The Statute of Frauds
A contract within its scope may not be enforced unless a memorandum of it is written and signed by the party to be charged. The purpose is to prevent a person from enforcing a falsely alleged contract through perjured testimony. There are six types of contracts covered.
I. Six types of contracts subject to the statute
1. Suretyship agreements
i. The suretyship clause requires that contacts where one person agrees to answer for the debt of another be in writing.
ii. Exception:Main purpose doctrine removes oral suretyship contract from the statute if promisor assumed a debt for his own benefit. Requirements:
1. Promisor intends to become primarily liable
2. There was consideration for the promise
3. Consideration was primarily for the promisor’s benefit
2. Contracts that cannot be performed within a year
i. Contracts that involving should have special protections because they impose special burdens
ii. Limitation 1:Doesn’t apply to agreement that is capable of performance within year
1. Narrow application: Take “capable of full performance” taken literally. Only covers promise that literally cannot be performed within one year.
2. Lenient application: require only “reasonable possibility” of performance within a year
iii. Limitation 2: Clause can be taken out if party seeking to enforce it has completed performance
3. For the sale of goods over $500
i. UCC 2.201(1) requires compliance for goods $500 or more (total price under the contract)
ii. Use the predominant purpose test to determine hybrid transactions
4. Upon consideration of marriage
i. Does not cover promise of marriage (engagements) which is usually oral
5. For the sale of real property
6. By the executor of a will to pay a debt of the estate
II. The writing requirement
1. Common law uses a stringent standard that is decreasing in influence
i. Identify the parties
ii. Nature of the exchange
iii. Set out all or most of the material (essential) terms
iv. Terms can appear in different document
irements
3. Merchants’ exception: Writing can be enforced against the party who did not sign when all of the following are satisfied:
i. Both parties are merchants
ii. Within a reasonable time of the oral contract, one of the parties sends a written confirmation to the other
iii. Which is signed by the sender
iv. And otherwise satisfies the statute as against the sender
v. The recipient has reason to know its contents
vi. Recipient does not give written notice of objection within ten days of receipt.
IV. UCC 2-201 is the statute of frauds with respect to goods
1. Section 1:
i. Goods for price of $500 or more
ii. Signed by party against whom enforcement is sought
iii. Writing sufficient to indicate a contract for sale
iv. Quantity needs to be shown in the writing
2. Section 2:
