Class 18, Friday, Feb. 17

1
Class 18, Friday, Feb. 17

• Announcements
• two handouts midterm preparation handout
  Problem Set 4
• Tuesday 349-76
• Thursday Problem Set 4 381-91 407-14
• Friday 426-28 (Problem 5-1) review
• Todays agenda
• Alaska Democratic Party v. Rice
• Buffaloe v. Hart
• Bazak International v. Mast Industries

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Today
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Overall structure/approach

• Is the K within S/F?
• If so, has it met the requirements of S/F?
• If not, does it fall under an exception?

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1. Is it within S/F?

• see p. 296 in casebookreproduces Rest. 110
• You are responsible for
• (1)(b) suretyship provision
• (1)(d) land provision
• (1(e) one year provision
• (2)(a) UCC 2-201
• If not within S/F, then defense fails if within,
  go to Question 2

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2. If within S/F, has it met its requirements?

• written memorandum evidencing an agreement
• identifying the parties and subject matter
• containing material terms and conditions
• signed by the party to be charged
• If all of these requirements are met, then
  defense fails

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3. If requirements of S/F not met, does an
exception apply?

• If no, then defense succeeds and K is not
  enforceable
• If yes, then defense fails (does not preclude
  enforcement)

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• C enters into a contract to sell tires to A. C
  delivers the tires to A. A puts the tires on a
  truck and sells the truck with tires to B. B
  promises to A that B will pay C.
• C A
• B

A owes C for the tires based on K between A and
C. A and B enter into K as part of that K, B
promises to pay As obligation to C. NOTE the
promise here is made to A, not C.
8

• C is a car dealer. A and B walk into the store.
  A is a minor. B is A's friend and has reached
  the age of majority. A wants to buy a car. C
  enters into a contract with A and B where A
  purchases the car and B guarantees A's
  obligation.
• C A
• B

Like the previous example, the primary obligation
is owed by A to C. Unlike the previous example,
B makes the promise to pay As obligation
directly to C.
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• 8.A is a company that owes money to C. B is a
  major customer of A. A's loan to C is past due
  and C is threatening foreclosure. B promises to
  C that if C will extend the time for repayment, B
  will guarantee A's obligation.
• C A
• B

This is like the previous example, but
illustrates the main purpose or leading object
rule.
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Alaska Democratic Party v. Rice

• Supreme Court of Alaska
• 934 P.2d 1313 (1997)

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Who is suing whom? For what kind of
damages? What is the subject matter of the
transaction? What is the legal basis for the
claim? What is the factual basis for the
claim? Arguments/defenses?
12
What happened at the trial court level? This
appeal? Issue? Authorities/Rule? Application
to facts in case? What policies does it
further/ignore?
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Application of s/f

• Is K within s/f?
• Have the requirements been met?
• (a) written memorandum evidencing an
  agreement
• (b) identifying the parties and subject
  matter
• (c) containing material terms and conditions
• (d) signed by the party to be charged
• 3. If not, does it fall within an exception?

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139. Enforcement By Virtue Of Action In Reliance

• (1) A promise which the promisor should
  reasonably expect to induce action or forbearance
  on the part of the promisee or a third person and
  which does induce the action or forbearance is
  enforceable notwithstanding the Statute of Frauds
  if injustice can be avoided only by enforcement
  of the promise. The remedy granted for breach is
  to be limited as justice requires.

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139. Enforcement By Virtue Of Action In Reliance

• (2) In determining whether injustice can be
  avoided only by enforcement of the promise, the
  following circumstances are significant
• (a) the availability and adequacy of other
  remedies, particularly cancellation and
  restitution
• (b) the definite and substantial character of
  the action or forbearance in relation to the
  remedy sought
• (c) the extent to which the action or
  forbearance corroborates evidence of the making
  and terms of the promise, or the making and terms
  are otherwise established by clear and convincing
  evidence
• (d) the reasonableness of the action or
  forbearance
• (e) the extent to which the action or
  forbearance was foreseeable by the promisor.

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Narrow estoppel
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Narrow estoppel

• Comment f to 178 in first Restatement

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Narrow estoppel

• Comment f to 178 in first Restatement
• 1. statement re statute of frauds requirements

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Narrow estoppel

• Comment f to 178 in first Restatement
• statement re statute of frauds requirements
• e.g., There is a writing that satisfies s/f.
• This K isnt subject to s/f.

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Narrow estoppel

• Comment f to 178 in first Restatement
• statement re statute of frauds requirements
• promise re statute of frauds requirements

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Narrow estoppel

• Comment f to 178 in first Restatement
• statement re statute of frauds requirements
• promise re statute of frauds requirements
• e.g., I will put this in writing.
  

