Defenses - Statute of Frauds

Statute of Frauds
1. In most instances, an oral contract is valid. However, certain agreements, by statute, must
be evidenced by a writing signed by the part sought to be bound
2. Agreements Covered:
a. Promises in Consideration of Marriage: A promise the consideration for which
is marriage must be evidenced by a writing
i. This applies to promises that induce marriage by offering something for of
valid other than a return promise to marry
b. Performance Not Within One Year from Date of Contract: A promise that by
its terms cannot be performed within one year is subject to the SoF
i. Part performance does not satisfy the SoF in this case
ii. The date runs from the date of the agreement and not from the date of
performance
iii. Note: Even if the contract can’t be performed within a year, full
performance by one party will remove it from the statute
iv. Georgia distinction: Under Georgia law, the SoF is inapplicable to
contracts that are of indefinite duration or terminable at will, or where
there is the possibility of performance within one year
v. Exam Tip: Watch for a contract measured by a lifetime. A promise to
“employ until I die” or “work until I die” is not within the statute because
it is capable of performance within a year - a person can die at anytime
c. Interest in Land: A promise creating an interest in land must be evidenced by a
writing
i. This includes not only agreements for the sale of real property, but also:
1. Leases for more than 1 year
2. Easements for more than 1 year
3. Mortgages and most other security liens
4. Fixtures
5. Minerals (or the like) or structures if they are to be severed by the
buyer
ii. Items that do not create an interest in land: Contracts to build a building or
to find a buyer for the seller (i.e., broker’s contract) do not create an
interest in land
iii. Effect of performance on contracts: Full performance by the seller will
take the contract out of the SoF. Part performance by the buyer may also
remove the contract from the statute
d. Executor or Administrator Promises Personally to Pay Estate Debts: A
promise by an executor or administrator to pay the estate’s debts out of their own
funds must be evidenced by a writing
e. Goods Priced at $500 or more: A contract for the sale of goods for a price of
$500 or more is within the SoF and generally must be evidenced by a signed
writing to be enforceable
i. Note: A writing is sufficient even though it omits or incorrectly states a
term, but the contract is not enforceable beyond the quantity of goods
shown in the writing
ii. Exam Tip: To determine whether the SoF is satisfied and the contract is
enforceable, look carefully for a writing signed by the party to be charged
(that is sued). If only one party signed the writing, first check to see if the
signature is of the party being sued. If not, consider whether the
merchant's confirmatory memo rule applies. Be sure that the contract is
between merchant, if not that rule doesn’t apply and the signature of one
party cannot bind the other
iii. Exam Tip: A mnemonic for remembering when a writing signed by the
party to be charged is not required for the sale of goods, even if for $500
or more, is SWAP: Specially made goods, written confirmation by a
merchant, admission in court, or performance. These facts take the
contract of the SOF
f. Promises to Pay Debt of Another (Suretyship Promises): A promise to answer
for the debt or default of another must be evidenced by a writing
i. The promise may arise as a result of a tort or contract, but it must be
collateral to another person’s promise to pay, and not a primary promise to
pay
ii. If the main purpose or leading object of the promisor is to serve a
pecuniary interest of his own, the contract is not within the SoF even
though the effect is still to pay the debt of another
1. Example: Homeowner promises to pay contractor’s debt to
building supplier if contractor does not pay, so contractor can
obtain supplies to work on homeowner’s house
iii. Georgia Distinction
1. Agreement to Lend Money: In Georgia, a commitment to lend
money must be in writing to be enforceable
2. Agency: Georgia follows the equal dignities rule. The authority of
an agent to execute a contract required by law to be writing must
also be in writing. The authority of an agent executing a contract
within the SoF must be in writing as well

g. Exam Tip: SoF issues are often raised in MBE questions. Remember that the SoF
does not apply to all contracts. You must check the facts to see whether the
 contract falls within any of the covered areas above. An easy way to remember
agreements covered by the SoF is by using the mnemonic MY LEGS
