Outline: Contracts - V - Statute of Frauds

Contracts (Spring 2006, Hull)

V. STATUTE OF FRAUDS

1. What's Covered
   1. One Year Term
      1. Performance cannot be completed by one year
      2. Time runs from making of contract
      3. Impossibility does not take contract out of Statute of Frauds
         1. Personal service
         2. Employment – Definite terms covered; lifetime employment subject to contingencies less than one year not covered [Burton v. Atomic Workers Federal Credit Union – Employer’s oral promise not to fire employee except for just cause until retirement age is unenforceable because not in writing, but equitable estoppel may be available.]
         3. Furnishing support
   2. Land Sales [Jolley v. Clay – Despite oral contract for land sale, payments, substantial improvements to land, and payment of taxes constitute partial performance sufficient to compel specific performance.]
   3. Goods >$500 – UCC 2-201
2. Functions
   1. Evidentiary - Writing shows that contract exists
   2. Cautionary - Attestation forces signers to think twice
   3. Channeling - Notarization shows intent to be bound
3. Statute of Frauds under Restatement
   1. R.2d 131 - Type of writing required
      1. Signed by or on behalf of party to be charged
      2. Reasonable identification of subject
      3. Indication of existence of contract
      4. Reasonably certain essential terms
   2. R.2d 132 - Memorandum may consist of several writings [Hoffman v. Sun Valley Co., Inc - An unsigned writing may be considered a part of the memorandum only where express reference to it is made in a signed writing.]
   3. Exception - R.2d 139 - Reliance
4. Statute of Frauds under UCC [2-201]
   1. 2-201(1) – Transactions involving sales of goods over $500 must be in writing, signed by the party to be charged, and need only reflect the quantity of goods sold even if it omits or incorrectly states a term.
   2. 2-201(2) – Merchant’s Exception – Silence is acceptance if reasonable, written contract is received, unless there’s an objection by writing within 10 days. [Bazak International Corp. v. Mast Industries, Inc. - Annotated purchase order forms that had been signed by a buyer, sent to a seller, and retained without objection, qualify as sufficient writing.]
   3. 2-201(3) - A contract which does not satisfy (1) but is otherwise valid is enforceable if:
      1. (a) - Special Goods - Goods specially manufactured and not suitable for sale to others, if seller has substantially begun manufacture before notice of repudiation is received
      2. (b) - Admissions - If the party charged admits, there is a contract
      3. (c) - Partial Performance - Acceptance of goods or of payment validates a contract that otherwise violates Statute of Frauds. [Allied Grape Growers v. Bronco Wine Company – Where there is no partial performance under 2-201(3)(c), a separate oral contract may still be enforceable by promissory estoppel when one party changes its position to its detriment in reliance on the contract.]
5. Restitution - Restitution is a middle ground between enforcement and invalidation. R.2d 375 – A contract otherwise invalidated by the Statute of Frauds is not exempt from resolution by restitution.
6. Oral Modifications under Restatement (complicated)
   1. R.2d 149(1) – No oral modifications for contracts under statutes of fraud.
   2. R.2d 150 – Reliance trumps R.2d 149

Oral Modifications under UCC (see Modifications under UCC)