All questions
Question 1
A farmer orally agreed to sell her neighbor a five-acre parcel of land for $50,000. The neighbor paid the farmer a $5,000 down payment, which the farmer accepted. The neighbor then, with the farmer's knowledge, hired a contractor to clear trees from the parcel at a cost of $2,000. When it came time to transfer the deed, the farmer refused to sell, claiming the oral agreement was unenforceable, and offered to return the down payment. The neighbor sued for specific performance.
Is the neighbor likely to win the suit for specific performance? Select one.
- Yes, because the neighbor's actions of making a partial payment and making improvements on the land take the contract out of the Statute of Frauds. (correct answer)
- No, because the neighbor's payment of only 10% of the purchase price is insufficient part performance.
- No, because all contracts for the sale of land must be in writing, without exception.
- Yes, because the farmer's acceptance of the down payment constitutes an admission that a contract was made.
Explanation: This question tests your understanding of the Statute of Frauds and its exceptions, particularly the doctrine of part performance for real estate contracts. When you see an oral land sale contract being challenged, always consider whether the buyer's actions might save the deal despite the writing requirement.
The Statute of Frauds generally requires land sale contracts to be in writing, but courts recognize the part performance exception to prevent unjust enrichment. This doctrine applies when a buyer has taken actions that unequivocally refer to the oral contract and would suffer hardship if the contract weren't enforced. Here, the neighbor made a partial payment that the farmer accepted and improved the property with the farmer's knowledge by clearing trees. These combined actions demonstrate the existence of a contract and justify removing the Statute of Frauds bar.
Choice A is correct because the neighbor's payment plus improvements satisfy the part performance exception, making the oral contract enforceable despite the Statute of Frauds.
Choice B incorrectly suggests there's a specific percentage threshold for partial payments. No such rigid rule exists—courts look at the totality of circumstances, not just payment amounts.
Choice C is wrong because it ignores well-established exceptions to the writing requirement. The Statute of Frauds has several recognized exceptions, including part performance.
Choice D focuses only on the payment as an admission, but this alone wouldn't overcome the Statute of Frauds. The key is the combination of payment and improvements that constitute part performance.
Remember: Part performance requires actions that unequivocally point to a land contract's existence—look for payment plus possession, improvements, or other detrimental reliance.
Question 2
A landlord and a potential tenant orally agreed to a lease for an apartment for a term of exactly one year, to begin on the first day of the following month. The monthly rent was $2,000. Before the lease term began, the tenant informed the landlord that they would not be taking the apartment. The landlord was unable to find a new tenant for two months and sued the original tenant for $4,000 in lost rent.
Is the oral lease agreement enforceable against the tenant? Select one.
- No, because all contracts for an interest in land must be in writing.
- No, because the contract could not be fully performed within one year from the date of the agreement.
- Yes, because the lease term itself was for one year or less. (correct answer)
- Yes, because the landlord detrimentally relied on the tenant's promise by taking the apartment off the market.
Explanation: The correct answer is C. Most jurisdictions have a specific exception to the land provision of the Statute of Frauds for leases of one year or less. Because this lease was for a term of exactly one year, it falls within this exception and an oral agreement is enforceable. A is an overstatement; it fails to account for the short-term lease exception. B is incorrect because, while the performance would extend more than one year from the date of the agreement, the specific statutory exception for short-term leases typically controls over the general one-year provision for contracts. D describes promissory estoppel, which might be an alternative theory of recovery but is not the primary reason the lease itself is enforceable. The direct enforceability of the contract is the stronger basis for the landlord's claim.
Question 3
A farmer orally agreed to sell her neighbor a five-acre parcel of land for $50,000. The neighbor paid the farmer a $5,000 down payment, which the farmer accepted. The neighbor then, with the farmer's knowledge, hired a contractor to clear trees from the parcel at a cost of $2,000. When it came time to transfer the deed, the farmer refused to sell, claiming the oral agreement was unenforceable, and offered to return the down payment. The neighbor sued for specific performance.
