Quite simply, the Statute of Frauds means that under certain conditions, contracts need to be written down. This article and the next article on the statute of frauds will cover general principles generally and then how the UCC has addressed these statutes. A couple of things before getting into case details:
First, the statute of frauds is actually a list of statutes with the purpose of reducing fraud and perjury.
Second, there must always be consideration to be enforceable. Just because a contract is written down does not mean that the contract is enforceable.
Third, any contract that fails to meet the statute of frauds requirements are not enforceable.
Fourth, the Restatement §110 covers certain types of contracts that need to be written down:
- Duties for decedents
- When one party agrees to cover the debts of another
- Marriage Contracts
- Sale of interest in land
- Contract where the performance is more than a year later.
Finally, the UCC §2-201 means that the sale of goods over $500 needs to be written down. If something doesn’t meet the UCC requirement of 500, but meets one of the requirements in the Restatements.
Crabtree v. Elizabeth Arden Sales Corp.
305 N.Y. 48 (1953).
Crabtree is the plaintiff. Won in trial and appeal before the defendant made this last appeal.
Question
First, whether there was a contract. Second, whether it met the requirements of the statute of limitations.
Rule
A completed contract can be inferred by all discussions related to the transaction. Only one document needs to have a signature.
Holding
This is a contract and meets the statute of frauds requirements. Affirmed.
Facts
The plaintiff made an agreement to work for “2 years to make good” with the defendant. The contract was a little interesting. For the first six months, the plaintiff would be paid 20,000 with an increase to 25,000 afterwards which would then again increase to 30,000 at the end of the year. The first offer was signed by the defendant but the actual pay-roll change form was not. The defendant failed to make the increase from 25,000 to 30,000 and the plaintiff filed suit.
The argument from the defendant is that there was not a contract (missing sufficient terms) and that it does not meet the requirements from the statute of frauds.
Analysis
The dispute is that there are two documents each outlining different terms. There was a signature on the agreement that set out the price, effective date, and parties involved. However, the term was not listed on that date and the argument is that the contract could be terminated at will. If that was the case, then there would be no room for recovery.
However, the court reasons that when it comes to the statute of frauds, several communications, oral or written, about the same transaction can be deemed as part of the same contract. As long as there is an effective signature on one written memo, then the contract can meet the statute of frauds requirements. Here, there is no doubt that the two terms are related so the additional communication counts as the same contract.
The next question is to determine whether the contract could be terminated at will or if there was a 2 year term. The phrase “2 years to make good” is ambiguous, but the court struggles to determine any meaning other than a 2 year term. Therefore, it is interpreted as a 2 year term and is enforceable. Affirmed.
Takeaway
This falls under the requirements for the statute of frauds because the agreement was to be performed a year from the making of the contract.
The big takeaway from this case is that any communication that is related to a transaction, as long as there is one piece of the communication signed in writing, can be found to meet the statute of frauds.
Additional Notes
We need to ask, why do some contracts have to be in writing? See the statute of frauds. This was introduced in 1677 in England and adopted in the United States. Every jurisdiction has a statute of frauds.
It needs to be signed by the defendant (the person against who it is being enforced).
Restatement §110… 5) Contract where the performance is more than a year later. This requires that the contract cannot be performed within a year. If there is a possibility that it can be performed within a year, the statute of frauds does not apply.
See §110, 129, 131-34.
Beaver v. Brumlow
148 N.M. 172 (2010).
Beaver is the defendant. Lost and appealed.
Question
Whether enforcement of the contract is barred by the statute of frauds.
Rule
A sale of land needs to be written down unless there is part performance “unequivocally referable” to the oral agreement.
Holding
There was part performance, therefore, there was no need to meet the statute of frauds.
Facts
Brumlow worked for Beaver for several years. During that time, he asked Beaver if he could purchase some of his land to build a home on. Brumlow agreed and with his consent, they marked the land that was to be sold, purchased a trailer home and built a permanent foundation on the property, and began conducting landscaping efforts. To do so, the Brumlows had to pull out of their retirement plans to pay for the 85,000 spent on this project. However, the land was never formally sold, despite the requests from the Brumlows to formalize the agreement.
Eventually, Mr. Brumlow sent his two weeks notice to Beaver and began working for a competitor. Out of anger, Beaver refused to sell the land and attempted to turn their verbal agreement into a “lease”. He had Brumlow sign an “agreement” to make payments for the property. Brumlow believed this to be a purchase agreement while Beaver said it was a lease agreement. Beaver then attempted to use this agreement to evict the Burmlows from the property. Brumlows responded with this suit requesting specific performance to sell the land.
