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Winternitz v. Summit Hills Joint Venture, 532 A.2d 1089 (1987)

Case Name: Winternitz v. Summit Hills Joint Venture
Plaintiff: Winternitz
Defendant: Summit Hills Joint Venture
Citation: 73 Md. App. 16, 532 A.2d 1089 (1987)

Key Facts:
Plaintiff operated a pharmacy and convenient store under a lease with defendant. The end of the lease was approaching and the plaintiff asked if he could renew the lease with the option to transfer the lease to a purchaser of his business. The defendant stated that it had no objection. The defendant delivered a two year lease which was not signed.
The plaintiff had a purchaser for his business but after the contract was signed, the defendant told him he would not allow him to transfer the lease to the new purchaser.
The plaintiff alleged:
(1) The landlord orally agreed to renew that lease and to permit him to assign it to a purchaser of his business,
(2) the landlord and its agents thereafter breached both the renewed lease and the assignment, and
(3) as a result of their conduct, he was required to reduce significantly the sale price of his business.

Procedural Posture: A jury awarded him $45,000 in damages. The court nullified that awarded by granting judgment N.O.V. on the basis that the Statute of Frauds made the allege lease renewal unenforceable, leaving nothing to assign.

Judgment: The court affirmed the court’s findings on the first two claims but agreed that the defendant did maliciously interfere with the plaintiff’s right to contract.

Reasoning: The plaintiff relied on “part performance” for counts 1 and 2. “Part performance” is an equitable doctrine available only where the principal relief sought is specific performance of the oral agreement. The claims were specifically for money damages.

Note: If he had been seeking specific performance, the exception of part performance would apply and he would have won.

See Exceptions to Statute of Frauds

 

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Crabtree v. Elizabeth Arden Sales Corp., 110 N.E.2d 551 (1953)

Case Name: Crabtree v. Elizabeth Arden Sales Corp.
Plaintiff: Crabtree
Defendant: Elizabeth Arden Sales Corp.
Citation: 305 N.Y. 48, 110 N.E.2d 551 (1953)

Key Facts: The plaintiff was seeking employment with defendant. He asked for a three-year contract at $25,000. He wanted a contract because he was entering a new field and wanted job security while he mastered the field. The defendant’s president offered him $20,000/year for the first 6 months, $25,000 for the next 6 months, and $30,000 for the second year.  The president had her secretary create a memorandum that stated some of the terms (which was not signed) the executive VP created a “pay-roll change” card which also stated some of the terms (which was initialed). After the first year, the plaintiff was not given his payroll increase so he quit and filed this action. The president denied that there was a two year contract agreement and even if one was made, the statute of frauds barred it enforcement.

Issue: Whether the length of the employment contract can be inferred by multiple writings and oral testimony.

Procedural Posture: The trial court found for the plaintiff $14,000 and the appellate court affirmed.

Judgment: Affirmed

Reasoning: If the court finds a sufficient connection between the documents, through a reference in them to the same subject matter or transaction, and oral testimony is admitted to show the connection, the signed and unsigned writings can be read together.

 

Notes: Under the Statute of Frauds, courts require some writing but there does not need to be a formal or written contract. There should at least be a document(s) that lists the essential terms, particularly the terms that are in dispute.

Depending on the jurisdiction, courts will read the two documents together if either

  1. If the signed writings explicitly mentions the unsigned document(s), or
  2. The documents appear to relate to each other (more liberal approach which the court in this case used)

 

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Alaska Democratic Party v. Rice, 934 P.2d 1313 (1997)

Case Name: Alaska Democratic Party v. Rice
Plaintiff/Appellee: Kathleen Rice
Defendant/Appellant: Greg Wakefield and Alaska Democratic Party
Citation: 934 P.2d 1313 (1997)

 

Issue: Whether the doctrine of promissory estoppel can be invoked to enforce an oral contract that falls within the Statute of Frauds.

Key Facts: Ms. Rice contended that Mr. Wakefield (the chair-elect of the Alaska Democratic Party) offered her a two-year position as executive director of the party. Because of this offer she quit her current employment and moved from Maryland to Alaska.
No written contract was entered into between Rice and the defendants.
Rice brought two claims: (1) promissory estoppel and (2) misrepresentation.

Procedural Posture: The jury awarded a total of $30,422 ($28,864 on her promissory estoppel claim and $1,558 on her misrepresentation claim)

Judgment: The court affirmed the claims but reduced the recovery to $28,864 – the amount that represents only lost wages and benefits.

Reasoning: “The purpose of the Statute of Frauds is to prevent fraud by requiring that certain categories of contracts be reduced to writing. However, it is not intended as an escape route for persons seeking to avoid obligations undertaken by or imposed upon them.”

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Alaska Democratic Party v. Rice – 934 P.2d 1313 (1997)

Case Name: Alaska Democratic Party v. Rice
Citation: 934 P.2d 1313 (1997)
Plaintiff/Appellee: Kathleen Rice
Defendant/Appellant: Greg Wakefield and Alaska Democratic Party

Issue: Whether the doctrine of promissory estoppel can be invoked to enforce an oral contract that falls within the Statute of Frauds.

