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module two transactional elements of sales contracts statute of frauds Salvador Dali painter who in the 1950s was commissioned to paint the Statue of Liberty for a television show when dolly did not perform as allegedly agreed the other party sued dolly argued that the agreement to paint constituted a sale of goods under the UCC and was therefore subject to the codes requirement that there be a written record for sales of goods the court ruled that the arrangement to procure the painting was not a sale of a good so dolly lost the codes requirement that there be a writing is the UCCS version of the statute of frauds to address what was then perceived to be a widespread problem with contractual fraud the english parliament passed the original statute of frauds in 1677 the statute required certain types of contracts including sales of goods to be in writing in order to be enforceable england repealed its legislation in 1954 as it pertained to the sale of goods but the UCC continues to enforce this rule it has been maligned by commentators as instead of preventing fraud some argue that it actually promotes fraud when parties claim the absence of a writing allows them to escape enforcement of an otherwise valid agreement section 2 - 201 of the UCC requires that in order to be enforceable a contract for the sale of goods of $500 or more must be in writing signed by the party or its agent against whom the enforcement is sought the terms of the writing need not necessarily be complete or accurate and the writing of the agreement and its signing may occur at different times all that is necessary for the provision to be satisfied is that the writing indicate the existence of the agreement and the quantity of the goods to be exchanged even the price term can be left out without running afoul of the UCC statute of frauds so for example if the writing states that the buyer agreed to purchase a hundred loaves of bread that is sufficient the price can be agreed to orally or left to a UCC gap-filler which would simply insert a reasonable price note that the contract cannot be enforced beyond the quantity referenced in the writing if a larger quantity is agreed to orally for example imagine that Acme corporation orders 10,000 fluorescent light bulbs from Chandler's electrical supply the purchase order and matching invoice stipulated a quantity of 10,000 but Acme claimed that it ordered 12,000 then has a phone recording showing that the parties agreed to 12,000 orally on the phone because the writing specified a quantity of 10,000 under the UCC statute of frauds only the sale of 10,000 units can be enforced between merchants the code allows a received written confirmation of an oral order to satisfy the statute of frauds requirements after agreeing to an order which may be oral emailed online etc the merchant may send a confirmation of the agreement to the other party under the UCC the party receiving the agreement has ten days to object to the confirmation if the receiving party fails to object within ten days then the parties are bound even without the original agreement having been in writing this is assuming that the original agreement can be proven such as with an email exchange or a recorded phone call the confirmation itself must comply with the requirements of the statute of frauds the code specifies exceptions regarding when a party may provide evidence of an agreement without a writing for example if the parties orally agreed to the production of specially manufactured goods not saleable to others in the ordinary course of business and the seller has already substantially commenced production or procurement of the goods in question then the agreement will be enforceable for example Acme corporation builds replicas of old Ford Mustang sports cars with modern safety and convenience features each vehicle is manufactured ing to the specifications selected by the individual purchaser and at a purchase price of $100,000 Jeff orders a model from acne and acne welds together the chassis in the frame after Acme configures the engine and transmission Jeff cancels the order and claims that since nothing was in writing the agreement is unenforceable given that production substantially commenced on a specially manufactured good and the amount of the agreement exceeds $500 Jeff would arguably be liable under the statute of frauds exception assuming the initial agreement can be proven another exception exists when a party admits in pleadings or court testimony to the existence of the agreement such an admission can establish the existence of the agreement without a writing the code also provides that when a party has paid for goods and accepted the shipment of those goods then the existence of the agreement has been showed by performance even though there's no writing some courts have allowed estoppel when the other party reasonably relies on an oral agreement to its detriment or fraud by the party asserting that there's no agreement as exceptions to the statute of frauds these may allow a party to prove an agreement in the absence of writing we're enforcing the writing requirement would be unjust for example Acme corporation imports exotic sports cars and Jeff agrees to buy one of the very expensive models Jeff lies about his finances though he knew he couldn't afford to buy the car he does not have the funds to pay Acme for the vehicle he ordered and when Acme learns of Jeff's fraud it cancels the order but Bill's Jeff for losses had suffered due to the agreement Jeff claims that there is no writing but his fraud may operate to prevent him from denying liability on the agreement parole Evidence Rule the parole Evidence Rule governs the admissibility of evidence at trial specifically it addresses what extrinsic evidence if any can be admitted that contradicts or varies the term of a written agreement the purpose of the rule is to preserve the integrity of written instruments and encourage the parties to ensure that written agreements are complete and proper the rule can be confusing in its interpretation and application and leaves judges with significant discretion in determining what evidence can be used to ascertain a contracts terms and meaning if a writing is intended to be a complete and exclusive expression of the terms of an agreement then evidence of additional terms whether or not they contradict the writing must be excluded the parties may include in an agreement a merger clause which expressly provides that the contract is complete and exclusive for an agreement that is not a complete and exclusive writing of all terms but leaves some terms incomplete a court may consider evidence of additional terms that do not contradict the written agreements for example assume Acme auto repair' orally agrees to purchase 100 car batteries at $200 each from Baker auto supply the parties later sign a contract for a hundred car batteries at 175 dollars each Baker ships 100 car batteries and demands $20,000 Acme insists that it only owes Baker for 100 car batteries at 175 dollars each or $17,500 since the price is set forth by the agreements contradict each other the written agreement controls and evidence of the first agreement must be excluded courts interpreting article 2 have added yet another dimension of complexity to the parol Evidence Rule courts