17: Statute of Frauds, Exceptions

Summary

This video explains the statute of frauds and its exceptions in both general law and UCC (Uniform Commercial Code). It details how courts can allow oral contracts to be enforceable despite the statute, such as in cases of part performance or reliance, especially in real estate transactions. The video explores various exceptions like specially manufactured goods, part performance regarding payment or delivery, and merchant exceptions. It emphasizes how specific conditions allow oral contracts to bypass the statute, enabling enforcement and offering remedies, such as damages or specific performance.

Takeaways

• 😀 The statute of frauds provides exceptions where oral contracts can be enforced despite lacking a written agreement.
• 😀 Both the general statute of frauds and the UCC (Uniform Commercial Code) have their own set of recognized exceptions.
• 😀 The general statute of frauds includes an exception for real estate contracts, where part performance or reliance can make an oral contract enforceable.
• 😀 The 'part performance' exception, under the general statute of frauds, applies when the party seeking enforcement has reasonably relied on the oral contract, changing their position.
• 😀 Section 129 of the second restatement articulates a part performance exception for contracts related to real estate.
• 😀 The reliance-based exception in Section 90 of the Restatement overlaps with Section 129 and has been used to apply exceptions beyond real estate contracts in some jurisdictions.
• 😀 The UCC statute of frauds has specific exceptions, including one for specially manufactured goods where the seller has substantially begun manufacturing before the buyer repudiates.
• 😀 A second UCC exception allows for oral contract enforcement if goods have been paid for or received and accepted, even if there is no written agreement.
• 😀 The UCC also allows enforcement of an oral contract if one party admits the existence of the contract in court through testimony or pleadings.
• 😀 The 'merchant's exception' under the UCC allows for an enforceable contract if one merchant sends a written confirmation and the receiving merchant does not object within 10 days, even without a signature.

Q & A

What is the Statute of Frauds, and why is it important?

The Statute of Frauds is a legal requirement that certain contracts must be in writing to be enforceable. Its purpose is to prevent fraud and misunderstandings by ensuring that contracts are documented and parties have a clear record of agreements.

What are the main exceptions to the Statute of Frauds?

The main exceptions include part performance, special manufacturing goods, admission of contract, and the merchant's exception. These exceptions allow oral contracts to be enforced even when they typically would not be under the Statute of Frauds.

How does the exception for part performance apply to contracts involving real estate?

The exception for part performance allows an oral contract involving real estate to be enforced if a party has reasonably relied on the agreement, such as by making improvements or taking other significant actions in reliance on the contract.

What is the role of Section 129 in the general Statute of Frauds?

Section 129 of the Restatement of Contracts outlines the part performance exception for real estate contracts. It allows for specific performance of a contract if the party seeking enforcement has changed their position in reasonable reliance on the oral contract.

How does the UCC's exception for specially manufactured goods work?

Under UCC Section 2-213A, if goods are specially manufactured for a buyer and are not suitable for resale, the contract can be enforced even without a written agreement, provided the seller has made a substantial beginning in manufacturing or committed to procurement before the buyer repudiates the contract.

Can an oral contract be enforced under the UCC if payment has been made or goods have been accepted?

Yes, under UCC Section 2-213C, if a buyer has made payment that the seller accepts, or if the buyer has accepted the goods, the oral contract can be enforced even if there is no written agreement satisfying the Statute of Frauds.

What happens if a party admits in court that a contract was made?

If a party admits in court that a contract was made, they are estopped from later arguing that the contract is unenforceable under the Statute of Frauds. This exception ensures consistency and fairness in the litigation process.

What is the merchant's exception under the UCC, and how does it apply?

The merchant's exception under UCC Section 2-213 allows a written confirmation from one merchant to satisfy the Statute of Frauds for another merchant, even if the second merchant did not sign the writing. This applies if the confirmation is received within a reasonable time and there is no objection within 10 days.

In the case example with the wholesaler and the manufacturer, does the merchant's exception apply?

Yes, the merchant's exception applies. The manufacturer sent a written confirmation to the wholesaler, who did not object within 10 days. This made the written confirmation sufficient to satisfy the Statute of Frauds, even though the wholesaler did not sign it.

What is the three-step process for analyzing whether the Statute of Frauds applies to a contract?

The three-step process includes: 1) determining whether the contract is within the Statute of Frauds (i.e., whether it's the type of contract covered by the law), 2) checking if there is a writing that satisfies the statute, and 3) if there is no writing, determining whether any exceptions apply to allow enforcement of the oral contract.