Contracts: SoF

General Concept

The Statute of Frauds requires that certain agreements be evidenced by a writing signed by the party sought to be bound

MY LEGS

Agreements covered by the SoF: Marriage, Year+, Land, Executor, Goods ($500+), Surety

Promises in Consideration of Marriage

A promise for which the consideration is marriage must be evidenced by a writing. This applies to promises that induce marriage by offering something of value (other than the return promise to marry)

Performance Not Within One Year from Date of Contract

The SoF applies to agreements that, by their terms, cannot be performed within one year. Partial performance does not satisfy the SoF in this case. The date runs from the date of the agreement and not the date of performance. However, even if the contract can’t be performed within a year, full performance by one party will remove it from the SoF

SoF and Lifelong contracts

The SoF does not apply to “lifetime” contracts because the life in question can terminate within a year, and therefore the contract is not impossible to complete in a year

Interest in Land

A promise creating an interest in land must be evidenced in writing. This includes sales of real property, but also: (1) leases for more than a year; (2) easements of more than a year; (3) mortgages and most other security liens lasting longer than a year; (4) fixtures; and (5) minerals (or the like) or structures if they are to be severed by the buyer.

Land-related Contracts That do not Trigger SoF

Contracts to build a building or to find a buyer for a seller do not create an interest in land

Effect of Performance on Land Contracts

Full performance by the seller will take the contract out of the SoF. Part performance by the buyer may also remove the contract from SoF

Executor or Administrator Promises to Personally Pay Estate Debts

A promise by an executor or an administrator to pay the estate’s debts out of their own funds must be evidence by a writing

Sale of Goods $500+

A contract for the sale of goods for a price of $500 or more is within the SoF and generally must be evidenced by a signed writing to be enforceable. Note that a writing is sufficient even though it omits or incorrectly states a term, but the contract is not enforceable beyond the quantity of goods shown in the writing

Suretyship Promises

A promise to answer for the debt or default of another must be evidenced in writing. If the main purpose or leading object of the promisor is to serve a pecuniary interest of his own, the contract is not within the SoF even though the effect is still to pay the debt of another

Effect of Noncompliance

Noncompliance with the SoF renders the contract unenforceable at the option of the party to be charged. AKA the SoF can be an affirmative defense. It is waived if not raised

Removing Contracts: Modifications

A written contract can be modified orally, but the modification must be in writing if the contract AS MODIFIED falls within the SoF

Common Law: Probisions Prohibiting Oral Modification

The common-law rule is that even if a written contract expressly provides that it may be modified only by a writing, the parties can orally modify the contract

UCC No Modification Clauses

Under the UCC, if a contract explicitly provides that it may not be modified or rescinded except by a signed writing, that provision is given effect. If the contract is between a merchant and a nonmerchant, this provision requires the nonmerchant’s separate signature

Waiver and Modification

If the parties attempt to orally modify a contract that requires a written modification, it is technically ineffective, but the modification can operate as a waiver. A waiver will be found whenever the other party has changed position in reliance on the oral modification. However, a party who makes a waiver affecting an executory (not yet performed) part of the contract may retract the waiver if they notify the other party that strict performance of the waived terms is required. The waiver may not be retracted if the other party detrimentally relied on it.

Full or Part Performance of Land Sale Contracts

If a seller conveys property to the buyer, and thus fully performs, the seller can enforce the buyer’s oral promise to pay. Likewise, the buyer may seek to specifically enforce an oral land sale contract under the doctrine of part performance. Part performance that unequivocally indicates that the parties have contracted for the sale of land takes the contract out of the SoF.

Actions Required for Partial Performance of Land Contract

At least two of: payment, in whole or in part; possession; and/or valuable improvements

Land Buyer Specific Performance

A purchaser of an interest in land may enforce an oral contract in this manner only in equity (meaning conveyance) and not damages

Performance required: Service Contracts

An oral contract that cannot be completed within one year but has been fully performed by one party is enforceable

Performance: Sale of Goods Contract

Part performance takes a sale of goods contract out of the SoF when: (1) the goods have been specially manufactured; or (2) the goods have been either paid for or accepted. If a sales contract is only partially paid for or partially accepted, the contract is enforceable only to the extent of the partial payment or partial acceptance. If goods are either received and accepted or paid for, the contract is enforceable, but not beyond the quantity of goods accepted or paid for. If only some of the goods called for in the oral contract are accepted or paid for, the contract is only partially enforceable. If an indivisible item is partially paid for, most courts hold that the SoF is satisfied for the whole item

Sale of Goods: Specially-Manufactured Goods

If goods are to be specially manufactured for the buyer and are not suitable for sale to others by the seller in the ordinary course of their business, the contract is enforceable if the seller has, under any circumstances that reasonably indicate that the goods are for the buyer, made a substantial beginning in their manufacture or commitments for their purchase before notice of repudiation is received

Sale of Goods: Admissions or Pleadings in Court

If the party against whom enforcement is sought admits in pleadings, testimony, or otherwise in court that the contract for sale was made, the contract is enforceable without a writing (but in such a case the contract is not enforced beyond the quantity of goods admitted)

Sale of Goods: Merchants Confirmatory Memo Rule

In contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the SoF to bind the sender, it will also bind the recipient if: (1) they have reason to know of the confirmation’s contents; and (2) they do not object in writing within 10 days of receipt

Equitable and Promissory Estoppel

Estoppel may be applied if it would be inequitable to allow the SoF to defeat a meritorious claim. Examples include situations where the defendant falsely and intentionally tells the plaintiff that the contract is not within the SoF or induces the plaintiff to change position in reliance on an oral agreement

Judicial Admission

If a party admits in pleadings or testimony that there is an agreement, it’s treated as though the party signed a writing

Writing Requirement, Generally

The SoF does not require a formal wrriten contract. Among other things, the writing can be a receipt, a letter, a check with details in the memo line, or a written offer that was accepted orally.

SoF Writing Elements

The SoF only requires one or more writings that: (1) reasonably identify the subject matter of the contract; (2) indicate that a contract has been made between the parties; and (3) state with reasonable certainty the essential terms

Electronic Records

If a law requires a record to be in writing, an electronic record is sufficient

Essential or Material Terms

No exhaustive list, dependent on the agreement, its context, and the subsequent conduct of the parties. There must be enough in the writing to enable a court to enforce the contract. If an essential term is contained in the writing, evidence is admissible to explain the particulars, but evidence will not be admitted to add a missing term.

Examples of Generally Essential Terms

Identity of the parties, description of the subject matter, and the terms necessary to make the contract definite

Essential Terms for Land Sale Contracts

Writings evidencing land sale contracts must contain a description of the land and the price

Essential Terms for Employment Contracts

Writings for employment contracts must state the length of employment

Essential Terms Sale of Goods

Writings evidence sales of goods must indicate that a contract has been made and specify the quantity term

Signature Requirement

The signature requirement is liberally construed by most courts. A signature is any mark or symbol made with the intention to authenticate the writing as that of the signer. It need not be handwritten. Under the UCC, a party’s initials or letterhead may also be sufficient. An electronic signature is sufficient

Remedies if Contract is Within Statute

If a contract violates the 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 that has been conferred