Contracts Chapter 3.A. Statute of Frauds

1. ContractsChapter 3.A. Statute of Frauds Statute of Frauds

2. Statute of Frauds • Origin: English Statute of Frauds in 1677 • Today: Statutes, with variations, continue in U.S. states • Why require a writing? • Should a writing be required for all contracts? • Are there any disadvantages to the requirement? Statute of Frauds

3. Statute of Frauds: Mechanics • SCOPE: Is the contract within the statute? • If yes, then go to step 2. • If no, then stop. • SATISFACTION: If the contract is within the statute, has the statute been satisfied? • If yes, then stop. • If no, then go to step 3. • EXCEPTION: If the statute has not been satisfied, do other facts prevent application? • If yes, then stop. • If no, then go to step 4. • EFFECT: If statute is not satisfied and there is no exception, is party seeking to enforce contract? • If yes, contract is UNENFORCEABLE. • If no, then Statute does not apply. Statute of Frauds

4. Scope: Covered Contracts • Original categories (Rest. (2d) §110) • Executor-administrator • Suretyship • Marriage • Land Interests • One-Year • UCC 2-201: $500 or more ($5000 in amended version) Statute of Frauds

5. SCOPE: Suretyship & Executor • Promisor is a surety if • makes a promise to creditor • to do that which will discharge debtor’s duty • S makes the promise for debor’s benefit and not primarily for own benefit. • Executorship provision is interpreted the same way. • Surety does not include novation (Rest. 115) or indemnification (insurance). Statute of Frauds

6. SCOPE: Sale of an Interest in Land • An “interest in land” depends on property law. Rest. (2d) defines as “any right, privilege, power or immunity… which is an interest in land under property law.” Statute of Frauds

7. SCOPE: Sale of Goods • UCC §2-201 covers contracts for sales over $500. • Some states have adopted a proposed increase to $5,000 threshold. Statute of Frauds

8. SCOPE: One-Year Provision • K is only within 1-year clause if BY ITS TERMS it is not to be performed within 1 year of its making. • How does Klewincourt interpret this rule? • How does this contrast with McInerney court’s position? • Which approach is better? Statute of Frauds

9. SATISFACTION: Signing and Writing Requirements • Who must sign? • What exception does the UCC create to this rule? • What must the writing reflect? • What is the issue in Bazak International? How does the court resolve it? • What term(s) must be included in the writing? • How does the Crabtree court find a sufficient writing to satisfy the statute? Statute of Frauds

10. EXCEPTION: Statute May Not Apply • Rest. (2d) categories • Full performance by one side in 1-year K (130(2)) • Protected reliance due to part performance (139; Chomickey) • UCC 2-201(3) • Special-order goods started or commitment to procure • Admission in pleading or testimony • Goods • for which payment has been made and accepted, or • that have been received and accepted. • NOTE: Performance (partial or complete) validates performed portion of contract only. Statute of Frauds

11. EFFECT: Consequences of Not Satisfying the Statute of Frauds • Noncompliance prevents enforcement of contract, but does not void contract. • It can still be used as evidence of something else. • SOF defense can be waived • intentionally (e.g., fail to raise in pleadings) • by admissions in legal filings or sworn testimony. • Charged party may be equitably estopped from asserting defense if the party represented • I will prepare a writing. • A writings has already been prepared. • No writing is necessary. Statute of Frauds