Restat 2d of Contracts, § 131

• Restatement of the Law, Second, Contracts
• Chapter 5- The Statute of Frauds
• Topic 6- Satisfaction of the Statute by a Memorandum
• § 131 General Requisites of a Memorandum

Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which

(a)  reasonably identifies the subject matter of the contract,

(b)  is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and

(c)  states with reasonable certainty the essential terms of the unperformed promises in the contract.

Comment:

a.  The statutory language.  This Section restates the law developed by judicial interpretation of the requirement of § 4 of the English Statute of Frauds that "the agreement . . . or some memorandum or note thereof" be in writing and signed. Despite slight variations in wording in § 17 of the English Statute and in American statutes, they have generally been read to establish the same requisites. Where the statute requires that "the contract" be in writing, however, a mere memorandum is not sufficient; and statutory provisions sometimes explicitly require a statement of the consideration or explicitly negate such a requirement, either with respect to contracts of suretyship or in all cases.

b.  The Uniform Commercial Code.  Paragraphs (a) and (b) follow the phrasing of Uniform Commercial Code §§ 1-206 and 2-201. Compare §§ 8-319, 9-203. Section 1-206 requires in addition an indication that the contract has been made "at a defined or stated price." Section 2-201 omits this requirement and also any reference to identification of subject matter, and adds "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." Section 8-319 refers to "a stated quantity of described securities at a defined or stated price." Section 9-203 requires "a security agreement which contains a description of the collateral" and in certain cases "a description of the land concerned." The description is sufficient "if it reasonably identifies what is described." See § 9-110.

c.  Rationale.  The primary purpose of the Statute is evidentiary, to require reliable evidence of the existence and terms of the contract and to prevent enforcement through fraud or perjury of contracts never in fact made. The contents of the writing must be such as to make successful fraud unlikely, but the possibility need not be excluded that some other subject matter or person than those intended will also fall within the words of the writing. Where only an evidentiary purpose is served, the requirement of a memorandum is read in the light of the dispute which arises and the admissions of the party to be charged; there is no need for evidence on points not in dispute.

The suretyship and marriage provisions of the Statute perform a cautionary as well as an evidentiary function. See §§ 112, 124. The land contract provision performs a channeling function. See Statutory Note preceding § 110. Even where these provisions are involved, however, there is no evidence of a statutory purpose to facilitate repudiation of firm oral agreements fairly made, to protect a promisor from temptation to perjure himself by false denial of the promise, or to reward a candid contract-breaker by denying enforcement.

d.  Types of documents.  The statutory memorandum may be a written contract, but under the traditional statutory language any writing, formal or informal, may be sufficient, including a will, a notation on a check, a receipt, a pleading, or an informal letter. Neither delivery nor communication is essential. See § 133. Writing for this purpose includes any intentional reduction to tangible form. See Uniform Commercial Code § 1-201.

Illustrations:

1. A makes an oral contract with B to devise Blackacre to B, and executes a will containing the devise and a recital of the contract. The will is revoked by a later will. The revoked will is a sufficient memorandum to charge A's estate.

2. A publishes in a newspaper an offer to buy certain goods, stating the terms of his proposal, and his name is printed under the advertisement. B accepts the offer. The advertisement is a sufficient memorandum to charge A. See § 136.

3. A writes and signs in pencil a receipt for $ 1,000 which recites that the money is received from B as part payment of the price of $ 5,000 for a parcel of land. The receipt is a sufficient memorandum to charge A on the agreement recited.

e.  Subject matter.  A memorandum, like a contract, must be read in its context and need not be comprehensible to persons not familiar with the particular type of transaction. Without reference to executory oral promises, the memorandum in context must indicate with reasonable certainty the nature of the transaction and must provide a basis for identifying the land, goods or other subject matter.

Illustrations:

4. A Company executes a written contract with B by which B purchases certain accounts owned by A Company. As part of the same transaction, C, the president of A Company, signs a contract of guaranty printed at the foot of the same paper: "In order to induce B to enter into an agreement dated     with     (hereinafter referred to as the client), the undersigned agrees to be liable for due performance of all the client's agreements with B." The blanks are not filled in. The quoted words are sufficient to identify the obligation guaranteed.

5. A and B make an oral contract for the sale of goods and sign the following memorandum:

6. A and B enter into an oral contract by which A promises to sell and B to buy such of A's iron in his millyard as he may decide to sell. A memorandum describes the subject matter of the contract as "all A's iron which he may decide to sell." The description is sufficient.

