
(ii) does NOT object within 10 days - “admissions in pleading or court” - if party admits in pleadings testimony or otherwise in court that contract was made, will be enforceable (but only to extent of quantity admitted)
- “payments or delivery of goods” - if goods are either received and accepted or paid for, the contract is enforceable. However, not above the quantity of goods accepted or paid for. (if indivisible item is partially paid for, most courts hold that SOF is satisfied for whole item.
(See also confirmatory memo rule)
What is the special rule re: confirmatory memo and SOG?
In contracts btwn merchants, if one party, within a reasonable time after an oral agreement has been made, sends a WRITTEN confirmation of the understanding that is sufficient to bind sender, it will also bind recipient if:
- he has reason to know of confirmation’s contents; AND
- does not object within 10 days of receipt
What is the effect of non-compliance with statute of frauds?
non-compliance with SOF renders K unenforceable at option of party to be charged
(ie… party being charged may raise lack of a sufficient writing as an AFFIRMATIVE DEFENSE)
What is the rule re: SOF and waiver?
If SOF is not raised as an affirmative defense, it is waived
What is the rule re: part performance and land sale contracts?
If seller FULLY PERFORMS (conveys title) –> he can enforce buyer’s oral promise to pay
Buyer –> may seek to enforce oral contract based on PART PERFORMANCE that unequivocally indicates that parties have contracted for sale of land. Most jdxns require AT LEAST two of the following:
- payment (in whole/part)
- possession
- valuable improvements
NOTE: Buyer may enforce the above ONLY in equity (ie SPECIFIC PERFORMANCE). He CANNOT get money damages.
MBE TRICK –> watch for fact pattern where parties orally agree to installment land contract. This may not UNEQUIVOCALLY indicate a sale of land, as it may also be consistent with a short term lease.
What is the rule re: PART PERFORMANCE and sale of goods?
Part performance takes SOG out of SOF IF:
- goods have been specially manufactured; OR
- goods have been either paid for or accepted
NOTE: if goods have been paid for/accepted, it’s only enforceable to the extent paid for/accepted
What is the rule re: FULL performance of contract that cannot be performed within 1 year?
Contract that cannot be performed within 1 year but that has been FULLY PERFORMED by one party is enforceable
What is the rule re: equitable and promissory estoppel?
Estoppel may be applied if it would be inequitable to allow SOF to defeat a meritorious claim
Examples:
- Def falsely and intentionally tells plaintiff that contract is not within SOF;
- Def induces P to change position in reliance on oral agreement
What is the rule re: judicial admission?
If party admits in pleadings/testimony that there is an agreement, it is treated as a signed writing
What is the effect if contract is within the SOF?
If K violates SOF, in almost all cases a party can sue for the reasonable value of the services or part performance rendered, or the restitution of any other benefit conferred
EXAM TIP –> if part performance takes K out of SOF, then plaintiff will have option of suing on the contract and seeking expectation damages rather than merely in restitution for the value conferred.
