Statute of Frauds continued - Contracts Law 1L Year Notes PDF

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Notes on the statute of fraud, part performance exception, limitations for land transactions, and detrimental reliance exception in contracts law for 1L students....

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STATUTE OF FRAUDS CONTINUED EXCEPTIONS ARTICLE 2 Version

Exceptions (recall framework) 1. Is case within SoF? a. If yes, move on 2. Is s/f satisfied? a. At common law b. Requires: determine if writing is signed that contains all material terms c. IF no- then move on to EXCEPTIONS 3. Is there an exception?

Part Performance Exception What is this? Is what it sounds like One or both parties have partially performed the contract

Why do we have this? What is the purpose of the writing? Why require in writing? So that we feel comfortable that the contracts happened/exist With exceptions: Translate that Same Concept of Comfort So yes we don’t have a writing that makes us feel comfortable, But we need something else QUESTION: What makes you feel comfortable? ANSWER: The Performance See concrete steps taken to effectuate contract makes us feel comfortable that a contract actually exits Ex.) Beaver v. Brumlow -cashing in 401K at a penalty, buying mobile home, live on property, make improvements - no contract – those things seemed to suggest there was a contract for the sell of land Seller said I can see how you think that but…

Buyers performance was not sufficiently indicative of an oral agreement to sell land to qualify as partial performance Expression used here is a term of art: Seller says Buyer’s acts are not “unequivocally referable” to a contract That is could be Seller: In order for PPE to be engaged the acts which constitute partial performance have to unequivocally mean that a contract has been formed Acts  Conclusion = K (sale of land) Objectively: (step outside situation) If I saw someone cash out their 401K, start building a house, making improvements, looking to get a mortgage from the bank… Would I naturally come to the conclusion that they had a contract to buy that land Then that is good enough Even though there are other remote possibilities

Limitation on Part Performance for Land Transactions Only applies if you’re seeking specific performance of the land contract If P seeking damages, then part perform exception to the S/F would not apply (because it is an equitable remedy)

Detrimental Reliance Exception § 139. Enforcement by Virtue of Action in Reliance (1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires.

SoF won’t stand in the way if can prove evidence of detrimental reliance Looking for some level of comfort (usually in written document) Essentially don’t have a writing, looking for some other basis of comfort Here it is reliance – people won’t change their position unless they have an agreement

Promissory Estoppel Detrimental Reliance - Acting in reliance on the oral contract to your detriment may make the contract enforceable - Only if injustice can only be avoided by enforcing the contract Article 2 has its own SoF § 2-201 Formal Requirements; Statute of Frauds (1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing. Less than $500 – don’t need a writing

Applicability: Only if K > $500 Requirements: 1. Signed by party resisting enforcement a. Party to be charged 2. Must evidence a contract for sale of goods 3. Must contain a quantity term a. (doesn’t need to be accurate) Note: errors are ok; not enforceable beyond quantity stated Ex.) want 10 chairs Contract says 1 chair (quantity term- okay that perspective) Not enforceable for full 10 chairs – only enforceable for 1 chair Can’t have 100 chairs and auto enforce 100 chairs (incorrect quantity term) Go back to formation to what the parties actually agreed to not what is in the writing

Writing Evidences Contract for Sale of Goods - From the face of writing know it’s consummating a sale for goods

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Offer letter sufficient so long as it contains all of the relevant terms o Not sufficient under Article 2

Article 2

4 “Built In” Exceptions:

201(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable (a)

(b)

Specially Manufactured Goods Exception if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or Example) RWU orders podiums with Emblem If seller created a template, procured raw materials, etc. and they say wait never mind we don’t have a contract it wasn’t in writing. Seller already started procuring goods- SoF allows it Admissions Exception if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or -

(c)

Admit in a legal form that you have made a contract, it is enforceable Caveat- contract is not enforceable beyond the quantity of goods you’ve admitted

Part Performance Exception with respect to goods for which payment has been made and accepted or which have been received and accepted

Buffaloe v. Hart - Contract for 5 tobacco barns (@ $4000/each for total of $20,000) - Buyer tendered check for $5000 as part payment for 5 barns - Seller held onto it for a while, then returned it in shreds o Claimed no enforceable contract -

Why is the check not satisfied by the SoF? o Party resisting enforcement = Seller o Seller has to sign the check for it to be enforceable  They never signed it

Look at Exceptions - Because SoF was not satisfied - 201(3)(c) with respect to goods for which payment has been made and accepted or which been received and accepted - This is the part performance exceptions for sale of goods specifically

Article 2 2 Part Performance Exception Two ways to satisfy: 1. Buyer makes payment for goods and the Seller accepts payment 2. Buyer has received and accepted goods Both are essentially overt admissions that a contract for sale has been made Payments Made and Accepted Payment was clearly made; was it accepted? Buyer gave check- if it had been cashed it would have been accepted Seller- argument payment was accepted when check delivered Would depend on law in jurisdiction of accepted payment Goods Received and Accepted If Buyer accepts goods = part performance Buyer already had possession- was renting out the barns There was no acceptance occurred after contract made His conduct after the contract was entered in to evidenced some type of property interest in the barns Took steps to show that he was the owner or going to be owner Technically he didn’t accept the barns – he was already in possession Acceptance by the totality of his actions

What is Enforceable? Contract for Two Barns or Five Barns? Issue not raised – partial payment sufficient to make the whole contract? Contract for 5 barns but he didn’t pay the amount for all 5 He paid for 1 barn in full and paid a $1000 deposit on another barn

Or it could be a down payment of $1000 for each of the 5 barns Not clear if it was for 2 or 5 barns

Merchant Confirmation Exception 201(2) Between merchants, sends timely written confirmation -

Allows enforceability even without signed writing

Merchant 1 writes to Merchant 2 confirming contract Merchant 2 doesn’t respond within 10 days  Good from a SoF perspective Merchant 2 silence means it is conceding there is a contract, can’t object on SoF Based on Common Sense Normal merchants who haven’t entered into contract would respond/reply to written confirmation would respond saying nope if they don’t believe contract was formed

1. Between merchants; 2. One party must send other party a written confirmation of contract within a reasonable time 3. Written confirmation needs to be signed a. Signed by the sender 4. No objection made by recipient within 10 days a. After 10 days- can no longer raise SoF as an impediment Formation | SoF (good on this side of the line) But for purpose of formation – still need to establish all elements of contract formation If that was why Merchant 2 didn’t engage – they could argue no contract...