Azevedo v. Minister

Brief Fact Summary.

Two parties entered an oral agreement to ship a certain amount of hay.  The price of the hay was set, but the parties disagreed as to whether a quantity term was set.  One party sent the other party periodic accountings concerning their transactions.

Synopsis of Rule of Law.

" 'Under the statute of frauds as revised in the Code(,) 'All that is required is that the writing [confirming memoranda] afford a basis for believing that the offered oral evidence rests on a real transaction.''

Facts.

The Appellant, J.L. Azevedo (the "Appellant"), is a rancher who buys and sells hay.  The Respondent, Bolton F. Minister (the "Respondent") operates a ranch at which he "raises and sells large quantities of hay."  The parties began negotiating in November of 1967 about a purchase and sale of hay.  The parties agreed over the phone that the Appellant would pay the Respondent $26.50 per ton for first and second cuttings of hay and $28 per ton for third cuttings of hay.  The parties opened an escrow account.  The parties do not agree on how many tons the Appellant agreed to by from the Respondent.  The Respondent alleges it was 1500 tons and the Appellant alleges the parties never agreed to a quantity.  The Appellant deposited $20,000 into an escrow account soon after the parties' telephone conversations.  The Respondent provided the Appellant with periodic accountings commencing on December 4, 1967 and continuing until March 1969, which "specified the dates the hay was hauled, names of truckers, bale count, and weight."  At some point, the escrow account was depleted, and the Respondent refused to ship any more hay.  Shortly thereafter, the Appellant refused to buy any more hay and this action was commenced.

Issue.

Is the Statute of Frauds satisfied by the written accountings provided by the Respondent to the Appellant?  Are they confirming memorandum?
•    Were the confirming memorandum sent within a reasonable time as required by the statute?

Held.

Yes.  The court observes that §2-201 of Uniform Commercial Code ("UCC") governs this action because the bundles of hay are goods.  Further, the parties are merchants for purposes of the code.  The purpose of §2-201(2) is to eliminate the "defense of statute of frauds."  Nonetheless, the party alleging that an oral contract existed "has the burden of proving that an oral contract was entered into before the written confirmation."  Section 2-201 of the UCC cures a past common law abuse, and in doing so makes a "recipient [of a confirmatory memorandum] bound unless he communicates his objection within 10 days."  The official comment to the UCC states:  "Only three definite and invariable requirements as to the (confirming) memorandum are made by this subsection. First, it must evidence a contract for the sale of goods; second, it must be 'signed,' a word which includes any authentication which identifies the party to be charged; and third, it must specify a quantity."  The court found that certain of the periodic accountings were confirming memorandum based on [Harry Rubin & Sons, Inc. v. Consolidated Pipe Co.] which held " 'Under the statute of frauds as revised in the Code(,) 'All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a real transaction.''
•    Section 2-201(2) also requires that the confirming memo be sent within a "reasonable time" after the oral contract is entered into.  The determination of whether or not the memorandum has been sent in a reasonable time "depends on the nature, purpose and circumstances of such action."  Here, the oral agreement was reached in early November 1967, when the Appellant deposited the $20,000 in the escrow account and the hay began being hauled.  The Respondent began sending periodic accountings to the Appellant on December 14, 1967.  The accounting containing the confirming memorandum was not sent until January 21, 1968.  The court agreed with the district court's finding that the delay was not unreasonable based on the "nature, purpose and circumstances" of the case.

Discussion.

This case offers an interesting discussion of the purposes and the history of §2-101(2) of the UCC.