(Example of good exam structure – Odorizzi pg 548)
Statute of Frauds: (Still must prove consideration for the contract. S.O.F. does not make a contract binding, it makes an otherwise binding contract non-binding. SOF is a defense to an otherwise valid contract.)
Common Law Statute of Frauds (services):
(1) Is the contract one of the types to which the statute applies? (so that memo will be req’d for its enforcement)
§ NO – statute has no application to case
§ YES – Ask “Is the statute satisfied?”
· YES – statute presents no bar to enforcement – case proceeds in normal fashion, but Π still has burden of persuading the trier of fact that the agreement was made as she alleges
· NO – Ask “Are there other factors in the case, such as performance or reliance by Π, which might invoke an exception to the statutory bar?
Restatement § 110- Statute of Frauds-
(a) a will or contract in execution of an estate;
(b) a contract to answer for a duty of another;
(c) a marriage contract.
(d) a contract for the sale of an interest in land (the land provision);
(e) a contract that is not to be performed within one year from the making (the one-year provision).
i. Standard view: contract not subject to provision if it is possible to be performed w/in a year, even though prospect of such performance is remote
ii. Distinguish b/w possibility of performance and termination w/in one year: fact that k may be terminated w/in a yr is not sufficient to remove k from requirements of statute
(2) The following classes of contracts are governed by the UCC
(a) a contract for the sale of goods for $500 or more (UCC §2-201)
(b) a contract for the sale of securities (UCC §8-319)
(c) a contract for the sale of personal property over $5,000 (UCC §1-206)
o Single Writing- Writing does not all have to be in one contract nor does it have to be signed w/intention of evidencing a contract ~ just has to be signed w/intent to authenticate. At least one writing must be signed by the party against whom enforcement is sought and other writings must directly reference that transaction.
§ Min: papers fail to refer to eachother & one is unsigned = failure to show sufficient authentication
§ Maj: same situation = okay if internal docs refer to same subject matter or transaction ~ extrinsic evidence admissible to help show connection
(d) Crabtree v. Elizabeth Arden Sales Corp.- Contract for two-year employment with raises written on a memo- first raise given, second was not. Court allows oral testimony to link docs.
(e) R2d § 133 – it isn’t necessary for the signed writing to establish a contractual relationship; the memo may consist of an informal writing (even a letter that is not sent), an offer, or a document that attempts to repudiate(not UCC) contractual liability
· Exceptions to the SOF- Reliance-
o Restatement § 129- Contract can be enforced regardless of SOF if party reasonably relied and had continuing assent of the other party. The other party must change their position.
§ Winternitz v. Summit Hills- Π operated a pharmacy he wanted to sell. The landlord orally agreed to renew the lease, he sold his business and the landlord would not renew, he had to sell for less.
Rule: Enforcement based on reliance is only available for specific enforcement- not money damages.
o Restatement § 139- A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee and which does, is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement. (Remedy is restitution for the reasonable value of partial performance)
§ Ex: Alaska Democratic Party v. Rice- Woman moves to Alaska and gives up job because new job has been promised to her. Must establish promise by clear and convincing evidence to in order to override statute.
o 3 Approaches Exist:
§ Maj: restatement view – promissory estoppel generally available to overcome statute of frauds
§ Min: promissory estoppel available only where Δ has promised to create a sufficient writing
§ Min: rejection of promissory estoppel exception as a whole
o some courts require Π to demonstrate that by virtue of his reliance, he has suffered injury that will not be compensable on any other basis
U.C.C. Statute of Frauds for the Sale of Goods-
U.C.C. § 2-201- Formal Requirements; Statute of Frauds.
(1) a contract for the sale of goods for the price of $500 or more is not enforceable 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 or his agent. 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. (Minimal rule- enough writing to show it is true)
a. Ex: Tobacco Barn case- Buffaloe v. Hart- A check may constitute a writing provided it contains sufficient writing to indicate a contract of sale, is signed by the party against whom enforcement is sought, and states a quantity.
