ContractsChapter 3.A. Statute of Frauds

Ch. 3.A. Statute of Frauds 1

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?Ch. 3.A. Statute of Frauds 2

Statute of Frauds: Mechanics1. SCOPE: Is the contract within the statute?• If yes, then go to step 2.• If no, then stop.

2. SATISFACTION: If the contract is within the statute, has the statute been satisfied?

1. If yes, then stop.2. If no, then go to step 3.

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.

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.

Ch. 3.A. Statute of Frauds 3

Scope: Covered Contracts

Original categories (Rest. (2d) §110)1.Executor-administrator2.Suretyship3.Marriage4.Land Interests5.One-Year

UCC 2-201: $500 or more ($5000 in amended version)

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SCOPE: Suretyship & ExecutorPromisor is a surety if

1. makes a promise to creditor2. to do that which will discharge debtor’s

duty3. 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).Ch. 3.A.

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SCOPE: Sale of an Interest in LandAn “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.”

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SCOPE: Sale of Goods

UCC §2-201 covers contracts for sales over $500. Some states have adopted a proposed

increase to $5,000 threshold.

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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 Klewin court interpret this rule?

How does this contrast with McInerney court’s position?

Which approach is better?

Ch. 3.A.

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?Ch. 3.A. Statute of Frauds 9

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)

1. Special-order goods started or commitment to procure

2. Admission in pleading or testimony3. Goods

1. for which payment has been made and accepted, or2. that have been received and accepted.▪ NOTE: Performance (partial or complete) validates

performed portion of contract only.Ch. 3.A. Statute of Frauds 10

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.

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