The Statute of Frauds:

1. The Statute of Frauds: When a Handshake Isn’t Enough

2. 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 that there was no binding agreement. Ink no longer required.

3. 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.

4. The Suretyship Clause: Guaranteeing Another’s Debt • Why would one party assure another’s debt? • Possibility of ambiguity? • Setting where ambiguityis most likely? • Is SOF a solution? • When might there be less cause for concern? Why might one person vouch for or guarantee another person’s debt?

5. Power Entertainment v. NFLP:The Underlying Bankruptcy • Pro Set owned assets, including license to sell NFL player cards. • Pro Set becomes bankrupt and isliquidated for creditors (NFLP). • PE alleges agreement with creditors to “purchase Pro Set out of bankruptcy” in return forlicense. NFLP later reneges. Player cards: An asset worth fighting for?

6. 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? • Can a defendant (NFLP) assert SOF based on a plaintiff’s (PE’s) promise?Who was the statute designed to protect? Will the statute of frauds defense hold?

7. 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? • Consideration? Defense folds. Oral promise scores!

8. Reasons to require writing? Test: Might thepromise 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. A Promise That Cannot Be Performed in One Year

9. 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.”

10. 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. • An agreement for sale of real property or for an interest in real property. • A contract for sale of goods for $500. Some oral promises are not binding.

11. Some New Types of Contracts Within the Statute of Frauds • A doctor’s warranty of cure. • Pre-or post-nuptial contractaltering rights and duties of marriage or marital property. • Promise in consideration of “non-marital conjugal cohabitation.” • Certain contracts subject to consumer laws. Do some plastic surgeons make a warranty of cure?

12. 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 canbe satisfied by combining separate but connected documents. Remember Lucy v. Zehmer?

13. 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 by a person with the intent to sign the record. Click “Accept” if you agree to these terms and wish to purchase this product. Accept Decline

14. 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?

15. In re Arbitration Between Acadia and Edlitz Will the Statute bar this oral “modification?”

16. In re Acadia & Edlitz:Modifying a Written Contract • N.Y. and federal law: Arbitration agreement must be in writing. • Original duration of the agreement? • Later: Separate agreement? Or a “renewal?” • Are underlying purposes of Statute satisfied? Can written agreements be “stretched” by oral renewal or modification?

17. 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.

18. 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. • Signed by party to be charged. Contract on Starbucks napkin: Sufficient despite coffee stains?

19. “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. • Unless recipient gives written objection w/in 10 days of receipt. Another aspect of the battle of the forms.

20. 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.”

21. 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….”

22. 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 of agreement. • Defendant can still deny K. A fifty foot mechanical gorilla?

23. 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. • UCC is to the contrary. Would Perry Mason extract an admission?

24. 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?

25. 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?

26. Application: Sales of goods between parties with “places of business” in different signatory nations. Parties can adopt differentchoice of law, or override particular provisions. CISG art. 11: “A contract of sale need not be concluded in or evidenced by writing….” The Statute and the Convention On International Sale of Goods

27. Johnson Farms v. McEnroe What is part performance substituting for a writing?

28. 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? Partial Performance Of Contract For the Sale of Real Property

29. 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?

30. 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?

31. Monarco v. Lo Greco The Statute’s Grapes Of Wrath Christie measures his inheritance.

32. 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?

33. 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. • The underlying promise (the one that should be in writing, but isn’t), because it induces reliance? Will little exceptions swallow the whole Statute?

34. 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?

35. Restatement of Contracts §139The 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.

36. 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?