(2) Between merchants (merchant exception) if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received. (If you get a contract you didn’t make you should rationally respond – section is for an oral agreement which is followed by a writing)
(a) Must (1) show existence of a k (2) be signed by sender (3) show quantity of goods
(b) Ex: Bazak v. Mast- No written contracts but faxed purchase orders to the seller and not objected to.
(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable:
(a) if the goods are unique and, before notice of repudiation is received and under circumstances that reasonably indicated that the goods are for the buyer, has either started making the product or committed to procuring it.
(b) If the party admits the contract was made; or
(c) With respect for goods in which payment was accepted.
i. Acceptance must be voluntary and unconditional and may be inferred from the buyer’s conduct in taking physical possession of the goods or some part of them. For the buyer, he is req’d to deliver “something…that is accepted by the seller as such performance. Thus, part payment may be made by money or check, accepted by the seller. (Buffaloe v. Hart – check for barns)
(4) A contract is not unenforceable merely because it is not capable of being performed within one year
Promissory Estoppel under UCC 2-201? – majority view is that promissory estoppel can operate as an exception by virtue of UCC § 1-103 (see note 7 pg 343)
Parol Evidence Rule [R.2d 209-217; UCC § 2-202] Common Law – when parties to a k have mutually agreed to incorporate (or “integrate”) a final version of their entire agreement in a writing, neither party will be permitted to contradict or supplement that written agreement with “extrinsic” evidence (written or oral) of prior agreements or negotiations between them. ONLY OPERATES TO EXCLUDE EVIDENCE – doesn’t define what evidence is affirmatively admissible. Doesn’t apply to agreements, whether oral or written, made after the execution of the writing.
· (1) Court must first determine if the agreement is complete or partially integrated.
o Old Test: Face of the agreement: Parties intent determined from the “four corners of the page”. If the written agreement appeared to be final, no parol evide
(c) the meaning of the writing, whether or not integrated;
(d) illegality, fraud duress, mistake, lack of consideration, or other invalidating cause;
(e) ground for granting or denying rescission, reformation, specific performance, or other remedy.
Sale of Goods- U.C.C. §2-202
· Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms are included therein may not be contradicted by evidence of any prior agreement of a contemporaneous oral agreement but may be explained or supplemented
(a) By course of dealing or usage of trade (§1-205) or by course of performance (§2-208); and
o Course of dealing- sequence of previous conduct between parties fairly regarded as establishing a common basis of understanding for interpreting their conduct; or
o Course of Performance- repeated occasions for performance accepted without objection are relevant to determine the meaning.
o Trade Usage- normal meaning of the term in the trade.
o When reasonable the express terms and the above should be construed to be consistent, but when they cannot, express terms control course of performance and course of performance controls course of dealing and usage of fair trade.
o “Meaning of the agreement is to be determined by the language used by them and by their action, read and interpreted in the light of commercial practices and other surrounding circumstances”
(b) By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
Contract Interpretation [R.2d 201-208, 211, 222-223; UCC §1-205, 2-208, 2-211] Common Law/Restatement
Restatement §201- Whose Meaning Prevails
(1) Where the parties have attached the same meaning to a promise or agreement of a term thereof; it is interpreted in accordance with that meaning.
(2) Where the parties have attached different meanings to a promise or agreement of a term; it is interpreted in accordance with the meaning attached by one of them at the time the agreement was made
a. that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; OR
b. that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party. (favor ‘innocent’ party)
(3) Otherwise, neither party is bound by the meaning of the other.
Construed against the drafter- In adhesion contracts (or when unequal bargaining power) the meaning is usually construed against the drafter in the case of ambiguity or when one party can be regarded as solely responsible for the ambiguous language. (must show words were actually chosen by one party rather than by the other)
Restatement §202- Rules in Aid of Interpretation
(1) Interpret under all the circumstances and purpose of contract is given great weight.
(2) Interpreted as a whole.
(3) Unless otherwise noted the general meaning is used unless it is a technical term.
(4) Performance given great weight