Statute of Frauds
The statute of frauds is a record requirement.
7. Statute of Frauds
Some contracts cannot be enforced unless there is a record (information stored in a written or electronic medium) [indicating a contract has been made between the parties, signed by the party against whom enforcement is sought].
- The UCC’s statute of frauds requires a record to enforce a contract for the sale of goods if the price is $500 or more.
- In addition, many states have statutes of frauds that require a record to enforce a contract that, by its terms, cannot be fully performed within a year from the time the contract is made.
- The one-year period is measured from the time the contract is made, not from when performance is promised.
- [A “record” satisfying the statute of frauds may be made at any time, as long as it indicates a contract has been made. ]
- [A notice of breach may satisfy the statute of frauds if it indicates the existence of a contract.]
- “Signing” the record means taking an action to authenticate or adopt the record (including by executing a symbol or attaching an electronic symbol or sound).
- [Statutes of frauds also govern contracts and deeds related to transfers of real property. Those applications are discussed in the real property section of this outline.]
- [The Nevada FLE does not require knowledge of the exceptions to the UCC’s statute of frauds.]
- Nor does the exam test other categories of contract governed by statutes of frauds, such as a contract of an executor to answer for a duty of the decedent.
- Nor does the exam require knowledge of the different rules on how much information about the content of the contract must be in the record to satisfy the statute.
- The Nevada FLE, finally, does not test when promissory estoppel may be used to enforce a promise despite an otherwise valid statute of frauds defense.
The statute of frauds is a record requirement: a few categories of contract cannot be enforced unless there is a writing or electronic medium that indicates a contract was made and is signed by the party against whom enforcement is sought.
Most contracts are perfectly enforceable on a handshake, but a few categories cannot be enforced unless there is a record, a writing or electronic medium that indicates a contract was made and is signed by the party against whom enforcement is sought. For this exam you care about two categories.
- 1Sale of goods governed by the UCC: a contract for the sale of goods is unenforceable without a record if the price is $500 or more. Below $500, the UCC statute of frauds is not triggered at all.
- 2The one-year provision: many states require a record to enforce a contract that, by its own terms, cannot be fully performed within one year.
Two more pieces round it out. A record can be created at any time, even after the deal, so long as it shows a contract was made, and a notice of breach can itself satisfy the statute if it acknowledges the contract. And signing just means taking an action to authenticate or adopt the record; an electronic symbol or sound counts, so an electronic signature is a signature.
The trap lives in the clock. You measure the year from the moment the contract is made, not from when performance is promised or when it begins. A one-year job that starts six months from now cannot be completed within a year of the day the deal was struck, so it needs a record; a job of any length that could possibly wrap up within a year of formation does not.
Real-property transfers and the various exceptions to the UCC rule are off the table here.
Two boxes only: goods at $500 or more (UCC), and cannot be performed within one year by its terms.
Everything else here is enforceable without a record.
One-year clock starts when the contract is made, not when performance is promised or begins.
A one-year job starting next month cannot finish within a year of formation, so it needs a record.
Record = signed writing or electronic medium indicating a contract was made; it may be created at any time, and a notice of breach can count.
Signing = any action to authenticate or adopt the record.
Electronic symbol or sound counts, so an e-signature is a signature.
A produce wholesaler and a restaurant agree by phone that the wholesaler will deliver crates of vegetables for a total price of $600. Nothing is written. The restaurant later refuses to pay and the wholesaler sues to enforce the deal.
Make the total price $480. The price is below $500, so the UCC statute of frauds is never triggered, and the oral contract is enforceable with no record at all.
The restaurant emails the wholesaler after delivery saying it is rejecting the shipment and will not honor their deal. That notice of breach acknowledges the contract and bears the restaurant's electronic signature, so it can itself be the record that satisfies the statute, even though it was created after the contract was made.