7. A and B enter into a contract by which A promises to sell and B to buy a certain lot of hops belonging to A. A telegram from B refers to the subject matter as "number 13." This refers to a sample submitted by A to B by mail with a numbered tag attached and referring by trade usage to a specific lot. The description is sufficient.

8. A and B enter into an oral contract for the sale and purchase of Blackacre. An otherwise sufficient memorandum, signed by A and B, describes the subject matter as "the land on the corner of X and Y Streets," omitting any statement as to the city or state. A owns only one of the four lots at the intersection. The description is sufficient.

9. A and B enter into a written contract for the employment of B as A's sales manager for a term of two years. At the end of the two years, A and B orally agree to extend the employment for three more years at an increased salary. A year later A signs the following memorandum: "It is understood that the arrangements made for employment of B in our business on January 1, 1977, for a period of three years from that date at a salary of $ 30,000 per year, continues in force until January 1, 1980." The memorandum sufficiently identifies the nature of B's employment.

f.  Contract between the parties.  A memorandum must be sufficient to indicate that a contract has been made between the parties with respect to an identified subject matter or that the signer has offered such a contract to the other party. The parties must be reasonably identified; the identification may consist of a name or initials, even though there may be others with the same name or initials, or of any other reasonably accurate mode of description. Identification of the agent of a party in the memorandum sufficiently refers to the party, whether or not the agent is himself a party. See Restatement, Second, Agency § 153. Where there is no dispute as to the parties, a party may be sufficiently identified by possession of a memorandum signed by the other party. A signed written offer to the public may be sufficient even though the offeree is not identified.

Illustrations:

10. A and B are negotiating for the sale of A's restaurant to B. B gives A a check for $ 500 bearing the notation "Tentative deposit on tentative purchase of 1415 City Line Ave., Phila. Restaurant, Fixtures, Equipment, Good Will." Later A and B orally agree on terms of sale. The quoted memorandum is not sufficient to indicate that a contract for sale has been made.

11. C and D make an oral contract for the sale of Blackacre and sign the following memorandum: "C agrees to sell and D agrees to buy Blackacre for $ 10,000." C is agent for A, D is agent for B, and each is acting on behalf of his principal. The memorandum is sufficient to charge A and B.

12. An otherwise sufficient memorandum of an oral contract for the sale of Blackacre states that "the owner of Blackacre" promises to sell it. The memorandum is signed by B, and B is the agent of A, the owner of Blackacre, acting on A's behalf. The memorandum is sufficient to charge A.

13. A, president and principal stockholder of A Company, gives B his personal check for $ 10,000 and a written offer to buy Blackacre from B on stated terms. The offer, signed by A, states that "the offer to purchase is from a company owned by A." B accepts the offer by a signed writing. Neither the offer nor the acceptance identifies the purchaser except by the quoted language. The identification is sufficient.

14. A and B make an oral agreement for the sale of a parcel of land by A to B. B pays A $ 50 and A signs and delivers to B a receipt which identifies the parcel and accurately states the terms of payment but does not name or describe B or his agent. In B's suit for specific performance, A defends on the ground of B's inequitable conduct in the negotiations. B is sufficiently identified by his possession of the memorandum.

g.  Terms; accuracy.  The degree of particularity with which the terms of the contract must be set out cannot be reduced to a formula. The writing must be the agreement or a memorandum "thereof"; a memorandum of a different agreement will not suffice. The "essential" terms of unperformed promises must be stated; "details or particulars" need not. What is essential depends on the agreement and its context and also on the subsequent conduct of the parties, including the dispute which arises and the remedy sought. Omission or erroneous statement of an agreed term makes no difference if the same term is supplied by implication or by rule of law. Erroneous statement of a term can sometimes be corrected by reformation. See § 155. Otherwise omission or misstatement of an essential term means that the memorandum is insufficient. Uniform Commercial Code § 2-201, however, states a different rule for sale of goods.

Illustrations:

15. A and B enter into an oral contract for the sale of Blackacre by A to B. A memorandum is made and signed which states sufficiently the parties, subject matter and terms of the oral bargain except that, though the parties in fact orally agreed that the price should be payable on delivery of a deed, the memorandum contains no statement as to when the price is payable. The memorandum is sufficient.