Is the neighbor likely to win the suit for specific performance? Select one.
- Yes, because the neighbor's actions of making a partial payment and making improvements on the land take the contract out of the Statute of Frauds. (correct answer)
- No, because the neighbor's payment of only 10% of the purchase price is insufficient part performance.
- No, because all contracts for the sale of land must be in writing, without exception.
- Yes, because the farmer's acceptance of the down payment constitutes an admission that a contract was made.
Explanation: This question tests your understanding of the Statute of Frauds and its exceptions, particularly the doctrine of part performance for real estate contracts. When you see an oral land sale contract being challenged, always consider whether the buyer's actions might save the deal despite the writing requirement.
The Statute of Frauds generally requires land sale contracts to be in writing, but courts recognize the part performance exception to prevent unjust enrichment. This doctrine applies when a buyer has taken actions that unequivocally refer to the oral contract and would suffer hardship if the contract weren't enforced. Here, the neighbor made a partial payment that the farmer accepted and improved the property with the farmer's knowledge by clearing trees. These combined actions demonstrate the existence of a contract and justify removing the Statute of Frauds bar.
Choice A is correct because the neighbor's payment plus improvements satisfy the part performance exception, making the oral contract enforceable despite the Statute of Frauds.
Choice B incorrectly suggests there's a specific percentage threshold for partial payments. No such rigid rule exists—courts look at the totality of circumstances, not just payment amounts.
Choice C is wrong because it ignores well-established exceptions to the writing requirement. The Statute of Frauds has several recognized exceptions, including part performance.
Choice D focuses only on the payment as an admission, but this alone wouldn't overcome the Statute of Frauds. The key is the combination of payment and improvements that constitute part performance.
Remember: Part performance requires actions that unequivocally point to a land contract's existence—look for payment plus possession, improvements, or other detrimental reliance.
Question 4
A plaintiff sued a defendant for breach of an oral contract for the sale of a rare book for $2,000. The defendant's answer to the complaint denied the existence of a contract. However, during a deposition, when asked by the plaintiff's attorney, "Did you agree to sell the book to the plaintiff for $2,000?" the defendant answered, "Yes, I did, but I changed my mind." The defendant then moved for summary judgment based on the Statute of Frauds.
How should the court rule on the defendant's motion for summary judgment? Select one.
- Deny the motion, because the defendant admitted in a deposition that a contract for sale was made. (correct answer)
- Grant the motion, because the oral contract was for the sale of goods over $500 and was not in writing.
- Grant the motion, because the defendant's answer to the complaint denied the contract's existence.
- Deny the motion, because the defendant's initial denial of the contract in the pleadings was made in bad faith.
Explanation: When you encounter a Statute of Frauds defense in contract law, remember that certain exceptions can override the writing requirement, including judicial admissions made during litigation proceedings.
The Statute of Frauds requires contracts for the sale of goods over $500 to be in writing. However, under UCC § 2-201(3)(b), if a party admits in court proceedings that a contract was made, the oral contract becomes enforceable to the extent of the admission. Here, the defendant clearly admitted during deposition that he agreed to sell the book for $2,000, which constitutes a judicial admission that defeats the Statute of Frauds defense.
Looking at the wrong answers: Option B incorrectly assumes the Statute of Frauds automatically bars oral contracts over $500, ignoring the judicial admission exception. Option C misunderstands the relationship between pleadings and discovery—the defendant's initial denial in the answer doesn't override his later sworn admission in deposition. Option D focuses on "bad faith," which isn't the controlling legal principle here; the key is simply that an admission was made, regardless of the defendant's motivations.
The court should deny summary judgment because the defendant's deposition admission satisfies the judicial admission exception to the Statute of Frauds, making the oral contract enforceable.