There is no question as to the existence of a contract, only whether the statute of frauds restricts the specific performance of that contract.
Analysis
Under most circumstances, this agreement would fall under the statute of frauds requiring a formal written agreement for the sell of the land. However, the part performance of both parties is sufficient to remove this agreement from the statute of frauds requirement. The Brumlows had done several things to prepare for the purchase of the land and the Beavers had requested legal advice on the best ways to sell the land.
The biggest argument made by Beaver is that specific performance is not a good method of remedy because the part performance was not “unequivocally referable” to the contract. Meaning, they argued that if there are multiple possible ways for the contract to be interpreted by that performance, then the performance does not remove the requirements of the statute of frauds. The court disagrees saying that if you look at everything as a whole, it is clear that the performance was wholly related to the purchase of the land.
Takeaway
Make things formal before conducting any performance. It will save you the trouble of taking a case to court.
Additional Notes
Restatement § 129. Can be enforced by specific performance if there is reasonable reliance, part performance, and can only be enforced by specific performance.
Additional Notes
Restatement § 129. Can be enforced by specific performance if there is reasonable reliance, part performance, and can only be enforced by specific performance.
Full performance by one party means that the contract can be enforced regardless of the agreement being written down. §130.
Satisfied by any writing, signed by the defendant, and identifies the subject matter. §131.
The writing can be included in several writings as long as one is signed and circumstances indicate that they relate to the same transaction. §132.
Except for marriage, writing does not need to be made as a memo of a contract. §133.
The signature may be made by any symbol made with the intent to authenticate the writing. §134.
The statute of frauds cannot be used to derail an otherwise good contract. § 139
Three Steps Regarding Statute of Frauds: Do these on any statute of frauds problem and you will most likely get the right answer.
- First, is the contract a type within the statute of frauds?
- UCC or Restatement? Start with UCC. If it is not under the UCC use the Restatement.
- If not, the contract is not unenforceable under the statute of frauds. If so, move to step 2.
- Is the statute of frauds satisfied?
- Is there a sufficient writing?
- If so, not unenforceable under the statute of frauds. If not, move to step 3.
- Third, Is there an exception which applies to make the contract enforceable?
Alaska Democratic Party v. Rice
934 P.2d 1313 (Ak. 1997)
Rice is the plaintiff, won in trial court.
Question
Whether promissory estoppel can be used to enforce a statute of frauds contract.
Rule
§ 139 says that a promissory estoppel (reliance on a promise to the detriment of the promisee) can be enforceable despite the statute of frauds.
Meaning, if the facts would typically require a written document under statute of fraud rules, promissory estoppel can overcome that requirement. However, the court must consider several factors to ensure that injustice would be present if not satisfied.
Holding
Here, the elements of promissory estoppel were met. Judgment affirmed.
Facts
The plaintiff was fired from her position in Alaska as the executive director of the democratic party of Alaska. She then moved to Maryland. However, when a new chair was up for election in Alaska, he offered her an opportunity to work for him as the executive director if he was elected. He was in fact elected, called her and offered her a position, and encouraged her to move from Maryland where she had a profitable position with the party there. She did so, but once in Alaska, was informed that she could not be hired. There was never a written contract between the parties. She filed suit.
Analysis
The plaintiff makes two claims, she reasonably relied on the promise of employment to her detriment and that the party had misrepresented the fact that she was to be employed. I’ll focus primarily on promissory estoppel here.
For the first issue, the courts adopted §139 of the Restatement (2d) of Contracts. They say that she reasonably relied on the promise because the elect-char had the apparent authority to make a promise, she quit a similar job, moved, but received no employment. Lack of enforcement would be unjust because there were terms made by clear and convincing evidence. Therefore, a jury was right to hear the case and decide if she was entitled to the judgment.
Additional Notes
Does the statute of frauds apply? Yes. Her employment would have been for a period of 2 years with an additional 2 years to be added afterwards.
Was the statute of frauds met? No. There was no written document.
Is there an exception to the statute of frauds? Court says yes. § 139, promissory estoppel trumps (overpowers) the statute of frauds. The plaintiff had a reliance on a promise and there was a detriment due to that reliance.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