16. A and B enter into an oral contract for the sale of Blackacre by A to B, and both sign a memorandum providing for a "purchase money mortgage in the amount of $ 18,000 payable for 15 years at 5%." B claims a right to pay $ 142.35 per month; A claims a payment of $ 100 a month plus monthly interest at 5%. No usage is shown. The memorandum is not sufficient to support an action by B for specific performance on his terms.

h.  Statement of consideration.  In Wain v. Warlters, 5 East 10 (K.B. 1804), a promise in writing to pay the debt of another was held unenforceable because the writing failed to state the consideration, which had been fully executed. Where that view is followed, the words "for value received" or an implication of consideration may validate the memorandum. But the decision has not been generally followed in the United States, and the English law was changed by statute in 1856. Uniform Commercial Code § 3-408 eliminates the requirement of consideration for a negotiable instrument or obligation thereon given in payment of or as security for an antecedent obligation, and § 3-416 exempts from the Statute of Frauds any guaranty written on a negotiable instrument. Aside from explicit statutory provisions, the prevailing view is that error or omission in the recital of past events does not affect the sufficiency of a memorandum.

Where, on the other hand, the consideration for a promise consists of a return promise not yet performed, performance of the return promise is commonly a condition of the promisor's duty, and an adequate memorandum will ordinarily reveal the consideration. A memorandum of a contract for the sale of land for an agreed price is not sufficient unless it discloses the price. Compare Uniform Commercial Code §§ 1-206 and 3-319, referring to "a defined or stated price" for intangible personal property or for investment securities. But § 2-201 dispenses with statement of the price of goods sold.

Illustrations:

17. A lends $ 1,000 to B, and as part of the transaction C orally agrees to guarantee repayment. To evidence the guaranty, C signs a written promise to pay A $ 1,000. The written promise is a sufficient memorandum without any statement of consideration.

18. A agrees not to sue B Company on a debt for goods sold and delivered, in consideration of C's guaranty of payment for past and future deliveries to B up to $ 3,000. C signs the following guaranty: "I, C, do hereby guarantee to A the payment of any sums due or that may become due up to the sum of $ 3,000 on such goods as B may have bought or shall buy from A. [Signed] C." A makes no further deliveries. The memorandum is not sufficient to charge C, since it omits any mention of A's return promise.

19. A and B orally agree on the sale of a farm by A to B for $ 155 an acre. A dates and signs the following memorandum: "Received from B $ 100 as payment on 84 acres farm, [at $ 155 an acre] balance to be paid when deed and abstract are presented." The memorandum is sufficient to charge A if the bracketed words are included but not if they are omitted.

This Section is restated from former § 207. See 4 Williston Contracts §§ 567-78 (3d ed. 1961 & Supp. 1978); 2 Corbin, Contracts §§ 498-509 (1950 & Supps. 1971 & 1980).

Comment a.  The Statute of Frauds in Iowa provides that "no evidence" of the contract "is competent" unless in writing, but excepts "oral evidence of the maker against whom the unwritten contract is sought to be enforced." A memorandum "expressing the consideration" is required in Minnesota, Nevada and Wisconsin. The statutes in the District of Columbia and Kentucky, provide that the memorandum need not state the consideration. See Statutory Note preceding § 110 for citations.

Comment d.  Illustration 1 is based on Illustration 1 to former § 207; see Rape v. Lyerly, 287 N.C. 601, 215 S.E.2d 737 (1975), citing this Illustration in Tentative Draft; Note, Contracts to Devise Realty -- Sufficiency of Will as Memo for Statute of Frauds, 54 N.C. L. Rev. 976 (1976); Annot., 94 A.L.R.2d 921 (1964). Illustration 2 is based on Illustration 2 to former § 207; see Annot., 1 A.L.R.2d 841 (1948). Illustration 3 is modified from Illustration 3 to former § 207; compare Langlois v. Oriole Land & Dev. Corp., 283 So.2d 143 (Fla. Dist. Ct. App. 1973) with Pettigrew v. Denwalt, 431 P.2d 333 (Okl. 1967); see Annots., 8 A.L.R. 1339 (1920) (pencil signature), 20 A.L.R. 363 (1922) (check or note as memorandum), 153 A.L.R. 1112 (1944) (same).

