Statue Of Frauds Statue of frauds Flashcards
The following contracts are NOT valid unless they satisfy the statute of frauds (usually requires that the contract be a signed writing):
Marriage. A contract made in consideration of marriage (e.g., a prenup);
Suretyship. A contract promising to guarantee the debt of another;
One Year. A contract that by its terms cannot be performed within one year from its making;
UCC. A contract for the purchase or sale of goods for $500 or more;
AND
Real Estate. A contract to transfer, receive, or create an interest in real estate.
The one-year SOF provision is interpreted
very narrowly – there must be no possible way that the contract could be performed within one year from the time the contract is formed (e.g., A hires B to teach him contract law “for the rest of A’s life” – the statute of frauds is not triggered under the one-year provision because A could die at any time before one year passes).
Main Purpose Exception.
If the main purpose in agreeing to pay the debt of another is for the guarantor’s own economic advantage, then the Statute of Frauds does NOT apply.
Modifications and SOF
The statute of frauds applies to a modification ONLY IF the contract as modified (not the original contract) falls within the statute of frauds.
Once it is determined that the statute of frauds is triggered (see above), the next issue is whether
the statute of frauds has been satisfied. There are two main ways to satisfy the statute of frauds – by writing and by performance.
Satisfaction of SOF by Writing.
A writing will satisfy the statute of frauds if the writing:
Is signed by the party against whom enforcement is sought;
Shows that a contract was formed;
AND
Includes the requisite terms.
The requisite terms under the common law are parties, subject, quantity, and price.
The requisite terms under the UCC are parties, subject, and quantity.
Satisfaction by Performance.
The performance required to satisfy the statute of frauds depends on the type of contract involved:
Services Contracts under the One-Year Provision.
Under the common law, FULL performance of a services contract by either side satisfies the statute of frauds.
Part performance does NOT satisfy the statute of frauds.
Contracts to Transfer, Receive, or Create an Interest in Real Estate.
In most jurisdictions, real estate contracts can satisfy the statute if:
The seller FULLY performs (i.e., conveys the land to the buyer);
OR
The buyer performs two of the following three actions:
The buyer takes possession of the property;
The buyer makes payment in full or part; AND/OR
The buyer makes substantial improvements to the land.
UCC Goods Contracts for $500 or More.
There are four main ways a contract
can satisfy the statute of frauds under the UCC (“P.A.W.S.”):
Performance
Admission in Court
Written Confirmation between Merchants
Specially Manufactured Goods
UCC Goods Contracts for $500 or More and Performance
Performance. Under UCC § 2-201(3)(c), the statute of frauds is satisfied for the quantity of goods for which payment has been made and accepted or which have been received and accepted (the contract is not enforceable under this provision beyond the quantity of goods for which payment has been made and accepted or which have been received and accepted).
UCC Goods Contracts for $500 or More and ADmission in Court
Admission in Court. Under UCC § 2-201(3)(b), the statute of frauds is satisfied if the party against whom enforcement is sought admits in his pleading, testimony, or otherwise in court that a contract for sale was made (the contract is not enforceable under this provision beyond the quantity of goods admitted).
UCC Goods Contracts for $500 or More and Written confirmation between Merchants
Written Confirmation between Merchants. Under UCC § 2-201(2), the statute of frauds is satisfied if:
After an oral agreement between merchants;
Either party sends a signed, written confirmation of the oral contract (must be signed by the sender);
AND
The written confirmation is received by the other merchant to the oral agreement;
UNLESS
The party receiving the written confirmation gives a written notice of objection within 10 days after receipt of the written confirmation.
UCC Goods Contracts for $500 or More and Specially Manufactured Goods
Specially Manufactured Goods. Under UCC § 2-201(3)(a), the statute of frauds is satisfied when a seller makes a “substantial beginning” toward manufacture of custom goods that are to be specially made for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business under circumstances that reasonably indicate that the goods are for the buyer.