Study tip: Remember that the Statute of Frauds has several exceptions that can save otherwise unenforceable oral contracts. Judicial admissions during litigation are particularly powerful because they're made under oath and constitute binding acknowledgments of the contract's existence.
Question 5
A corporation's president was negotiating a large services contract with a potential client. The client was hesitant to sign. To close the deal, the president sent an email stating, "I understand your concerns. If you sign this agreement, I personally guarantee that our team will meet every deadline." The client then signed the main contract with the corporation. The corporation later defaulted on a deadline, causing the client to suffer damages. The client sued the president personally to enforce the guarantee.
Is the president's email promise likely to be enforceable? Select one.
- No, because the president was acting as an agent of the corporation, which is the only liable party.
- No, because the president's promise was not supported by separate consideration.
- Yes, because the email constitutes a signed writing that satisfies the suretyship provision of the Statute of Frauds. (correct answer)
- Yes, because the president's main purpose in making the promise was to benefit himself through his role at the corporation.
Explanation: The correct answer is C. The president's promise to personally guarantee the corporation's performance is a classic suretyship agreement—a promise to answer for the debt or default of another (the corporation). Such promises must be in writing and signed by the promisor to be enforceable. An email can serve as a writing, and the president's name on the email can serve as a signature. Therefore, the email likely satisfies the Statute of Frauds. A is incorrect because while he was an agent, he explicitly made a personal guarantee, which creates personal liability if enforceable. B is incorrect because the client's action of signing the main contract with the corporation serves as consideration for the guarantee. D describes the main purpose rule, but it is typically applied when the promisor's benefit is more direct and personal (e.g., protecting their own property), not just the indirect benefit an employee or officer receives from their company's success. The existence of a sufficient writing is the most direct reason for enforceability.
Question 6
You are representing a client who provides custom software development services. Your client orally agreed to a fixed-price contract with a corporation to develop and maintain a complex logistics system for a period of three years. The corporation made an initial payment and your client began work. After six months of successful performance by your client, the corporation terminated the contract, claiming it was unenforceable. Your client wishes to sue for damages for the remainder of the three-year term.
In the lawsuit, which of the following is the most likely outcome regarding the enforceability of the oral contract for the full three-year term? Select one.
- The contract will be enforced for the full term because the corporation's part payment takes the entire agreement out of the Statute of Frauds.
- The contract will be enforced for the full term because your client's part performance makes the corporation's Statute of Frauds defense inequitable.
- The contract will be deemed unenforceable for the full term because it could not be performed within one year and was not in writing.
- The contract will be deemed unenforceable, but your client may recover in quasi-contract for the reasonable value of the services already rendered. (correct answer)
Explanation: The correct answer is D. The contract for services for a three-year term clearly falls within the one-year provision of the Statute of Frauds and is therefore unenforceable as to the executory portion. A and B are incorrect because part performance of a service contract generally does not take the entire contract out of the one-year provision. Unlike with land contracts, it does not typically give rise to a remedy of specific performance for the remainder of the term. C is correct that the contract is unenforceable for the full term, but D is a better and more complete answer because it also addresses the remedy available to the performing party. When a contract is unenforceable due to the Statute of Frauds but one party has conferred a benefit on the other, the performing party is entitled to recover the reasonable value of their services (restitution or quantum meruit) to prevent unjust enrichment. Therefore, D most accurately describes the likely legal outcome.
Question 7
A father was negotiating with a car dealership for a new car for his son, who had just turned 18. The son's credit was not yet established. The father told the sales manager, "Give my son the car, and I will make the payments." The dealership agreed and sold the car to the son, listing the son as the owner and borrower on the loan documents. The father made no written promise. When the son defaulted on the first payment, the dealership sought to recover the payment from the father.
Which of the following provides the father with the best defense against the dealership's claim? Select one.
- The son's incapacity due to his age voids the underlying contract.
- The father's promise was a suretyship agreement that required a writing. (correct answer)
- The father received no consideration in exchange for his promise.