Comment e.  Illustration 4 is based on James Talcott, Inc. v. Fullerton Cotton Mills, Inc., 208 F.2d 81 (5th Cir. 1953); cf. Ledford Constr. Co. v. Smith, 231 Md. 596, 191 A.2d 587 (1963). Illustration 5 is based on Illustration 4 to former § 207; cf. Salmon Falls Mfg. Co. v. Goddard, 55 U.S. (14 How.) 446 (1852). Illustrations 6, 7 and 8 are based on Illustrations 7, 8 and 9 to former § 207. As to Illustration 7, cf. Brewer v. Horst-Lachmund Co., 127 Cal. 643, 60 P. 418 (1900); see Annots., 29 A.L.R. 1218 (1924), 129 A.L.R. 1230 (1940). Illustration 8 was followed in Nauman v. Powers, 147 Kan. 641, 78 P.2d 27 (1938); Cousbelis v. Alexander, 315 Mass. 729, 54 N.E.2d 47 (1944); compare Del Rio Land, Inc. v. Haumont, 118 Ariz. 1, 574 P.2d 469 (Ct. App. 1977). See also Annots., 139 A.L.R. 965 (1942), 23 A.L.R.2d 6 (1952); cf. Annots., 141 A.L.R. 814 (1942) (sale of oil and gas lease), 16 A.L.R.2d 621 (1951) (lease). Illustration 9 is based on Marks v. Cowdin, 226 N.Y. 138, 123 N.E. 139 (1919).

Comment f.  As to initials, see Annot., 159 A.L.R. 253 (1945). Illustration 10 is based on Arcuri v. Weiss, 198 Pa. Super. Ct. 506, 608, 184 A.2d 24 (1962); Mapes v. Kalva Corp., 68 Ill. App.3d 362, 24 Ill. Dec. 944, 386 N.E.2d 148 (1979); Progress Ent., Inc. v. Litwin Corp., 225 Kan. 212, 589 P.2d 583 (1979); Boddy v. Gray, 497 S.W.2d 600 (Tex. Civ. App. 1973), error ref.; Fraley v. Null, Inc., 244 Md. 567, 224 A.2d 448 (1966). Illustrations 11 and 12 are based on Illustrations 5 and 6 to former § 207; see Annots., 23 A.L.R. 932 (1923); 70 A.L.R. 196 (1931); 138 A.L.R. 330 (1942). As to Illustration 11, see Del Rio Land, Inc. v. Haumont, 118 Ariz. 1, 574 P.2d 469 (Ct. App. 1977) (auctioneer at land sale or his clerk has broad authority to make memorandum on behalf of both buyer and seller; real estate broker's authority must be specifically proved); Pettigrew v. Denwalt, 431 P.2d 333 (Okl. 1967) (husband's authority to sign memorandum of sale (by endorsing checks), so as to bind wife, narrowly construed; the presence of a homestead statute was an important factor in the holding). Illustration 13 is based on Looman Realty Corp. v. Broad St. Nat'l Bank, 32 N.J. 461, 161 A.2d 247 (1960); cf. Dodge v. Blood, 299 Mich. 364, 300 N.W. 121 (1941). But cf. Irvmor Corp. v. Rodewald, 253 N.Y. 472, 171 N.E. 747 (1930). Illustration 14 is based on Randazzo v. Kroenke, 373 Mich. 61, 127 N.W.2d 880 (1964); cf. Sanders v. McNutt, 147 Ohio St. 408, 72 N.E.2d 72 (1947). But cf. Pierce v. Rush, 210 Ga. 718, 82 S.E.2d 649 (1954); Elliott v. Owen, 244 N.C. 684, 94 S.E.2d 833 (1956).

Comment g.  Courts disagree on the degree of precision required and the degree to which gaps in the memorandum may be filled by extrinsic evidence. It is common for courts to state that no parol evidence may be used, see, e.g., Dudley v. Boise Cascade Corp., 76 Wash.2d 466, 457 P.2d 586 (1969); Pettigrew v. Denwalt, 431 P.2d 333 (Okl. 1967); Blue Valley Creamery Co. v. Consolidated Prods. Co., 81 F.2d 182 (8th Cir. 1936). In Rape v. Lyerly, 287 N.C. 601, 215 S.E.2d 737 (1975), the court did so while citing this Section in Tentative Draft. The rule of this Section, however, requires only that the "essential" terms be stated in the memorandum. More precise discussions appear, e.g., in ITT Cannon Elec., Inc. v. Brady, 141 Ind. App. 506, 230 N.E.2d 114 (1967); Progress Ent., Inc. v. Litwin Corp., 225 Kan. 212, 589 P.2d 583 (1979); and Del Rio Land, Inc. v. Haumont, 118 Ariz. 1, 574 P.2d 469 (Ct. App. 1977); compare Rape v. Lyerly, supra, in which, despite the dictum referred to earlier, the court relied heavily on testimony at trial for evidence of the services to be rendered under an oral contract evidenced by a revoked will. Cases with dicta requiring the memorandum to be excessively precise often find that in fact no oral contract was made. See, e.g., Trollope v. Koerner, 106 Ariz. 10, 470 P.2d 91 (1970); Fraley v. Null, Inc., 244 Md. 567, 224 A.2d 448 (1966).