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Broader promissory estoppel

• e.g., Alaska Democratic Party v. Rice
  Restatement 139

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Buffaloe v. Hart

• North Carolina Court of Appeals
• 114 N.C. App. 52, 441 S.E.2d 172 (1994)

24
generic tobacco box barn

• One manufacturers website states All rack
  barns include an indirect fired furnace,
  humidification system with fan forward/reverse
  switch, energy efficient barn structure and
  racks. Control options are additional. All barns
  are made to order so contact us for price and
  availability.

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Who is suing whom? For what kind of
damages? What is the subject matter of the
transaction? What is the legal basis for the
claim? What is the factual basis for the
claim? Arguments/defenses?
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What happened at the trial court level? What
happened on appeal? Issue? Authorities/Rule? Ap
plication to facts in case? What policies does
it further/ignore?
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2-201. Formal Requirements Statute of Frauds.

• (1) Except as otherwise provided in this section
  a contract for the sale of goods for the price of
  500 or more is not enforceable by way of action
  or defense unless there is some writing
  sufficient to indicate that a contract for sale
  has been made between the parties and signed by
  the party against whom enforcement is sought or
  by his authorized agent or broker. A writing is
  not insufficient because it omits or incorrectly
  states a term agreed upon but the contract is not
  enforceable under this paragraph beyond the
  quantity of goods shown in such writing.

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2-201

• (2) Between merchants if within a reasonable time
  a writing in confirmation of the contract and
  sufficient against the sender is received and the
  party receiving it has reason to know its
  contents, it satisfies the requirements of
  subsection (1) against such party unless written
  notice of objection to its contents is given
  within 10 days after it is received.

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2-201

• (3) A contract which does not satisfy the
  requirements of subsection (1) but which is valid
  in other respects is enforceable
• (a) if the goods are to be specially
  manufactured for the buyer and are not suitable
  for sale to others in the ordinary course of the
  seller's business and the seller, before notice
  of repudiation is received and under
  circumstances which reasonably indicate that the
  goods are for the buyer, has made either a
  substantial beginning of their manufacture or
  commitments for their procurement or
• (b) if the party against whom enforcement is
  sought admits in his pleading, testimony or
  otherwise in court that a contract for sale was
  made, but the contract is not enforceable under
  this provision beyond the quantity of goods
  admitted or
• (c) with respect to goods for which payment has
  been made and accepted or which have been
  received and accepted (Sec. 2-606).

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Application of 2-201

• is transaction within s/f?
• if so, have requirements been met?
• compare requirements under 2-201 with the
  general s/f
• 3. if not, does an exception apply?

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Note 1

• s/f sometimes characterized as a one-way street
• if situation had been reversed and Buffaloe,
  after giving the Harts the check, had reneged,
  would his check have been sufficient to satisfy
  2-201?

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2-201 exceptions

• read 2-201(3) carefully
• see also notes 3-5 following Buffaloe

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Bazak International Corp., v. Mast Industries,
Inc.

• Court of Appeals of New York
• 73 N.Y.2d 113, 538 N.Y.S.2d 503, 535 N.E.2d 633
  (1989)

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Who is suing whom? For what kind of
damages? What is the subject matter of the
transaction? What is the legal basis for the
claim? What is the factual basis for the
claim? Arguments/defenses?
35
What happened at the trial court level? First
appeal? This appeal? Issue? Authorities/Rule?
Application to facts in case? What policies does
it further/ignore?
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Issues

• What is the appropriate standard for a writing to
  operate as a confirmation for the purposes of
  2-201(2)?
• How should this standard be applied to the facts
  in this case?

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Issue 1 Appropriate standard

• rephrased are explicit words of confirmation
  needed for a writing to operate as a confirmatory
  document under 2-201(2)?
• Masts argument
• Bazaks argument

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2-201(2) the so-called merchants exception

• (2) Between merchants if within a reasonable time
  a writing in confirmation of the contract and
  sufficient against the sender is received and the
  party receiving it has reason to know its
  contents, it satisfies the requirements of
  subsection (1) against such party unless written
  notice of objection to its contents is given
  within 10 days after it is received.

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Why the merchants exception?
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2-201. Formal Requirements Statute of Frauds.

• (1) Except as otherwise provided in this section
  a contract for the sale of goods for the price of
  500 or more is not enforceable by way of action
  or defense unless there is some writing
  sufficient to indicate that a contract for sale
  has been made between the parties and signed by
  the party against whom enforcement is sought or
  by his authorized agent or broker. A writing is
  not insufficient because it omits or incorrectly
  states a term agreed upon but the contract is not
  enforceable under this paragraph beyond the
  quantity of goods shown in such writing.

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Exceptions to s/f

• General exceptions
• narrow estoppel (equitable and promissory)
• broader promissory estoppel
• Clause-specific exceptions
• land--part performance
• one yearpart performance
• suretyshipmain purpose or leading object rule
• goodssee 2-201(3) and 2-201(2)

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End of Class

• Tuesday 349-76
• Thursday Problem Set 4 381-91 407- 14
• Friday 426-28 (Problem 5-1) review