- The father's promise was an original promise, not a collateral one.
Explanation: The correct answer is B. This scenario describes a suretyship, which is a promise to answer for the debt of another. The primary obligor is the son, as indicated by the loan documents. The father's promise to pay if the son does not is a collateral promise. Such promises fall within the Statute of Frauds and must be in writing to be enforceable. A is incorrect because being 18 years old means the son has reached the age of majority and has the capacity to contract. C is incorrect because the dealership's providing the car to the son constitutes a legal detriment and is sufficient consideration for the father's promise. D is incorrect and states the dealership's best argument, not the father's defense. An original promise would be if the father had said, "Sell me the car, and I will give it to my son," making himself the primary debtor. Here, he promised to pay the son's debt.
Question 8
Your client is a general contractor who was building a large commercial complex. The painting subcontractor was having financial difficulties and could not get credit from a paint supplier. To keep the project on schedule, your client called the supplier and said, "If you deliver the paint to the subcontractor, I'll make sure you get paid." The supplier delivered $10,000 worth of paint, but neither the subcontractor nor your client paid the invoice. The supplier sued your client to enforce the oral promise.
What is the supplier's strongest argument for enforcing the oral promise against your client? Select one.
- The promise falls under the main purpose exception to the suretyship rule. (correct answer)
- The supplier fully performed its obligations under the agreement by delivering the paint.
- The client is a merchant, and the merchant's confirmatory memo rule applies.
- The client's promise constituted a novation, substituting the client for the subcontractor as the debtor.
Explanation: The correct answer is A. The general contractor's promise appears to be a suretyship, which would normally require a writing. However, the 'main purpose' or 'leading object' exception applies when the promisor's primary motivation for making the promise is to secure a direct economic benefit for themselves. Here, the contractor's main purpose was not to benefit the subcontractor, but to keep the project on schedule and benefit their own business interests. This takes the promise outside the Statute of Frauds. B is incorrect because full performance by one party can take a contract out of the one-year provision, but it does not generally apply as an exception to the suretyship provision. C is incorrect because the merchant's confirmatory memo rule applies to the sale of goods between merchants, not a suretyship agreement. D is incorrect because a novation requires the agreement of all parties, including the original debtor (the subcontractor), to be discharged, which did not happen here.
Question 9
An event planner and a catering company had a valid written contract for the company to provide services for a corporate event scheduled in six months. The contract price was $20,000. Two months later, the parties orally agreed to modify the contract. The planner requested additional services for a second, separate event to be held in 14 months, increasing the total contract price to $35,000. Later, the catering company refused to provide services for the second event.
Is the oral modification to include the second event enforceable? Select one.
- Yes, because the original contract was in writing, so modifications need not be.
- Yes, because the modification was supported by new consideration from both parties.
- No, because the contract as modified cannot be fully performed within one year. (correct answer)
- No, because the parol evidence rule bars evidence of oral modifications.
Explanation: The correct answer is C. When determining if a modification needs to be in writing, one must look at the contract as modified. The modified agreement includes an obligation to perform services at an event 14 months in the future. Because this obligation cannot be performed within one year from the date the modification was made, the contract as modified falls within the one-year provision of the Statute of Frauds. Therefore, the modification must be in writing to be enforceable. A is incorrect; if a modification brings a contract within the Statute of Frauds, it must be in writing. B is incorrect because while consideration is necessary for a modification at common law, it does not satisfy the Statute of Frauds requirement. D is incorrect because the parol evidence rule applies to prior or contemporaneous agreements, not subsequent modifications.
Question 10
A landlord and a potential tenant orally agreed to a lease for an apartment for a term of exactly one year, to begin on the first day of the following month. The monthly rent was $2,000. Before the lease term began, the tenant informed the landlord that they would not be taking the apartment. The landlord was unable to find a new tenant for two months and sued the original tenant for $4,000 in lost rent.
