Contracts 3

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Author:
paul
ID:
23043
Filename:
Contracts 3
Updated:
2010-07-15 22:06:52
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SOF Statute Frauds
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Description:
Contracts 3 - Statute of Frauds
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  1. Are ORAL Ks enforceable?
    Yes, absolutely!

    Only certain kinds of Ks need to be in writing to be enforced. Those that do require a writing in order to be enforced are said to be "within the Statute of Frauds."
  2. What types of Ks require a writing to be enforceable?
    • a) Transfers of an interest in real property
    • b) Full performance theoretically impossible to complete within one year (if full performance within one year is theoretically possible, no writing is required even if actual performance exceeds one year)
    • c) Sales of goods for $500 or more ( ≥ $500) (UCC Article 2)
    • d) Leases of goods where the aggregate rental amount is $ 1,000 or more ( lease ≥ $ 1,000) (UCC Article 2A, NY ONLY!)
    • e) Suretyships (Exam tip: be sure that there actually is a debt to which the surety may be called to answer)
    • f) Contract modifications if the contract as modified is within the SOF
    • g) Misc. New York provisions (see separate card)
  3. In NEW YORK, what types of K provisions must be in writing to be enforceable?
    • Assignment of an insurance policy
    • Promise to pay a discharged debt
    • Agreement to pay a finder's fee or broker's commission (except to an attorney, auctioneer, or real estate agent)
  4. If a writing is required, what must be in it?
    Depends on whether the K is for

    • • Sale of Goods (Art. 2)
    • • Lease of Goods (Art. 2A, NY ONLY), or
    • • Any other K
  5. If a writing is required for a Sale of Goods (Art. 2), what must it contain?
    • Quantity term, and
    • Signed ∆ (i.e., must be signed by the party to be charged with br/K)
  6. If a writing is required for the Lease of Goods (Art. 2A, NY ONLY), what must it contain?
    • Statement that the K is for a lease
    • Quantity
    • Duration
    • Amount of rental payments
    • Signed by ∆ (i.e., the party to be charged with breach of K)
  7. If a writing is required for ANY OTHER K, what must it contain?
    • All material terms (e.g., who, what, duration, price), and
    • Signed by ∆ (i.e., the party to be charged with breach of K)
  8. EXCEPTIONS to SOF: Real Property
    Interests in real estate don't require a writing if:

    Short-term leases: lease of property of a duration ≤ 1 year,

    OR

    Past-performance: any 2 of the following is true (i) buyer is in possession of property, (ii) buyer made some payment (need not be full payment), or (iii) buyer made improvements to property
  9. EXCEPTIONS to SOF: Full Performance of Oral K
    A party that has FULLY PERFORMED can enforce an oral contract, even if full performance was theoretically impossible within one year.

    Example: S orally agrees to employ B for two years for $50,000. B works the full 2 years, but S won't pay. Even though full performance under the oral contract was theoretically impossible to achieve within one year, B does not need a writing to enforce the oral K because B has fully performed.
  10. Sales of goods for $500 or more (Art. 2) need not satisfy the SOF where . . . (4 possibilities)
    • 1) Buyer accepts or pays for goods (note, partial payment of a single item does not count)
    • 2) Goods are custom-made, not suitable for sale in ordinary course of seller's business, and seller made a substantial start in their manufacture
    • 3) Admission of a K in a judicial proceeding (e.g., deposition, testimony)
    • 4) Merchant's confirmatory memo (separate card)
  11. What is the Merchant's Confirmatory Memo exception to the SOF?
    It's an exception to the SOF requirement that the writing be signed by the ∆. The exception allow one party to use its own signed writing to satisfy the SOF against a non-signing ∆ where all the following are true:

    • 1) both parties are "merchants"
    • 2) the writing claims a prior oral agreement
    • 3) the writing is signed and has a quantity, and
    • 4) there is no written objection within 10 days

    The typical fact pattern where the exception applies involves two merchants who agree over the phone, and one follows-up with a written confirmation. Article 2 lets a merchant use its own confirmation to satisfy SOF against another merchant, even if the latter does not sign the confirmation.
  12. What is the Suretyship "Main Purpose" exception to the SOF?
    It provides an exception to the writing requirement for a surety arrangement

    Rule: If the surety's main purpose in becoming a surety was to benefit himself, then no writing is required.

    NY Distinction: The surety "main purpose" exception applies only on the MBE—NY does not recognize the exception, and therefore surety arrangements in NY always require a writing regardless of whether the surety's main purpose for assuring the debt of another is his own benefit.

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