The Statute of Frauds:

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					The Statute of Frauds:




When a Handshake Isn’t Enough
     The Requirement of a
                    Writing:
•      What Does It Mean?
    Writing in traditional sense v. modern recordation.
• Signature in traditional sense v. “authentication.”
• “By the party to be charged.”
• An affirmative defense that
  can be lost (e.g., failure to plead).
• Writing does not preclude a finding      Ink no longer
  that there was no binding agreement.       required.
Contracts Traditionally
  Within the Statute of
               Frauds
  • Guarantee to pay another’s debt.
   • Contract that cannot be performed w/in 1 year.
   • Executor’s promise to pay deceased’s debts.
   • Contract made on consideration of marriage.
   • Contract for interest in real property.
   • Contract for sale of goods for $500.
    The Suretyship Clause:
          Guaranteeing
•        Another’s Debt
    Why would one party
    assure another’s debt?
• Possibility of ambiguity?
• Setting where ambiguity
  is most likely?
                              Why might one person vouch for or
• Is SOF a solution?          guarantee another person’s debt?


• When might there be less cause for concern?
    Power Entertainment v.
                        NFLP:
•             The Underlying
    Pro Set owned assets, including
                 Bankruptcy
    license to sell NFL player cards.
• Pro Set becomes bankrupt and is
  liquidated for creditors (NFLP).
• PE alleges agreement with
  creditors to “purchase Pro Set
  out of bankruptcy” in return for   Player cards: An asset
  license. NFLP later reneges.        worth fighting for?
  Power Entertainment v.
                   NFLP:
Suretyship? Or Something
• PE admits promise, seeks
  to enforce NFLP’sElse?
                    promise
  to transfer license.
• Is NFLP’s oral promise
  subject to SOF?
                             Will the statute of frauds defense hold?
• Can a defendant (NFLP)
  assert SOF based on a plaintiff’s (PE’s) promise?
  Who was the statute designed to protect?
 Power Entertainment v.
                     NFLP:
              Purpose
     The is collateral? of the
• Suretyship
                Promise?
  No direct benefit to promisor.
• Main purpose: Did promisor
  make promise mainly for
  its own purpose or benefit?
• Intent to be primarily liable?
                                      Defense folds.
• Consideration?                   Oral promise scores!
 A Promise That Cannot
  Be Performed in One
          Year to require writing?
         • Reasons
                  • Test: Might the promise
                    have been performed within
                    one year?
• By strict reading of terms? Or as a matter of
  reasonable possibility in fact?
• Possible performance within one year v. possible
  discharge from obligation within one year.
 Performance Within One
     Year: Illustrative
              Problems
• Reconsider Hamer v. Sidway.
• “Work-Study” Program
  (Problem #2, p. 275).
• Promise of employment
  for 5 years, “if you live that long.”
• Promise of employment for as long as work is
  “satisfactory.”
The Other Four Contracts
   Within the Statute of
                Frauds
 • Promise by executor to pay
   debts of the deceased, out of
   executor’s own pocket.
 • An agreement made upon
   consideration of marriage.
                                      Some oral promises
 • An agreement for sale of real       are not binding.

   property or for an interest in real property.
 • A contract for sale of goods for $500.
      Some New Types of
    Contracts Within the
•     Statute of cure.
    A doctor’s warranty of Frauds
• Pre-or post-nuptial contract
  altering rights and duties of
  marriage or marital property.
• Promise in consideration of
  “non-marital conjugal
  cohabitation.”                  Do some plastic surgeons
                                  make a warranty of cure?