Is the oral lease agreement enforceable against the tenant? Select one.
- No, because all contracts for an interest in land must be in writing.
- No, because the contract could not be fully performed within one year from the date of the agreement.
- Yes, because the lease term itself was for one year or less. (correct answer)
- Yes, because the landlord detrimentally relied on the tenant's promise by taking the apartment off the market.
Explanation: The correct answer is C. Most jurisdictions have a specific exception to the land provision of the Statute of Frauds for leases of one year or less. Because this lease was for a term of exactly one year, it falls within this exception and an oral agreement is enforceable. A is an overstatement; it fails to account for the short-term lease exception. B is incorrect because, while the performance would extend more than one year from the date of the agreement, the specific statutory exception for short-term leases typically controls over the general one-year provision for contracts. D describes promissory estoppel, which might be an alternative theory of recovery but is not the primary reason the lease itself is enforceable. The direct enforceability of the contract is the stronger basis for the landlord's claim.
Question 11
A tech startup orally offered a software engineer a position for "the rest of her life" at a salary of $150,000 per year, starting immediately. The engineer orally accepted and began working. Two months later, the startup's funding fell through, and the company terminated the engineer's employment. The engineer sued for breach of contract. The startup moved to dismiss, asserting the Statute of Frauds as a defense.
How is the court most likely to rule on the startup's motion to dismiss? Select one.
- Grant the motion, because the contract was expected to last for more than one year.
- Grant the motion, because a contract of this financial value must be in writing to be enforceable.
- Deny the motion, because the contract could theoretically be fully performed within one year. (correct answer)
- Deny the motion, because the engineer's commencement of work constitutes part performance sufficient to satisfy the Statute of Frauds.
Explanation: The correct answer is C. The one-year provision of the Statute of Frauds applies only to contracts that cannot be performed within one year. A contract for lifetime employment is not within the Statute of Frauds, regardless of the employee's age or health, because it is possible that the employee could die within one year, at which point the contract would be fully performed. A is incorrect because the test is not whether performance is likely or expected to extend beyond a year, but whether it is possible to complete it within a year. B is incorrect because there is no general requirement for contracts to be in writing based on their value; the $500 threshold applies specifically to contracts for the sale of goods under the UCC, not service contracts. D is incorrect because part performance is generally not an exception to the one-year provision for service contracts, and even where it is recognized, it typically only allows for recovery in quantum meruit, not enforcement of the entire oral contract.
Question 12
You represent a company that entered into a written, one-year employment contract with a marketing director. Six months into the contract, the parties orally agreed to extend the director's employment for an additional two-year term to commence at the end of the current one-year term. The salary and other terms remained the same. Three months later, your client decided to terminate the director at the end of the initial one-year term and notified her accordingly. The director has threatened to sue for breach of the oral extension.
What is your client's best defense against the threatened lawsuit? Select one.
- The oral modification lacked new consideration.
- The oral agreement is unenforceable under the Statute of Frauds. (correct answer)
- The parol evidence rule bars the enforcement of the oral agreement.
- The director had a pre-existing duty to work for the full year.
Explanation: The correct answer is B. The oral modification was for a two-year term of employment that would begin six months in the future. A contract must be in writing if it cannot be performed within one year from the date it is made. The oral agreement was made six months into the initial term and covered a future two-year period. Thus, performance would not be complete until two and a half years after the modification was made. Because the modified agreement could not be performed within one year, it falls within the Statute of Frauds and must be in writing. A is incorrect because the mutual promises of future employment serve as valid consideration. C is incorrect because the parol evidence rule applies to oral agreements made prior to or contemporaneous with a written contract, not subsequent modifications. D is irrelevant to the enforceability of the new, extended agreement.
Question 13
You are representing a client who provides custom software development services. Your client orally agreed to a fixed-price contract with a corporation to develop and maintain a complex logistics system for a period of three years. The corporation made an initial payment and your client began work. After six months of successful performance by your client, the corporation terminated the contract, claiming it was unenforceable. Your client wishes to sue for damages for the remainder of the three-year term.
