Contracts: Statute of Frauds

When does the Statute of Frauds apply?

the possessory interest of land (sale or lease)

for a duration of over a year (from the making of the contract)

For the sale of goods over $500

Under common law, to satisfy SOF, the contract must be...

1. in writing, containing the offer and signature of whom enforcement is sought against

2. Contain essential terms

Under common law, to satisfy SOF, the contract must contain essential terms. What are essential terms?

PP DS
parties, price, duration, subject matter

True or false: Initials, crayon, scribbled on receipt, memos with corporate logos or "from the desk of" are enough to satisfy the "in writing" requirement of SOF.

True

True or false: Sending a text message stating acceptance is NOT enough to satisfy SOF, but DocuSign is.

However, signature block with signing off name could be acceptance.

True

Describe how courts approach contracts not specifying duration for the following:

1. The Default/Standard Approach

2. Lifetime Contracts

3. Businesses

4. At-Will Employment

5. Indefinite Contracts

1. Courts assume it's for under a year. Doesn't matter how unrealistic that seems.

2. Life is considered fragile and can end at any point. Under a year.

3. Businesses are considered immortal and last indefinitely (over a year).

4. At will employment can end at any point. Under a year.

5. Indefinite contracts at over a year.

Suppose there are two documents. Under SOF, describe the 2 approaches for how to handle linked writings.

Strict Approach: The signed document has to explicitly refer to the unsigned writing

Permissive approach: same subject matter

Explain the SOF Flowchart.

1. Is the contract within SOF?

2. Are the requirements of SOF met?

3. Is there a valid exception?

True or false: Part performance of a deal can establish an exception to the SoF.

True

To satisfy the SOF under UCC 2-201, rules remain largely the same except for one change. What's that change?

Quantity must be included

Consider this hypothetical:

Two merchants agree orally.

One merchant (A) writes down the agreement and sends it to the other (B).

If B doesn't say "I don't agree" within 10 days, the deal is enforceable even without A's signature.

True or false, and why?

True. Under UCC 2-201(2)'s merchant confirmation rule.

Under UCC, to satisfy SOF, the contract must be...

1. In writing

2. Signature of whom enforcement is sought against, unless merchant confirmation exception applies

3. Quantity must be stated; other terms (price, delivery, payment) can be left out — court can fill gaps.

What are the SOF Exceptions for (common law)?

Part Performance

Promissory Estoppel

Payment

Pleading

There are FOUR approaches to the (Part) Performance exception. What are they?

SUPR

Strict: only proof that screams "purchase"

(performance/conduct must unequivocally refer to the contract through conduct that can't reasonably be explained as anything else (e.g. taking possession of the property AND making improvements)

UCC: Performance is rendered when the seller delivers a specific quantity of the goods and they are accepted by the buyer

Permissive: proof that reasonably whispers "purchase"

(a reasonable person must naturally conclude that the conduct is based on the agreement)

Restatement:
Reasonable reliance and continuing assent of the party against whom enforcement is sought
changed position so substantially and noticeably to D, D didn't object, and enforcement is the only way to avoid injustice

True or false: Promissory Estoppel is an exception to the SOF.

Why?

True. Promissory estoppel is a separate claim from a contract.

What is the Payment Exception under UCC 2-201?

Applies ONLY to goods that have been paid for

Under common law & UCC, what is the Pleading Exception?

Defendant admits a contract was made

What are the exceptions to the Statute of Frauds under UCC?

Payment

Pleading

Specially manufactured goods (not suitable for resale).

The promissory estoppel exception is heightened compared to traditional promissory estoppel. List out all the elements under the promissory estoppel exception under the Restatement 2nd.

(1) a definite promise established by clear and convincing evidence

(2) reasonable and foreseeable reliance

(3) actual, detrimental reliance

(4) enforcement in the interests of justice.

The reliance must be definite and substantial, and other remedies must be inadequate.

Contracts over $500 fall under SOF. What’s the general rule under UCC § 2-201(1) for the requirements of SOF to be met?

In writing with essential/material terms, signed by the party whom enforcement is sought against, and the quantity term is stated.

Under the UCC payment exception, when can an oral contract for goods still be enforced?

The contract is enforceable only with respect to the goods that have been

paid for and accepted, or received and accepted. (payment must be clearly referable to identifiable goods)

What are the two approaches for the Promissory Estoppel exception under common law?

Restatement Second (Modern) — broad, allows enforcement based on reliance/injustice.

Restatement First (Old/Narrow) — only two narrow scenarios:

The defendant misrepresented that a writing existed, or

The defendant promised to create a writing.

In awarding damages, how is the promissory estoppel exception under SOF different than traditional promissory estoppel?

The court will be more “stingy”
The remedy will likely be limited to the extent necessary to avoid injustice — e.g., reliance damages — rather than full expectation damages

What is the UCC §2-201(b)(1) “specially manufactured goods” exception?

Oral contracts are enforceable if the goods are: 1) specially manufactured for the buyer, 2) not suitable for resale to others, and 3) the seller has substantially begun production.