• Certain contracts subject to consumer laws.
 Satisfying the Statute:
       A “Writing” AnD A
            “signAture”
• Goal: Physical record
  corroborating transaction.
• Contains “essential terms.”
• Signature: Authenticating
  or showing intent to adopt.
• Different requirements can
                                 Remember Lucy v. Zehmer?
  be satisfied by combining
  separate but connected documents.
Electronic Writings and Signature:
Uniform Electronic Transactions Act
• A record or signature may not be denied legal effect or
  enforceability solely because it is in electronic form.
• An electronic signature includes an electronic sound,
  symbol, or process attached to or logically associated
  with a record and
  executed or adopted Click “Accept” if you agree to these
                          terms and wish to purchase this
  by a person with the    product.
  intent to sign the
                               Accept        Decline
  record.
                   Problem
       A and B were in a reality show, Marooned,
in which the object was to be the last hold-out on a
desert island. A caught a wild chicken. B was
starving and promised to pay A $500 “when we get
back home” in return for a share of the cooked
chicken. They shook hands on the deal. The entire
transaction was recorded by a video camera.
Would the Statute of Frauds bar enforcement? Does
the Uniform Electronic Transactions Act apply to
the transaction?
       In re Arbitration
   Between Acadia and Edlitz




Will the Statute bar this oral “modification?”
    In re Acadia & Edlitz:
      Modifying a Written
•
                Contract
    N.Y. and federal law:
    Arbitration agreement
    must be in writing.
• Original duration of
                            Can written agreements be “stretched”
  the agreement?              by oral renewal or modification?

• Later: Separate agreement? Or a “renewal?”
• Are underlying purposes of Statute satisfied?
Other Oral Modification
 Of a Written Contract
• If written contract is not within Statute in
  original or modified form, modification need
  not be in writing.
• If agreement as modified falls within Statute,
  there must be a writing (but the original writing
  might suffice).
• Can parties adopt their own “Statute of Frauds”
  for oral modification? See UCC §2-209.
  UCC § 2-201: Rewriting
         The Statute of
                 Frauds proposed revision ).
• For sale of goods for $500 (See
• Sufficient to show contract
  has been made between parties.
• Even if “it omits or incorrectly
  states a term agreed upon.”
• Limited to stated quantity.        Contract on Starbucks napkin:
                                     Sufficient despite coffee stains?
• Signed by party to be charged.
“ConfirmAtions” betWeen
 Merchants for Sale of
                 Goods
• Satisfying SOF w/out signature
  of party to be charged.
• A written confirmation, sent in
  reasonable time, and “sufficient
  against sender.”
• Other party received it and had
  reason to know contents.
                                       Another aspect of the
• Unless recipient gives written        battle of the forms.

  objection w/in 10 days of receipt.
               Problem
               (page 284)
Seller: (Identical letters to A & B): “This
acknowledges your telephone order for 3000
tons of rails, and our acceptance.”
Buyer A: “The quantity we agreed to buy was
2000 tons, not 3000 tons.”
Buyer B: “Don’t ship the rails we ordered; we
have decided to look elsewhere.”
       Avoidance of the
                Statute
Of Frauds Under the goods
• Seller has begun specially manufacturedUCC
  before buyer’s repudiation. Sec. 2-202(3)(a).
• Admission in pleading, testimony or otherwise,
  insofar as admitted quantity. Sec. 2-202(3)(b).
  Contra common law!
• Payment made and accepted, or goods received
  and accepted. Sec. 2-202(3)(c).
• CISG art. 11: “A contract of sale need not be
  concluded in or evidenced by writing….”
       Avoidance of the
           Statute:
          Specially
             • Specially manufactured
      Manufactured Goods
               means designed particularly
                                     for plaintiff.
                                   • Goods likely have no resale
                                     value (compounding loss).
                                   • Manufacturing is probative
A fifty foot mechanical gorilla?
                                     of agreement.
                                   • Defendant can still deny K.
   Avoidance of the
       Statute:
DefenDAnt’s ADmission?
         • Defendant must assert
                           SOF at early stage to avoid
                           waiver.
                         • Common law: Once asserted,
                           SOF bars enforcement
                           despite admission in
                           deposition or testimony.
  Would Perry Mason      • UCC is to the contrary.
 extract an admission?
                    Problem
     Plaintiff filed a Complaint alleging that Defendant
promised to sell a collection of jewels. Defendant’s
Answer asserted the SOF as an affirmative defense.
Defendant then moved for summary judgment based on
the SOF, attaching a sworn statement stating that there is
no writing corroborating the agreement. Plaintiff is unable
to produce a writing, but wants the opportunity to depose
or cross-examine the defendant. Should the court dismiss
the complaint, or allow discovery or a trial to go forward?
Avoidance of the Statute:
               Payment
     Or Goods Received &
• Acceptance of goods or
              Accepted
  payment corroborates the
  making of the agreement.
• Plaintiff’s “delivery,” standing
  alone insufficient.
• Defendant’s acceptance might
  be revocable up to a point.
• Defendant can still deny K.        Counting your receipts and
                                      confirming the contract?
   The Statute and the
            Convention
 On International Sale
• Application: Sales of goods
               of Goods
  between parties with “places
  of business” in different
  signatory nations.
• Parties can adopt different
  choice of law, or override particular provisions.
• CISG art. 11: “A contract of sale need not be
  concluded in or evidenced by writing….”
Johnson Farms v. McEnroe




