Statute of frauds coverage and satisfaction

The Coverage Gate: Which Promises Enter the Statute

The statute of frauds is an enforceability rule: certain contracts require a signed writing before a court will enforce them against the party being sued. The first task is therefore classification, not document inspection. Ask which statute-of-frauds category the agreement fits, then ask whether the applicable writing satisfies that category.

At common law, the covered categories are:

1. Marriage: a promise made in consideration of marriage, such as a prenuptial property promise. An ordinary promise to marry is not itself the category.
2. Suretyship: a secondary promise to a creditor to pay another person’s debt or duty if that person fails to pay or perform. A promise to pay one’s own debt is not suretyship.
3. Land: a contract to transfer an interest in land, including a sale, a mortgage, an easement, or a lease for more than one year. The fact that a transaction concerns a building or business located on land does not automatically make a service contract a land contract.
4. Executor or administrator: a personal promise by an executor or administrator to pay an estate obligation from personal funds. A promise by the estate to pay from estate assets is different.
5. One year: a contract that, by its terms, cannot be fully performed within one year after it is made. The test is legal possibility under the agreement, not what actually happened or what the parties expected.

The separate UCC category covers a sale of goods for a price of $500 or more under UCC § 2-201. “Goods” are movable, tangible items under UCC § 2-105. The $500 threshold is the total price of the contract, not necessarily the price of each individual item. A sale of 1,000 items at $0.60 each is covered because the total price is $600; a sale of one $499 item is not covered by the UCC statute of frauds.

The one-year rule turns on the agreement’s terms. An agreement requiring performance at the end of eighteen months, or not before eighteen months, is covered. An agreement requiring performance “within eighteen months” is covered only if its terms make completion within one year impossible. An agreement with no stated duration may be outside the provision if complete performance is legally possible within a year. An agreement requiring performance exactly one year after formation is not performance within one year.

The suretyship near-miss is especially important. “I will pay my daughter’s loan if she defaults” is secondary and ordinarily covered. “I borrowed the money, and I will repay it” is a primary promise and is not suretyship, even if another person also owes money. A promise directed to the creditor is the usual suretyship pattern.

For mixed contracts, first determine whether the transaction is governed by common law or Article 2; supplied materials may provide the governing rule for a hybrid transaction. Do not apply the common-law categories and the UCC threshold indiscriminately.

This is closed-book: be able to state the five common-law categories, the UCC’s $500 goods trigger, and each category’s near-miss without assistance.

The Writing Gate: What Makes the Requirement Satisfied

Once a contract is covered, ask whether the writing satisfies the applicable rule. The consequence of an unsatisfied statute of frauds is ordinarily unenforceability against the party to be charged, not automatic invalidity. The party to be charged is the party against whom enforcement is sought.

At common law, Restatement (Second) of Contracts § 131 gives the functional writing test. A writing, signed by the party to be charged, must:

1. reasonably identify the subject matter;
2. indicate that a contract has been made between the parties; and
3. state the essential terms with reasonable certainty.

The writing need not be a formal contract or contain every term. For a land sale, it ordinarily must identify the parties, identify the property with reasonable certainty, indicate the transaction, and state material terms such as the price or consideration. A street address, parcel description, or other reference can identify land if it leaves the property reasonably ascertainable. A writing that merely says “I may sell you some land someday” may fail because it does not indicate a completed contractual obligation.

Only the party to be charged must sign. If the seller signs a sufficient land-sale memorandum but the buyer does not, the buyer may enforce against the seller; the buyer’s missing signature does not defeat that claim. If the seller later sues the buyer, however, the seller must show a writing signed by the buyer or another applicable rule permitting enforcement. The signature need not be placed at the end, and it may be a mark or other authentication adopted with intent to sign. An authorized agent may sign for the principal.

The writing may be created after the oral agreement. Related writings may be read together when their connection is established by their contents or circumstances. A signed document can incorporate an unsigned document, but the combined materials must still identify the transaction and supply the essential terms.

UCC § 2-201 uses a more permissive writing rule for goods. The writing must:

1. indicate that a contract for sale has been made between the parties;
2. be signed by the party against whom enforcement is sought; and
3. state a quantity.

The quantity stated is the maximum quantity enforceable under the writing. If a signed memorandum says “100 chairs,” a court cannot enforce delivery of 150 chairs under that memorandum. The UCC writing does not have to state the price, delivery date, payment terms, or every other term. Thus, a signed memorandum stating “sale of 1,000 plates to Restaurant” may satisfy § 2-201 even if it omits price, provided the contract price reaches $500 and the quantity is clear.

The quantity requirement creates a sharp distinction from common law. Under common law, the writing must state the essential terms, which may include price in a land transaction. Under § 2-201, quantity is the critical term; the court can often supply a missing price through other UCC rules, but it cannot enforce more goods than the writing identifies.

For either body of law, run the analysis in this order:

1. Classify the transaction. Is it marriage, suretyship, land, executor, one-year, or goods priced at least $500?
2. Identify the party to be charged. Whose enforcement is being sought?
3. Find the signature. Is there a writing signed by that party or an authorized agent?
4. Test the required content. Apply Restatement § 131 for common-law contracts or UCC § 2-201 for goods.
5. Limit the remedy. If the writing is insufficient, enforcement against that party fails unless an exception applies; if the UCC writing states a smaller quantity, enforcement cannot exceed that quantity.

A modification creates a fresh coverage question. Under common law, a modification must be written if the modified agreement falls within a statute-of-frauds category. For goods, UCC § 2-209(3) requires compliance with § 2-201 if the contract as modified comes within that section. Thus, an oral modification that raises a goods order from $400 to $600 can trigger the UCC writing requirement.

The Signed Memorandum: One Fact Controls the Result

Olivia orally agrees to sell Peter a parcel of land identified in both parties’ records as Blackacre for $300,000. Olivia then writes and signs: “I agree to sell Peter Blackacre for $300,000. -Olivia.” Peter never signs the note. Olivia later refuses to convey Blackacre, and Peter sues Olivia to enforce the agreement.

Three Short Gates: Coverage and Satisfaction Under Pressure

High-Yield Points - ⚡ Biggest Takeaways

Classify the agreement before inspecting the writing: common-law category or UCC goods sale of $500 or more. The party to be charged must sign; the opposing party’s signature is not automatically required. Under UCC § 2-201, quantity is indispensable and caps the quantity enforceable.