I.        Does the contract fall within the statute of frauds? (not all contracts do)

a.    If yes, then look at the requirements of the statute of frauds. Are these requirements satisfied?

                                          i.    Must be in writing

                                         ii.    Must be signed by party against whom enforcement is sought (defendant)

                                        iii.    Must indicate that a contract has been made

                                       iv.    For non-goods  - Must say with reasonable certainty the essential terms of unperformed promises

                                        v.    For goods – specify the term of qty (see exceptions under UCC §2-201)

                                       vi.    Can also be satisfied by full performance

b.    Is there a statute of frauds defense?  Defense against enforcement of this type of agreement.

   II.        What is covered under the statute of frauds? (MYLEGS – Marriage, Year, Land, Executor, Goods, Surety)

a.    Marriage - promise in consideration of marriage (something more); something to do in addition to promise to marry

b.    Year - Service contract not being able to be performed one year from the making of the contract

c.    Land - Real estate transfer - lease/mortgage - usually that go on for more than 1 year

d.    Executor - executor paying expenses out of own pocket

e.    Goods - Sales of goods for $500 or more (changed to $5000, but no state has adopted this $5k threshold). (see also UCC §2-201 contracts for sale of goods)

f.     Surety - Promises to answer for debts of another (guarantor). Not just promise to pay, but promise to pay if someone else does not (exception: if promise benefits the promisor)

 III.        The “One Year” Clause - There must not be the slightest possibility that the service can be fully performed within one year for Statute of Frauds to apply.

a.    Restatement §130. Contract Not to Be Performed Within a Year

                                          i.    Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the Statute of Frauds until one party to the contract completes his performance.

                                         ii.    When one party to a contract has completed his performance, the one-year provision of the Statute does not prevent enforcement of the promises of other parties.

b.    North Shore Bottling Co. v C. Schmidt & Sons, Inc. (MYLEGS goods) – oral service K, defense invoking SOF. K allowed termination of K within a yr of formation. SOF doesn’t apply b/c allowing discontinuation at any time meant that performance within one year was possible.

c.    Crabtree v Elizabeth Arden Sales Corp (memo; payroll) – K for service for 3 years; SOF applies. Unsigned memo stating terms + (2) signed payroll records supporting memo. Sufficient under parole evidence b/c all refer to same transaction, so connection can be made   . 

 IV.        Contracts for the Sale of Goods

a.    UCC §2-201 (Exception to the Statute of Frauds)

                                          i.    For goods $500+ (says $5k, but no state has adopted that amt yet), falls under statute of frauds. Needs writing, signed, etc.  Says a record is not insufficient if it omits or inaccurately states a term agreed upon, but contract only enforceable for qty of goods shown in the record.

                                         ii.    Btwn merchants – doesn’t need to be in writing if record of confirmation rec’d in reasonable time, as long as receiver has reason to know of its contents, and unless receiver sends notice of objection to sender within 10 days after rec’d.

                                        iii.    A contract can also be enforceable (& does not satisfy section 1) if:

1.    For specially manufactured goods, not good to sell to anyone else, and the seller has reasonably begun a substantial part of the manufacture, or process to manufacture.

2.    If defendant admits to the contract (in testimony or under oath), but only enforceable for qty of goods admitted

3.    For goods where payment made & accepted or rec’d & accepted

                                       iv.    A contract enforceable under this section is not unenforceable just b/c it can’t be performed within one year or any other period of its making.

b.    Note:  Electronic “writings” sufficient under Statute of Frauds.  Now, they use the word “record” instead of “writings.”

   V.        Effect of Noncompliance – If an oral contract falls within the statute of frauds, but the requirements of the statute not met, the contract is not void, just unenforceable.

a.    DF activities corp. v Brown (chair) – Sale of goods over $500, SOF applies. Oral contract, SOF not satisfied. P wants to use UCC§ 2-201(b)(2) (if parties admit, doesn’t have to be in writing), wants jury trial to prove there was a K. But improbable D would admit to perjury by changing statement during trial. So since SOF not met, and no exceptions met under 2-201, not enforceable.

b.    Restatement §139 (similar to §90) Courts haven’t really upheld this yet.***

                                          i.    A promise that reasonably induces reliance is enforceable despite not having satisfied the Statute of Frauds, if injustice can be avoided. 

                                         ii.    To determine if (i) has been met, courts will consider:

1.    the availability and adequacy of other remedies

2.    the definite and substantial character of the action or forbearance in relation to the remedy sought;

3.    if the action or forbearance is directly resulting from promise

4.    the reasonableness of the action or forbearance;

5.    the extent to which the reliance on promise was foreseeable

c.    Restatement § 140 - The Statute of Frauds does not invalidate defenses based on the plaintiff's failure to perform a condition of his claim or defenses based on his present or prospective breach of the contract he seeks to enforce.