use different criteria to determine whether a writing is complete and exclusive one approach is the four-corners test which is an examination solely of the agreement itself without reference to evidence outside the writing another approach also looks at the agreement in the context in which it was concluded to determine whether the agreement is complete in itself Battle of the forms one of the most noteworthy provisions of article 2 is section 2 - 207 which has been dubbed by legal scholars as the Battle of the forms provision in a typical commercial sale a buyer submits a purchase order to a seller who then sends the buyer a confirmation or invoice the forms thus exchanged may contain differing terms it then becomes difficult to definitively ascertain whether an agreement between the parties exists and if so what the terms are the battle of the forms provision of section 2 - 207 was intended to provide some guidance for stipulating the rules that govern the resolution of disagreements involving the use of forms under the common law mirror image rule any change to the terms of an offer operated as a rejection of the original offer and a counteroffer with the new terms when the parties exchanged varying forms the last form operated as a counteroffer that the other party could accept or reject this last shot rule like many of the common law rules the code sought to remedy was not based on commercial realities and did not promote effective and efficient transactions thus while the mirror image rule still applies in other contracts the UCC dramatically changed the rule for contracts for the sale of goods section 2 - 207 provides that if a form constitutes a definite and seasonable expression of acceptance of an offer then there is a validly enforceable agreement even though the acceptance or confirmation provided terms different from those in the original offer this provision effectively eliminates the common law mirror image rule and allows the parties to vary the terms of an agreement in the course of their transactions however the code provides that an acceptance made conditional on the inclusion of an additional term is not considered an acceptance in order to ascertain the terms of a contract in the event of variance between the offer and the acceptance the code distinguishes between contracts made by merchants and contracts made by non merchants if a contract involves at least one non merchant then the varying acceptance operates as an acceptance on the terms of the offer any additional terms constitute proposals for additional agreements that are ineffective unless agreed to by the other party for example assume that bill merchant orders a used car on ebay from jim's chevy dealership with an advertised price of $10,000 jim sends bill a conformation that says thank you for your order which is accepted in processed please note that the car must be removed from our lot by you within 48 hours or your order will be canceled since neither the car ad nor the order said anything about a 48-hour pickup requirements the acceptance the conformation varied from the offer which was the order under Section 2 - 207 the contract is valid but the 48-hour pickup requirement does not become part of the agreement unless accepted by Bill if both parties are merchants though then the code provides that the additional terms do become part of the contract unless one of three exceptions applies the first exception is that the offer or can expressly forbid the alteration of the offer if the offer or does Tso's and any changes are ineffective a second exception is that if the term of the acceptance materially alters the terms of the offer then the author terms do not become part of the agreement finally if the other party objects within a reasonable time to the alterations those alterations do not become part of the agreement for example Acme auto repair requests in writing a shipment from Baker auto supply to purchase 400 truck tires at 130 dollars each Baker responds with an acceptance but the acceptance states that he can only provide 395 tires so he crosses out 400 and inserts 395 this is probably not a material change so the 395 would become the binding agreement unless acme's offer stipulated the order could not be altered or unless Acme objects to the change from 400 to 395 within a reasonable time modifications at common law modifications to a contract after it had been executed needed to be supported by additional consideration on both sides otherwise the modifications even if agreed to by both sides were treated as gratuitous unenforceable promises article 2 allows the party to modify a contract without compromising the agreements and force ability even if there is no new consideration however to be binding the code imposes a good-faith requirements good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade the modification must have legitimate purpose and not be the product of pressure by one party on the other to the extent that the course party has no meaningful choice for example assume that Jo agrees with Jane who owns a hardware store that Jo will buy 10 snow shovels for $20 each On January 15 On January 14th there is a big snowstorm and suddenly Jane can get twice as much for each shovel she tells Jo that she won't sell the shovels to him for less than 30 jo and eating the shovels now agrees to the new price this modification will not be binding because Jane used undue pressure and the modification was not made in good phase on the other hand assumed that Jane's supplier ran out of shovels so she could not get the shovels wholesale except by paying an extra $10 per shovel after discussion jo agrees to pay an extra $5 per shovel so that they'll split the cost of this development this seems like a good-faith modification and so will likely be enforced article 2 allows the use of a no oral modification clause which bars enforcement of any subsequent oral modifications these clauses were unenforceable under the common law if a merchant and a non merchant are parties to the agreements then the non merchant must separately sign the no oral modification clause even where allowed modifications may need to comply with the statute of frauds if the new agreement is so covered for example Tom agrees orally to buy a motorcycle from Acme corporation for four hundred and fifty dollars he later talks to the salesperson and after acknowledging some confusion regarding models and options agrees to adjust the price to five hundred and fifty dollars since the sale of the motorcycle is now in excess of five hundred dollars the agreement between Acme and Tom is within the statute of frauds n must be in writing to be enforceable if the modification does not satisfy the statute of frauds it still may operate as a waiver in the sense that the other party by agreeing to the modification may waive its objection to the agreement while the modification may be excluded by the statute of frauds a waiver would achieve the same result as the invalid modification however some courts have held that for such a waiver to be effective the other party needs to demonstrate reasonable detrimental reliance on the waiver in our next module we'll look at warranties and other implied elements of agreements such as the unenforceability of unconscionable agreements and special rules that apply to electronic transactions you