Key Facts: Ms. Rice contended that Mr. Wakefield (the chair-elect of the Alaska Democratic Party) offered her a two-year position as executive director of the party. Because of this offer she quit her current employment and moved from Maryland to Alaska.
No written contract was entered into between Rice and the defendants.
Rice brought two claims: (1) promissory estoppel and (2) misrepresentation

Procedural Posture: The jury awarded a total of $30,422 ($28,864 on her promissory estoppel claim and $1,558 on her misrepresentation claim)

Reasoning: “The purpose of the Statute of Frauds is to prevent fraud by requiring that certain categories of contracts be reduced to writing. However, it is not intended as an escape route for persons seeking to avoid obligations undertaken by or imposed upon them.”

Judgment: The court affirmed the claims but reduced the recovery to $28,864 – the amount that represents only lost wages and benefits.

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Exceptions to the Statute of Frauds

As stated in the post on whether a contract is subject to the statute of frauds, when the statute of frauds is asserted as a defense against the enforcement of an alleged contract, one should ask the following questions:

1. Is the contract subject to the statute of frauds?

2. If it is subject, is the statute of frauds satisfied?

3. If it is not satisfied, do the factors invoke one of the exceptions to the statute of frauds?

If the answer to the first question is “yes” and the second question is “no,” then you need to look to see if one of the exceptions to the statute of frauds applies. Below is a list of the exceptions to the statute of frauds under common law and the UCC:

COMMON LAW EXCEPTIONS

  1. Part Performance (Restatement section 129). If it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement. This exception is very similar to promissory estoppel and only applies in situations where a transfer of interest in land exists and with specific performance. This exception also has no application in an action at law for money damages.
  2. Full Performance (Restatement section 130. As soon as any one party fully performs under the contract, then the SOF does not apply. This exception only applies to contracts that cannot be completed within one year
  3. Promissory Estoppel – Although this is not really an exception, promissory estoppel can be used anytime. A minority of jurisdictions bar promissory estoppel actions through the statute of frauds because they see it as an impermissible way to circumvent the statute of frauds.

 

UCC EXCEPTIONS

  1. Part Performance – Note: In an installment contract you need to show acceptance at every installment to show part performance.  Also if there is a partial payment figure out what the parties intended.
  2. Admissions Exception – If the party against whom enforcement is sought makes an under oath admission of facts that in the court’s view establish that such a contract was indeed made
  3. Special Manufacture Exception – If goods are specially manufactured for the buyer and “not suitable for sale to others in the ordinary course of  the seller’s business (e.g. making mugs for ACME, Inc. that has their logo and slogan.)
  4. Merchant Confirmation Exception – Here you will need something in writing that is signed but does not need to be signed by the person against whom enforcement is sought. It only needs to be signed by any party to the contract. However, the following must be present:
  1. Both parties must be merchants under the UCC
  2. The writing (confirmatory letter) has to be sent to and received by the party to whom enforcement is sought
  3. The party has ten days to objection. The objection has to be in writing .
    1. NOTE: You want to be careful that you are not creating a writing that satisfies the statute of frauds
    2. In order to do so, the objection should explicitly state or object to the terms
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When is a contract subject to the Statute of Frauds?

When the statute of frauds is asserted as a defense against the enforcement of an alleged contract, one should ask the following questions:

1. Is the contract subject to the statute of frauds?

2. If it is subject, is the statute of frauds satisfied?

3. If it is not satisfied, do the factors invoke one of the exceptions to the statute of frauds?

Below is the analysis that should be conducted under the UCC and Common Law to answer this first question, “Is the contract subject to the statute of frauds?”

The UCC presents the easier test as to whether a contract is subject to the statute of frauds. Under the UCC, the only thing we care about is whether the contract is for $500 or more.

Under common law we don’t care about the dollar amount of the contract. Restatement (Second) 110 states that “[t]he following classes of contracts are subject to the Statute of Frauds, forbidding enforcement unless there is a written memorandum or applicable exception:

  1. A contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision)
  2. A contract to answer for the duty of another (the suretyship provision)
  3. A contract made upon consideration of marriage (the marriage provision);
  4. A contract for the sale of an interest in land (includes leases) (the land contract provision);
  5. A contract that is not to be performed within one year from the making thereof (the one-year provision)”

The majority of these classes are self-explanatory but a few notes on the fifth class, the one-year provision. This class requires a contract not to be performed within one year from the date the contract is made to be in writing. The standard view is that a contract is not subject to the statutory provision if it is possible to be performed within a year, even if the prospect of such performance is remote or unlikely. Therefore, the question you should ask is, “At the time of the formation, could it have been completed within a year?” If the answer is “yes,” no matter how remote or unlikely it is, then most courts will deem that the contract fits this class and is not subject to the statute of frauds. Something to remember is that many courts are looking for reasons to exclude things from the statute of frauds.