What is part performance substituting for a writing?
  Partial Performance Of
                Contract
             the Sale all Real
     Forand acceptance ofofor part of the
• Payment
                Property
  contract price.
• Taking possession of the property.
• Making improvements on the property.
• First Caveat: Was conduct ambiguous? Is the
  alleged oral agreement the only explanation?
• Second Caveat: To what extent does alleged part
  performance evidence both parties’ intent?
                Example
     Employer made an oral promise to employee:
“I’ll employ you for two years, and I’ll pay you
$1,000 per week.” After eighteen months of
employment, the employer discharged the
employee without just cause. Is the employer’s
promise subject to the statute of frauds? If so,
what argument might the employee have for
avoiding the statute?
Johnson Farms v. McEnroe:
  Part Performance or
      Preparation?
• What was the alleged oral agreement?
• Why might parties have failed to put the
  agreement in writing?
• What was the alleged part performance by the
  buyers?
• Did such conduct tend to corroborate seller’s
  oral agreement?
Monarco
    v.
Lo Greco

the stAtute’s
   Grapes
  Of Wrath
                Christie measures his inheritance.
 The Promised Inheritance
  In Monarco v. Lo Greco
                                    • Promise: Stay at home,
                                      work the farm, and
                                      survivor will leave entire
                                      farm to you by will.
                                    • How was it corroborated?
                                    • Breach: Stepfather secretly
                                      terminates joint tenancy,
                                      rewrites will to leave his
                                      share to his grandson.
Will Christie reap what he sowed?
        Promissory Estoppel
       And the Statute: Four
•                  Scenarios
    Promise that contract is in
    writing (“it’s in the mail”).
• Promise that promisor
  will put it in writing.
• Promise that writing is
  not really required.              Will little exceptions swallow the whole Statute?


• The underlying promise (the one that should be in
  writing, but isn’t), because it induces reliance?
        Monarco: Special
               Features
•
     Requiring a Remedy?
    Circumstances corroborating
    the promise equally clearly
    as a writing?
• Unconscionable injury?
• Inadequacy of the part
  performance rule?
• Inadequacy of restitution?        California real estate:
                                  Why is the farm so valuable?
     Restatement of
     Contracts §139
The Statute & Promissory
      • Restates elements of promissory
          Estoppel
        estoppel; asks what justice requires?
          • Strength of elements of estoppel?
          • Do reliance and other facts
            corroborate promise?
          • Availability of other remedies
            (cancellation or restitution)?
          • Caveat: Not all states (Texas) agree.
P.E. and the Sale of Goods:
Does UCC Displace Common
             Law? answer the
          • Does § 2-201
           promissory estoppel question?
         • Section 1-103: Common law
           supplements Code unless
           displaced by specific provision.
         • Does § 2-201 displace promissory
           estoppel? Split in the courts.
         • Result under CISG?

				
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