The Statute of Frauds Statute or Concept.ppt

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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 Bankruptcy
• Pro Set owned assets, including
  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 Else?
• PE admits promise, seeks
  to enforce NFLP’s 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:
   The Purpose of the Promise?
• Suretyship is collateral?
  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
                  • Reasons to require writing?
                  • 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
    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 Frauds
• A doctor’s warranty of cure.
• 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
       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
• For sale of goods for $500 (See proposed revision ).
• 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.
               (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 UCC
• Seller has begun specially manufactured goods
  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 Manufactured Goods
                                   • Specially manufactured
                                     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
                        • Common law: Once asserted,
                          SOF bars enforcement
                          despite admission in
                          deposition or testimony.
 Would Perry Mason      • UCC is to the contrary.
extract an admission?
     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 & Accepted

• Acceptance of goods or
  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 of Goods
• Application: Sales 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
   For the Sale of Real Property
• Payment and acceptance of all or part of the
  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?
     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
• Did such conduct tend to corroborate seller’s
  oral agreement?
  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 Estoppel
       • Restates elements of promissory
         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?
         • Does § 2-201 answer the
           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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