CHAPTER XVII

THE STATUTE OF FRAUDS

§ 101. Description of the Statute of Frauds

The English law known as the Statute of Frauds was passed in 1676. Part of this famous law has been examined in § 48. The part we are here concerned with is the seventeenth section, which in some form has been enacted in most of the states and is as follows:

No contract for the sale of any goods, wares and merchandise, for the price of ten pounds sterling or upward shall be allowed to be good; except the buyer shall accept part of the goods so sold and actually receive the same, or give something in earnest to bind the bargain or in part payment, or that some note or memorandum in writing of the said bargain be made, and signed by the parties to be charged by such contract or their agents thereunto lawfully authorized.

The Statute of Frauds applies to contracts to sell, not to sales.

"Goods, wares and merchandise" are held in this country to include all that is usually classed as personal property, goods, chattels, and choses in action, i.e., accounts, claims, contracts, stocks, and securities.

A contract for the sale of corporate stocks or bonds is good if some memorandum is made by the broker before suit is brought.

The definition in the Uniform Sales Act is given as follows:

A contract to sell goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a consideration called the price.

The distinction between a contract to sell and a sale is this: in a contract to sell, the goods are not delivered and title does not pass; while in a sale, delivery is made or the title passes to the purchaser.

§ 103. When the Contract of Sale Must Be in Writing

The Statute of Frauds discussed in § 101 applies to contracts of sale where delivery is to be made later and where the value is over a certain amount. This amount ranges from $30 in Arkansas, Maine, and Missouri, to $500 in Arizona, Massachusetts, New Jersey, Rhode Island and $2,500 in Ohio. Fifty dollars is usual.

The words "in value" apply where the Uniform Sales Act has been passed. In the old statute, the words were "in price." The price is the amount fixed by the parties themselves; the value, what the goods are actually worth in the market. For this reason, contracts purely by word of mouth have become more risky under the Uniform Sales Act. In order that a contract of sale above the limited amount may be enforceable, a written memorandum of the terms of the agreement must be signed by the party against whom it is sought to enforce the contract, or his agent.

The written memorandum of sale required by the Statute of Frauds need not be formal. It may be a note, a letter, a telegram, a receipt, or may consist of several papers so connected as to make an intelligible sales-contract. The written memorandum of sale need not be made at the time of the contract, but it must state all the material facts, the parties, the price, if a price was agreed upon, and specify the articles to be sold. It must be signed by the party, or by the agent of the party whom it is desired to hold. In states where the Uniform

Sales Act does not prevail, the written memorandum of sale may have to be subscribed; that is, signed at the end of the

contract.

Exceptions to the rule that a sale of goods above the limited amount must be in writing, occur: (1) when the buyer has paid part of the price, or (2) where the buyer has accepted and actually received part of the goods. The last two methods of satisfying the statute will be considered in the following sections.

Notes:

I. Any contract of sale above the specified minimum must be in writing.

§ 104. Exception for Part Payment

A payment made at the time of entering into the contract of sale makes it enforceable, though it may be above the limited value. The payment may either be a part of the price, or something given or paid to "bind the bargain." This should, strictly speaking, be in addition to the purchase price. In England this earnest is no part of the price of the goods. Usually in this country it is part of the price. The amount is not material.

The thing delivered in part payment must be of some value, but if of any value at all, it will be sufficient to bind the bargain.1

Note:

I. Part payment will bind the bargain, but it is no evidence as to time, terms, and essentials of the agreement, and it is a poor substitute for a written

contract.

1 Weir v. Hudnut, 115 Md. 525.

§ 105. Exception for Part Delivery

The second case mentioned in § 103 was: "Where the buyer has accepted and actually received part of the goods." The word "received" means taken into actual physical possession, the word "accepted" means that the buyer must have determined in his own mind to become the owner of the goods. Both conditions must be fulfilled to make the contract enforceable. The buyer may show his consent to become the owner of the goods either by his words or by his conduct.

The "part of the goods" must be taken out of the actual amount of the goods to be delivered. Samples or specimens which do not come out of the buyer's share are not “part of the goods."

If the buyer has directed the goods to be delivered to a railroad company for transportation, a delivery to the railroad company is a delivery to him and their receipt for the goods will be his receipt. If he has not so directed, there is no receipt and acceptance until the buyer or his agent accepts the goods from the railroad company.

Note:

I.

1. Although he may have accepted the goods, the purchaser could still dispute the price, the warranties, and the other terms of the agreement. The written contract is the only dependable means of proving the agreement.

§ 106. Exception for Amounts Below Specified Value

Contracts of sale below the minimum established by the law need not be in writing. If the transaction were below the : value set in any particular state, suit could be brought on an oral contract; i.e., a contract not in writing. If it were proved, it could be enforced, but an oral contract is always hard to prove. (See § 46.)

If the contract of sale is above the minimum value, suit cannot be brought upon it unless it is in writing. If the parties to such a contract (not in writing) carry it out, it becomes an executed sale and stands, as does any other sale, but if either party refuses to carry it out, the other cannot enforce it at law.

A single contract for the sale of a number of articles, each of which is below the limited amount in value, must nevertheless be in writing if the value of all together is greater than the limited amount.

Notes:

I.

It is safest to make all contracts in writing.

2. Any contract of sale above the specified minimum must be in writing except in cases of part pay

ment or part delivery. Any contract of sale below the minimum should be in writing.

3. It is never safe to enter into any contract without some memorandum in writing. Especially is this true when there is anything indefinite about the possible value of the goods to be sold.

§ 107. Exception for Work or Services

If the article purchased involves work or services which make it suitable only for the original buyer, the contract may be oral. For example, a man goes to a dentist and orders a set of false teeth. The dentist takes some porcelain and other materials worth very much less than $50 and out of them makes a set for which he charges considerably over $50. His work and skill are what give the teeth their value, and the teeth which are made for one man cannot be sold to another. In such a case the law says it is the dentist's services, not the materials, for which the man is paying, and the contract is not one of sale and need not be subject to any of the conditions mentioned in § 103. That is, the dentist

can bring suit without a written contract.