statute of frauds

Statute of Frauds Overview

  • Legal requirement for certain contracts to be in writing to be enforceable.

  • Under the UCC, sales contracts for goods valued at $500 or more must be in writing.

Purpose of Written Contracts

  • Cautionary Reason: Writing down agreements encourages parties to take contracts seriously and consider consequences of breach.

  • Evidentiary Reason: Written documentation helps prevent disputes regarding the existence or terms of the contract in court.

UCC Writing Requirements for Sales Contracts

  • To satisfy the UCC's statute of frauds, a sales contract must contain in writing:

    1. Quantity of goods.

    2. Signature of the party against whom enforcement is sought.

    3. Language that allows a reasonable person to conclude that the parties intended to form a contract.

  • Terms not included in writing can be supported by testimonial evidence of oral agreements, industry practices, etc.

Case Study: Rosenfeld v. Basquiat

  • Facts:

    • Artist Jean-Michel Basquiat agreed to sell paintings to art dealer Michelle Rosenfeld.

    • Basquiat wrote terms on a brown wrapping paper using crayon, including painting names, payment amount, and signatures.

    • Following Basquiat's death, the estate refused to honor the contract due to lack of formal delivery terms.

  • Court Decision:

    • The U.S. Court of Appeals for the 2nd Circuit found the writing met UCC requirements, confirming payment and quantity, thereby affirming the trial court's decision.

    • Emphasized that specific delivery terms were unnecessary to satisfy statute of frauds.

UCC Provisions for Merchants

  • Lenient rules exist for sales contracts between merchants:

    • A received signed memorandum binds the recipient unless promptly objected.

    • E.g., if a merchant sends a confirmation of an agreed order, the order is enforceable under the statute of frauds.

Electronic Records and Signatures

  • UCC recognizes electronic records and signatures as valid for sales transactions.

  • Contracts cannot be deemed unenforceable merely because they are in electronic form.

Key Takeaways on Statute of Frauds

  • The following must be in writing for UCC's statute of frauds satisfaction:

    1. Quantity.

    2. Signature of the enforcing party.

    3. Intent of parties to form a contract.

  • Other terms can be proven through verbal testimony and established practices.