Illustration 15 is based on Illustration 12 to former § 207, but is changed to a contract for the sale of land instead of goods. The payment term is supplied by operation of law. In accord with this approach is the New York line of cases described in Flammia v. Mite Corp., 401 F. Supp. 1121 (E.D.N.Y. 1975), aff'd mem., 553 F.2d 93 (2d Cir. 1977); especially Morris Cohon & Co. v. Russell, 23 N.Y.2d 569, 297 N.Y.S.2d 947, 245 N.E.2d 712 (1969), in which a finder was permitted to recover in quantum meruit when a memorandum of an oral agreement did not include the rate of compensation. Illustration 16 is based on Montanaro v. Pandolfini, 148 Conn. 153, 168 A.2d 550 (1961). See also Del Rio Land, Inc. v. Haumont, 118 Ariz. 1, 574 P.2d 469 (Ct. App. 1977).

Comment h.  The English statute of 1856 was the Mercantile Law Amendment Act, 19 & 20 Vict. c. 97, § 3. As to statement of consideration in a memorandum of sale of goods or choses in action; see Annots., 30 A.L.R. 1163 (1924), 59 A.L.R. 1422 (1929). Illustration 17 rejects the authority of Wain v. Warlters, 5 East 10 (K.B. 1804); see De Wolf v. Rabaud, 26 U.S. (1 Peters) 476 (1828). Illustration 18 is based on Standard Oil Co. v. Koch, 260 N.Y. 150, 183 N.E. 278 (1932), reargument denied, 261 N.Y. 535, 185 N.E. 727 (1933). Illustration 19 is based on Hanlon v. Hayes, 404 Ill. 362, 89 N.E.2d 51 (1949); see Annot., 23 A.L.R.2d 164 (1952).

ALR Annotations:

Construction and application of UCC § 2-201(3)(b) rendering contract of sale enforceable notwithstanding statute of frauds, to extent it is admitted in pleadings, testimony, or otherwise in court. 88 A.L.R.3d 416.
Applicability of statute of frauds to agreement to rescind contract for sale of land. 42 A.L.R.3d 242.
Contract to support, maintain, or educate a child as within provision of statute of frauds relating to contracts not to be performed within a year. 49 A.L.R.2d 1293.
Joint adventure agreement for acquisition, development, or sale of land as within provision of statute of frauds governing broker's agreement for commission on real-estate sale. 48 A.L.R.2d 1042.
Sufficiency, under the statute of frauds, of description or designation of land in contract or memorandum of sale which gives right to select the tract to be conveyed. 46 A.L.R.2d 894.
Statute of frauds: promise by stockholder, officer, or director to pay debt of corporation. 35 A.L.R.2d 906.
Effect of attempted cancelation or erasure in memorandum otherwise sufficient to satisfy statute of frauds. 31 A.L.R.2d 1112.
Necessity and sufficiency of statement of consideration in contract or memorandum of sale of land, under statute of frauds. 23 A.L.R.2d 164.
Sufficiency of description or designation of land in contract or memorandum of sale, under statute of frauds. 23 A.L.R.2d 6.
Sufficiency of memorandum of lease agreement to satisfy the statute of frauds, as regards terms and conditions of lease. 16 A.L.R.2d 621.
Undelivered lease or contract (other than for sale of land), or undelivered memorandum thereof, as satisfying statute of frauds. 12 A.L.R.2d 508.
Memorandum which will satisfy statute of frauds, as predicable in whole or part upon writings prior to the oral agreement. 1 A.L.R.2d 841.

Digest System Key Numbers:

Frauds, Statute of 97 et seq.