i. Marriage
ii. Within One Year
iii. Land
iv. Executor or administrator
v. Goods for $500 or more
vi. Surety
3. Effect of Noncompliance with the Statute: Noncompliance with the SoF renders the
contract unenforceable at the option of the party to be charged
a. The party being sued may raise the lack of sufficient writing as an affirmative
defense. If the statute isn’t raised as a defense, it is waived
4. When Contract is Removed from SoF
a. Contract Modifications: A written contract can be modified orally, but the
modification must be in writing if the contract as modified falls within the SoF
i. Example: For a sale of a goods contract, if the contract as modified is for
$500 or more, it must be evidenced by a writing. If the contract as
modified is for less than $500, no writing is necessary
ii. Common Law - Provisions Prohibiting Oral Modification Not
Effective: The common law rule is that even if a written contract expressly
provides that it may be modified only by a writing, the parties can orally
modify the contract
iii. UCC - No Modification Clauses Effective: Under the UCC, if a contract
explicitly provides that it may not be modified or rescinded except by a
signed writing, that provision is given effect
1. If the contract is between a merchant and nonmerchant, this
provision requires the nonmerchant’s separate signature
iv. Waiver: If the parties attempt to orally modify a contract that requires
written modification, it is technically ineffective as a modification but
can operate as a waiver
1. A waiver will be found whenever the other party has changed
position in reliance on the oral modification
2. However, a party who makes a waiver affecting an executory (not
yet performed) portion of the contract may retract the waiver if
they notify the other party that strict performance of the waived
terms is required
3. The waiver may not be retracted if the other party detrimentally
relied on it
b. Performance
i. Land Sale Contracts:
 1. If a seller conveys property to the buyer (they fully perform), the
seller can enforce the buyer’s oral promise to pay
2. The buyer may seek to specifically enforce an oral land sale
contract under the doctrine of part performance
a. Part performance that unequivocally indicates that the
parties have contracted for the sale of land takes the
contract out of the SoF
b. Most jurisdictions require at least 2 of the following:
i. Payment (in whole or in part)
ii. Possession
iii. Valuable improvements
c. Georgia Distinction: In Georgia, performance sufficient to
take a contract for the sale of land outside the SoF requires:
i. Full payment accepted by the vendor
ii. Possession of the property plus partial payment
iii. Possession of the property plus valuable
improvements
d. Specific Performance Only: A purchaser of an interest in
land may enforce an oral contract in this manner only in
equity (meaning they may sue only for specific
performance, not damages)
e. Exam Tip: Watch for a fact pattern where the parties orally
agree to an installment land contract. In the absence of
other facts, such a large down payment, possession plus
payment, does not unequivocally indicate a contract for the
sale of land. Those facts are also consistent with a lease,
thus a party cannot enforce the contract
ii. Service Contracts - Full Performance Required: An oral contract that
cannot be completed within 1 year but has been fully performed by one
party is enforceable
iii. Sale of Goods Contract:
1. Part performance takes a sale of goods contract out of the SoF
when: (1) the goods have been specially manufactured, or (2) the
goods have been either paid for or accepted
2. If the sales contract is only partially paid for or accepted, the
contract is enforceable only to the extent of the partial payment
or acceptance
3. If goods are either received and accepted or paid for, the contract is
enforceable
a. However, the contract is not enforceable beyond the
quantity of goods accepted or paid for. If only some of the
 goods called for in the oral contract are accepted or paid
for, the contract is only partially enforceable
b. If an indivisible item is partially paid for, most courts hold
that the SoF is satisfied for the whole item
c. When Writing Not Required: There are 3 situations in which contracts are
enforceable without the writing described above
i. Specially Manufactured Goods: If goods are to be specially
manufactured for the buyer and are not suitable for sale to others by the
seller in the ordinary course of their business, the contract is enforceable if
the seller has, under circumstances that reasonably indicate that the goods
are for the buyer, made a substantial beginning in their manufacture or
