STATUTE OF FRAUDS (SOF)

SOF Rule

Contracts that fall within the Statute of Frauds are unenforceable unless evidenced by a writing.  The writing must:

• Be signed by the party against whom enforcement is sought; and

• Contain the essential elements of the deal.

A. Writing Required

• The writing need not be formal (i.e., receipts or correspondence can serve as memoranda).  The essential elements may be in more than one writing if one of the writings references the other(s).  The writing need not be delivered to the party trying to enforce the contract.

• Exam Tips: A memorandum sufficient to satisfy the Statute of Frauds need not be written when a promise is made.  The memorandum also need not be addressed to the promisee to be enforceable by the promisee.

B. Types of K within SOF

M—Marriage: Consideration of marriage

M—Modification

Y—Year: K that cannot be performed within one year of its making

L—Land: K for sale of real property.

E—Executor

G—Goods: K for sale of goods for the price of $500 OR more

S—Suretyship: K to answer for the debt of another.

Marriage

A prenuptial agreement made in consideration of marriage subject to SOF except a promise to marry each other. A promise made in consideration of marriage does not become enforceable merely because the marriage has occurred in reliance on it.  However, additional part performance or action in reliance may make such a promise enforceable.

Modification

UCC

• SOF must be satisfied if the contract as modified is within its provisions.

• Good faith modification for K for sales of goods need not be in writing.

• An attempted modification that violates the UCC Statute of Frauds operates as a waiver of the original term that cannot be retracted once a party has materially changed its position in reasonable reliance on the waiver.

Common Law

• A modification needs to be in writing even though the modification would not otherwise fall within SOF would not be enforceable.

Year

A writing is required when any promise in a contract cannot possibly be performed fully within a year from the making of the contract. 

Exception:

1. Full performance: when one party to a contract has completed his performance, the one-year provision of the Statute does not prevent enforcement of the promises of other parties.

LAND

Writing Requirement

• SOF requires a writing for a transfer of an interest in real property.

• Must be signed by the party to be charged and must include the following essential terms:

  • Description of the property

  • Description of the parties.

  • Price.

  • Any conditions of price or payment (if agreed on).

Exceptions:

1. Part Performance

­The doctrine of part performance may be used to enforce an otherwise invalid oral contract of sale provided that the acts of part performance unequivocally prove the existence of the contract.

­When the contract is for the sale of land, a showing of some combination of part performance:

• ­Payment of all or part of the purchase price or for the quantity delivered and accepted (UCC)

• Taking of possession (Common law Land)

• Making substantial improvements (Land).

2. Full Performance: When a party to an oral contract who has promised to convey real property performs, that party can enforce the other party’s oral promise unless the promise is itself the transfer of a real property interest.

   1. Face to Face conversation: if seller agrees to transfer land to the buyer in exhcange for the buyer’s promise to pay 50k and buyer accepts the deed. Seller can enforce buyer’s oral promise.

3. Estoppel

   1. Equitable estoppel is based on an act or a representation.

4. Promissory estoppel: A promise that the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and that does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise.

5. Judicial Admission: A promise is enforceable against a party to the extent admitted by the party through discovery admissions or by testimony made under oath.

Executor

when the executor promises the creditor of the decedent’s estate that the administrator will assume personal liability for the debt if the estate does not have the funds to pay.

Goods—UCC sale of goods for $500 or more

When the price of goods is at least $500, the UCC requires a memorandum of the sale that must:

i)        Indicate that a contract has been made;

ii)       Identify the parties;

iii)       Contain a quantity term; and

iv)      Be signed by the party to be charged (party disputing existence of K 

Writing can be combined from multiple memos.

3 Exceptions: UCC

1. Specially manufactured goods: The goods are to be specially manufactured for the buyer, are not suitable for sale to others in the seller’s ordinary course of business; and seller has made “either a substantial beginning of their manufacture or commitments for their procurement.

2. Judicial Admission: promise is enforceable against a party to the extent admitted by the party through discovery admissions or by testimony made under oath.

3. Merchant’s Confirmatory Memo: Between merchants, if within a reasonable time a writing in confirmation of the contract sufficient against the sender is received and the party receiving it has reason to know of its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection is given within ten days after it is received, then the contract is enforceable against the receiving party even though he has not signed it.

• A mistake in the memo or omission of terms does not destroy the memorandum’s validity. However, enforcement is limited to the quantity term stated in the memo.

Suretyship

one person's promise to pay the debts of another

Exception:

1. Main purpose of a surety in agreeing to pay the debt of the principal is the surety's own economic advantage, then a writing not required under SOF, and an oral promise by the surety is enforceable.

2. Original promise to the debtor: an oral surety agreement to pay for the debt of another is enforceable is enforceable and does not need to be in writing

3. Original promise to the creditor: Surety makes a promise to the creditor does need to be in writing Unless (1) the surety agree to release the debtor based upon surety’s assurance or (2) surety makes a promise to benefit himself.

SOF Essay Approach:

1. Does SOF apply?

• MMYLEGS

2. If so, has it been satisfied?

• Ask whether there is a writing signed by the party to be charged

3. If not, is there an exception

• Full or part performance (goods delivered and accepted or combination of payment/possession/improvements to land), Judicial Admission

• UCC specially manufactured goods, or merchant’s confirmatory memo