An option applies the wrong body of law to the deal: the common-law one-year rule to a sale of goods, or the $500 goods threshold to a services or other non-goods contract.
Classify first. Goods at $500 or more is the UCC box; a deal that by its terms cannot finish within one year is the separate common-law box. Match the rule to the type of deal.An option measures the one year from when performance is promised or begins instead of from when the contract is made, or it nudges the goods threshold off $500 (treating something under $500 as covered).
The one-year clock runs from formation, and the goods line is a price of $500 or more. Pin the exact trigger point and the exact number.A true but irrelevant fact: the goods were already made, the buyer had not taken possession, the parties expected a long relationship, or the record was created after the deal.
None of these change the analysis. The triggers are the $500 goods threshold and the by-its-terms one-year impossibility; a record may be made at any time.An option misstates what signing or a record requires: an ink or handwritten signature is needed, an electronic signature does not count, a record must be made within a reasonable time, or a notice of breach can never be the record.
Signing is any action to authenticate or adopt the record, electronic symbols count, a record may be made at any time, and a notice of breach can satisfy the statute if it indicates a contract was made.An absolute: every sale of goods needs a record, any year-long service contract needs a record, or long-term arrangements can never be enforced without a writing.
Each statement overstates the rule. The triggers are bounded: $500 or more for goods, and a by-its-terms one-year impossibility for the time provision.the stem hands you an oral or informal deal and asks whether it is enforceable, and the facts foreground either a dollar figure for goods or a stretch of time for performance.
Step one, classify the deal: if it is a sale of goods, ask only whether the price is $500 or more, because that is the entire UCC trigger.
If it is not goods, ask whether the contract by its own terms cannot be fully performed within one year, measuring from the moment the contract was made, not from when performance starts.
If either box is checked, a record signed by the party to be charged is required; if neither is, the deal is enforceable with no record.
When a writing does exist, do not be thrown by its timing or its form: a record may be made at any time, a notice of breach can qualify, and an electronic signature is a signature.
A furniture maker and a cafe owner agreed over the phone that the furniture maker would build and deliver a set of dining tables and chairs for the cafe at a total price of $900. Neither side wrote anything down or sent any message about the deal. After the furniture was finished, the cafe owner changed her mind and refused to accept or pay for it. The furniture maker sued the cafe owner to enforce their agreement.
Is the oral agreement enforceable against the cafe owner?
A hobbyist orally agreed to buy a used bicycle from a neighbor for $300. They shook hands on the deal, but nothing was written down and neither sent the other any message about it. Before the bicycle was handed over, the neighbor received a better offer from someone else and refused to go through with the sale. The hobbyist sued the neighbor to enforce the agreement to sell the bicycle.
Is the oral agreement enforceable against the neighbor?
On the first of January, a regional manager and a consultant orally agreed that the consultant would provide one full year of advisory services, but that the year of work would not begin until the first of July that same year. Everyone understood the engagement would run a full twelve months once it started. Nothing about the arrangement was ever put in writing. When the consultant later tried to enforce the agreement, the manager argued it could not be enforced without a record.
Does this agreement require a record to be enforceable?
A property owner orally hired a landscaper to maintain the grounds of an estate, with the work to start the same week. The two agreed the arrangement would continue for as long as the owner wanted the service and could be ended by either side at any time, and they expected it might well run for several years. Nothing was written down. After a few months the owner stopped the service and the landscaper sued to enforce the rest of what he said was a multi-year arrangement.
Does the oral arrangement require a record to be enforceable?
A supplier and a retailer orally agreed that the supplier would sell the retailer a shipment of goods for $4,000, with no writing exchanged at the time. A week after the deal, the retailer sent the supplier an email stating that it was canceling and would not honor the order the two had agreed to, and the email closed with the retailer's name typed by its purchasing agent as the company's electronic signature. The supplier sued to enforce the agreement and pointed to the email.
Can the retailer's email satisfy the requirement of a signed record for this agreement?