commitments for their purchase before notice or repudiation is received
ii. Admissions in Pleadings or Courts: If the party against whom
enforcement is sought admits in pleadings, testimony, or otherwise in
court that the contract for sale was made, the contract is enforceable
without a writing
1. But in such a case the contract is not enforced beyond the quantity
of goods admitted
iii. Merchants Confirmatory Memo Rule: In contracts between merchants,
if one party within a reasonable time after an oral agreement has been
made, sends to the other party a written confirmation of the
understanding that is sufficient under the SoF to bind the sender, it will
also bind the recipient if:
1. They have reason to know of the confirmation’s contents, and
2. They do not object to it in writing within 10 days of receipt
3. Exam Tip: Typically, 2 merchants agree over the phone and one
sends a written confirmation to the other. UCC lets one merchant
use its own confirmation to satisfy the SoF against another
merchant
d. Equitable and Promissory Estoppel: Estoppel may be applied if it would be
inequitable to allow the statute to defeat a meritorious claim
i. Examples includes situations where D falsely and intentionally tells P that
the contract is not within the SoF and induces P to change position in
reliance on an oral agreement
e. Judicial Admission: If a party admits in pleadings or testimony that there is an
agreement, it’s treated the same as though the party signed a writing
5. Writing Requirement: The SoF doesn’t require a formal written contract
a. Among other things, the writing can be a receipt, letter, check with details in the
memo line, or a written offer that was accepted orally
b. The statute requires only 1 or more writings that:
i. Reasonably identify the subject matter of the contract
 ii. Indicate that a contract has been made between the parties, and
iii. State with reasonable certainty the essential terms
c. Electronic Record Satisfies Writing Requirement: If a law requiring a record
to be in writing, an electronic record (such as an email) satisfies the law
d. Essential or Material Terms: There is no definitive list of essential terms. What
is essential depends on the agreement, its context, and the subsequent conduct of
the parties, including the dispute that has arisen
i. There must be enough in the writing to enable a court to enforce the
contract
ii. If an essential term in contained in the writing, evidence is admissible to
explain the particulars, but evidence will not be admitted to add a
missing term
iii. Examples of essential terms include:
1. Identity of the pirates
2. Description of the subject matter
3. The terms necessary to make the contract definite
iv. Writings evidencing land sale contracts must contain a description of the
land and the price
v. Writings evidencing employment contracts must state the length of
employment
vi. Writings evidencing sales of goods contract (UCC), must indicate that a
contract has been made and specify the quantity term
vii. Exam Tip: Remember, to be sufficient under the SoF, the writing need not
be a full fledged contract, nor need it even be one piece of paper. Thus,
several pieces of correspondence (including electronic) between the
parties could be sufficient memoranda of the agreement; an email or a
memo written on a napkin could also suffice. The key is that there be
something in writing evidencing the essential terms
6. Signature Requirement: A signature is any mark or symbol made with the intention to
authenticate that writing as that of the signer
a. It need not be handwritten. It can be printed or typed
b. Under the UCC, a party’s initials or letterhead may also be sufficient
c. An electronic signature is also sufficient
d. Exam Tip: Note that the memorandum need not be signed by both parties. Only
the party to be charged (the person to be sued) must sign. Thus, in a suit by the
buyer against the seller, an otherwise sufficient writing that is signed by the seller
but not the buyer satisfies the SoF. However, if the seller were suing the buyer,
the writing would not be sufficient. There is an exception in contracts for the sale
of goods in the case of merchant’s confirmatory memo
7. Remedies if Contract is Within Statue: If a contract violates the SoF, in almost all
cases a a party can sue for the reasonable value of the services or part performance
rendered, or the restitution of any other benefit that has been conferred
a. Exam Tip: If the part performance rendered takes the contract out of the SoF, the
performing party has the option of suing on the contract for expectation
damages rather than merely in restitution for the value of the benefit conferred