In the lawsuit, which of the following is the most likely outcome regarding the enforceability of the oral contract for the full three-year term? Select one.
- The contract will be enforced for the full term because the corporation's part payment takes the entire agreement out of the Statute of Frauds.
- The contract will be enforced for the full term because your client's part performance makes the corporation's Statute of Frauds defense inequitable.
- The contract will be deemed unenforceable for the full term because it could not be performed within one year and was not in writing.
- The contract will be deemed unenforceable, but your client may recover in quasi-contract for the reasonable value of the services already rendered. (correct answer)
Explanation: The correct answer is D. The contract for services for a three-year term clearly falls within the one-year provision of the Statute of Frauds and is therefore unenforceable as to the executory portion. A and B are incorrect because part performance of a service contract generally does not take the entire contract out of the one-year provision. Unlike with land contracts, it does not typically give rise to a remedy of specific performance for the remainder of the term. C is correct that the contract is unenforceable for the full term, but D is a better and more complete answer because it also addresses the remedy available to the performing party. When a contract is unenforceable due to the Statute of Frauds but one party has conferred a benefit on the other, the performing party is entitled to recover the reasonable value of their services (restitution or quantum meruit) to prevent unjust enrichment. Therefore, D most accurately describes the likely legal outcome.
Question 14
A corporation's president was negotiating a large services contract with a potential client. The client was hesitant to sign. To close the deal, the president sent an email stating, "I understand your concerns. If you sign this agreement, I personally guarantee that our team will meet every deadline." The client then signed the main contract with the corporation. The corporation later defaulted on a deadline, causing the client to suffer damages. The client sued the president personally to enforce the guarantee.
Is the president's email promise likely to be enforceable? Select one.
- No, because the president was acting as an agent of the corporation, which is the only liable party.
- No, because the president's promise was not supported by separate consideration.
- Yes, because the email constitutes a signed writing that satisfies the suretyship provision of the Statute of Frauds. (correct answer)
- Yes, because the president's main purpose in making the promise was to benefit himself through his role at the corporation.
Explanation: The correct answer is C. The president's promise to personally guarantee the corporation's performance is a classic suretyship agreement—a promise to answer for the debt or default of another (the corporation). Such promises must be in writing and signed by the promisor to be enforceable. An email can serve as a writing, and the president's name on the email can serve as a signature. Therefore, the email likely satisfies the Statute of Frauds. A is incorrect because while he was an agent, he explicitly made a personal guarantee, which creates personal liability if enforceable. B is incorrect because the client's action of signing the main contract with the corporation serves as consideration for the guarantee. D describes the main purpose rule, but it is typically applied when the promisor's benefit is more direct and personal (e.g., protecting their own property), not just the indirect benefit an employee or officer receives from their company's success. The existence of a sufficient writing is the most direct reason for enforceability.
Question 15
A woman died with a valid will naming her brother as executor. The estate had significant debts, including a $10,000 credit card bill. The credit card company contacted the brother about the outstanding balance. Fearing the company would file a claim that could delay the estate's settlement, the brother told the company representative, "Don't worry, if the estate doesn't have enough cash to cover it, I'll pay the bill myself." The estate's assets proved insufficient. The company sued the brother personally to enforce his promise.
What is the brother's best defense to the lawsuit? Select one.
- The promise is unenforceable because it was not in writing. (correct answer)
- The promise is unenforceable for lack of consideration.
- The promise is unenforceable because an executor cannot be held personally liable for estate debts.
- The promise is unenforceable because it was illusory.
