Brief Fact Summary. Two individuals entered into an oral agreement for the purchase and sale of a boat. This agreement was memorialized by a notation on a check.
Synopsis of Rule of Law. For a memoranda to satisfy the Statute of Frauds ("SOF"), [t]here must be "1) a writing indicating a contract for sale, (2) signed by the party to be charged, and (3) the quantity term must be expressly stated."
The essentials of a valid contract are: mutual assent, consideration, legality of object, capacity of the parties and formality of memorialization.View Full Point of Law
Issue. Did the notation on the back of the Defendant's check satisfy the Statute of Frauds?
Held. The court first observes that N.J.S.A. 12A:2-201 requires contracts for goods over $500 to satisfy the SOF. The court lays out three ways the SOF could be satisfied. First, "under N.J.S.A. 12A:2—201(1) the check may constitute a sufficient written memorandum." Second, "under N.J.S.A. 12A:2-201(3)(b) defendant's testimony in depositions and his answers to demands for admission may constitute an admission of the contract." Third, "under N.J.S.A. 12A:2-201(3)(c) payment and acceptance of the check may constitute partial performance."
• As to the first, the court lays out the requirements of N.J.S.A. 12A:2-201(1). There must be "1) a writing indicating a contract for sale, (2) signed by the party to be charged, and (3) the quantity term must be expressly stated." The court applies these factors to the check at issue with the notation "deposit on aux. sloop, D'Arc Wind, full amount $4,650" and finds that the check satisfies these three factors. The court then recognizes how New Jersey's adoption of the Uniform Commercial Code clearly substituted the old rule that a memorandum "mean[s] a writing containing the full terms of the contract" with the phrase "A writing is not insufficient because it omits or incorrectly states a term agreed upon * * *."
• As to the second, "the check, together with defendant's admission of a contract in his depositions and demands for admission, may satisfy N.J.S.A. 12A:2-201(3)(b)." The theory behind this section is that the Defendant should not be able to hide behind an admission.
• As to the third, "the check may constitute partial performance of the contract in that payment for goods was made and accepted, and, as such, the contract would be held enforceable under the statute of frauds." "[P]art payment or receipt and acceptance of part of the goods would satisfy the statute of frauds, not for the entire contract, but only for the Quantity of goods which have been received and accepted or for which payment has been made and accepted." Here, since the check clearly references the quantity, namely it is payment for one boat "the check, by representing that payment had been made and accepted, would constitute partial performance and the contract would be held enforceable under N.J.S.A. 12A:2-201(3)(c)" for the one boat.
Discussion. This case illustrates how the implementation of the Uniform Commercial Code's effects state laws.