Explanation: The correct answer is A. The Statute of Frauds applies to a promise by an executor or administrator to answer for a duty of the decedent out of their own funds. Here, the brother, as executor, promised to pay the estate's debt from his personal funds if the estate was insolvent. This type of promise falls squarely within the Statute of Frauds and must be in writing to be enforceable. B is incorrect because the company's forbearance from filing a formal claim could be considered valid consideration. C is incorrect because while an executor is generally not personally liable, they can choose to become liable by making a valid, enforceable promise to pay. D is incorrect because the promise was not illusory; it was a specific promise contingent on a determinable event (the estate's insolvency).
Question 16
A homeowner orally hired an architect to design a home addition. The parties agreed the work would take about eight months and the fee would be $15,000. They did not specify a completion date. The architect produced initial sketches, which the homeowner approved. The architect then spent four months developing detailed blueprints. When the blueprints were nearly complete, the homeowner terminated the agreement. The architect sued for breach of contract, and the homeowner asserted the Statute of Frauds as a defense.
Is the homeowner's Statute of Frauds defense likely to succeed? Select one.
- Yes, because the contract was for services valued over $500.
- Yes, because performance took longer than one year from the date the lawsuit was filed.
- No, because the contract was for services, not for the sale of goods.
- No, because the contract did not contain a term that made performance impossible within one year. (correct answer)
Explanation: The correct answer is D. The one-year provision of the Statute of Frauds only applies if the terms of the contract make it impossible for performance to be completed within one year. Here, the parties did not specify a completion date, and the work was estimated to take eight months. There was no term preventing completion within one year. Therefore, the contract is outside the Statute of Frauds and the oral agreement is enforceable. A is incorrect because the $500 threshold applies to the sale of goods under the UCC, not services. B is incorrect because the relevant timeframe is one year from the making of the contract, not the filing of a lawsuit. C is true, but it only addresses the UCC Statute of Frauds; the more relevant analysis is the one-year provision, which D correctly addresses.
Question 17
A machine shop orally ordered a custom-built metal lathe from a manufacturer for $75,000. The lathe was designed to the shop's unique specifications and was not suitable for sale to others in the ordinary course of the manufacturer's business. The manufacturer ordered specialized components and began assembly. Before the lathe was completed, the machine shop repudiated the oral contract. The manufacturer sued for breach of contract.
Is the manufacturer likely to prevail? Select one.
- No, because any contract for the sale of goods for $500 or more must be in writing to be enforceable.
- No, because the manufacturer had not yet completed the lathe when the machine shop repudiated the contract.
- Yes, because the lathe was specially manufactured and the manufacturer had made a substantial beginning on its production. (correct answer)
- Yes, because the machine shop is a merchant, and the Statute of Frauds does not apply to transactions between merchants.
Explanation: The correct answer is C. Under UCC § 2-201, an exception to the Statute of Frauds exists for specially manufactured goods. If goods are to be specially manufactured for the buyer, are not suitable for sale to others, and the seller has made a substantial beginning of their manufacture or commitments for their procurement, the oral contract is enforceable. This fact pattern meets all elements of the exception. A states the general rule but ignores the applicable exception. B is incorrect because completion of the goods is not required; a substantial beginning is sufficient. D is an incorrect statement of law; while the UCC has special rules for merchants (like the confirmatory memo rule), the general Statute of Frauds for goods over $500 applies to merchants as well.
Question 18
Your client is a general contractor who was building a large commercial complex. The painting subcontractor was having financial difficulties and could not get credit from a paint supplier. To keep the project on schedule, your client called the supplier and said, "If you deliver the paint to the subcontractor, I'll make sure you get paid." The supplier delivered $10,000 worth of paint, but neither the subcontractor nor your client paid the invoice. The supplier sued your client to enforce the oral promise.
What is the supplier's strongest argument for enforcing the oral promise against your client? Select one.
- The promise falls under the main purpose exception to the suretyship rule. (correct answer)
- The supplier fully performed its obligations under the agreement by delivering the paint.
- The client is a merchant, and the merchant's confirmatory memo rule applies.
- The client's promise constituted a novation, substituting the client for the subcontractor as the debtor.
Explanation: The correct answer is A. The general contractor's promise appears to be a suretyship, which would normally require a writing. However, the 'main purpose' or 'leading object' exception applies when the promisor's primary motivation for making the promise is to secure a direct economic benefit for themselves. Here, the contractor's main purpose was not to benefit the subcontractor, but to keep the project on schedule and benefit their own business interests. This takes the promise outside the Statute of Frauds. B is incorrect because full performance by one party can take a contract out of the one-year provision, but it does not generally apply as an exception to the suretyship provision. C is incorrect because the merchant's confirmatory memo rule applies to the sale of goods between merchants, not a suretyship agreement. D is incorrect because a novation requires the agreement of all parties, including the original debtor (the subcontractor), to be discharged, which did not happen here.
Question 19
A wholesaler and a retailer entered into an oral agreement for the sale of 1,000 widgets at $10 each. The retailer sent a check for $2,000 as a down payment, with a memo line stating "For widgets." The wholesaler cashed the check but later refused to deliver any widgets, asserting the Statute of Frauds. The retailer sued to enforce the contract for all 1,000 widgets.
For how many widgets is the contract enforceable against the wholesaler? Select one.
- 0, because the contract was for more than $500 and not in writing.
- 200, because payment was made and accepted for that quantity. (correct answer)
- 1,000, because the part payment takes the entire contract out of the Statute of Frauds.
- 1,000, because the check with the memo line is a sufficient writing to satisfy the Statute of Frauds.
Explanation: The correct answer is B. Under UCC § 2-201(3)(c), an oral contract for the sale of goods is enforceable "with respect to goods for which payment has been made and accepted." Unlike the common law rule for land, part performance of a contract for the sale of goods makes the contract enforceable only for the quantity of goods paid for. Since the retailer paid $2,000 and the price was $10 per widget, the payment covers 200 widgets. Therefore, the contract is enforceable for 200 widgets but not for the remaining 800. A is incorrect because it ignores the part performance exception. C is incorrect because part performance under the UCC does not validate the entire oral contract, only the portion performed. D is incorrect because a check memo line may not be considered a sufficient writing signed by the party to be charged (the wholesaler), and even if it were, the part performance rule is more directly applicable here.
Question 20
A client has come to you for advice. She orally agreed to sell her vacation property to a buyer for $300,000. The buyer mailed her a signed personal check for $30,000 with "Deposit for property at 123 Lakeview Dr." written on the memo line. Your client endorsed and deposited the check but has now received a higher offer and wishes to cancel the sale. The buyer has threatened to sue for specific performance.
What is the most significant weakness in your client's position that the contract is unenforceable under the Statute of Frauds? Select one.
- The buyer's check with the memo line could be considered a sufficient writing signed by the party to be charged.
- Your client's endorsement and deposit of the check could be interpreted as a writing that satisfies the Statute of Frauds. (correct answer)
- The buyer's part payment of 10% of the purchase price is sufficient to make the entire oral contract enforceable.
- The doctrine of promissory estoppel will prevent your client from asserting the Statute of Frauds.
Explanation: The correct answer is B. To enforce a contract against your client (the seller), the buyer needs a writing signed by her. While the buyer's check is signed by him (the party seeking enforcement), it is not signed by your client. However, your client's act of endorsing and depositing the check could be argued to constitute her signature, adopting the terms on the check and creating a sufficient memorandum to satisfy the Statute of Frauds against her. A is incorrect because the buyer's check, signed by the buyer, satisfies the Statute of Frauds as to the buyer, not your client. The buyer needs a writing signed by your client. C is incorrect because for land contracts, partial payment alone is generally not sufficient to constitute part performance; it usually requires possession or improvements as well. D is a possible argument for the buyer, but the potential existence of a sufficient writing signed by your client is a more direct and significant weakness in her Statute of Frauds defense.