Transcript for:
Understanding the Statute of Frauds

in this second of three lessons on the statute of frauds we want to consider the question of what exactly it is that makes a writing sufficient such that it can satisfy the statute of frauds and then allow proof of the existence of a contract remember that it's incorrect to say that the statute of frauds requires a contract to be in writing what it actually requires is that the contract be evidenced by a writing and that writing might not be the contract itself a case that illustrates this fact really well is crabtree versus elizabeth arden sales corporation a new york case from 1953 it involves an employment agreement where nate crabtree was in discussions with elizabeth arden sales corporation the cosmetics company about his employment as a sales manager crabtree did actually come on board with the company as a sales manager but left employment when terms that he understood to be in the agreement were not lived up to on the elizabeth arden side when this came to trial the elizabeth arden company denied the existence of an agreement to employ the plaintiff for two years there was actually plenty of evidence that such an agreement existed but the bigger issue was that even if such an agreement had been made did the statute of frauds bar it from being enforced by definition a two-year employment agreement cannot be performed within one year so the statute of frauds clearly did apply to this contract we move on then to question two was there a writing that would satisfy the statute we actually get a couple of writings here and the first one is from a meeting where mr crabtree and several other employees were present the court notes that miss arden had her personal secretary so that's her representative incidentally make a memorandum on a telephone order blank the secretary just kind of grabbed a piece of paper that was nearby on the desk the date of this one was september 2nd 1947. pay attention to that because i want you to notice how far apart in time the writings are that we're going to rely on here the handwritten note sets out some important details the beginning salary what the salary would be after six months after an additional six months that there would be expense money to be available and so forth you can see the details on your screen it does in fact say at the top employment agreement with nate crabtree so it seems like there is some mutual assent going on here that was recorded by the secretary this however is not the only writing that we have next after crabtree reported for work at the firm for the very first time a payroll change card was made up and initialed by mr johns who was the executive at the company who worked payroll and then it was forwarded to the payroll department the card recited that it was prepared on september 30th 1947 to be effective on october 22nd it specified the names of the parties what crabtree's job classification would be and it had some handwriting on it does this part sound familiar first six months of employment 20 000 per annum next six months 25 000 per annum after one year of employment 30 000 per annum approved by rpj which are the initials for mr johns and authorized representative of elizabeth arden sales corporation this then is our second riding it was prepared on september 30th many days apart from the initial writing finally after six months of employment crabtree did receive his scheduled increase from twenty thousand to twenty five thousand dollars but the next increase at the end of the year was not paid so a year after he has been in employment when the increase wasn't paid then both mr johns and the comptroller of the corporation mr carstens told crabtree they would attempt to straighten out the matter with miss arden the company president with that in mind the comptroller prepared another payroll change card to which his signature is appended so now we have another writing noting there was to be a salary increase from twenty five thousand to thirty thousand dollars quote per contractual arrangements with miss arden elizabeth arden however refused to approve the increase and after the discussion went back and forth crabtree left the company those then are the three writings that are available here notice that none of them as such is an employment contract nate crabtree never signed a single document that qualified as the contract the one and only contract that sets out the employment deal as you should have seen in the case crabtree ultimately did satisfy the statute of frauds and that is an instructive tale for us in how the statute of frauds operates in cases like this one where the contract is not itself put into writing restatement section 132 says and you can see this on your screen that a memorandum that can satisfy the statute of frauds may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction on all the writings in question in the elizabeth arden case there is a signature on the writings and it is of someone who was an authorized representative of the company next section 133 entitled memorandum not made as such it reads except in the case of a writing evidencing a contract upon consideration of marriage that certainly wasn't an issue here the statute may be satisfied by a signed writing not made as a memorandum of contract guess what that lets us do the payroll change cards have no statement on them that say they are intended to be part of a contract now admittedly the first writing we saw did refer to it being an employment agreement so that's a little bit of a better claim but we have enough on each of these that it doesn't matter whether there is or isn't a statement that the document is a memorandum of a contract none of these are the contract itself section 134 entitled signature says the signature to a memorandum may be any symbol made or adopted with an intention actual or apparent to authenticate the writing as that of the signer think back to the documents we have that contain only initials on them the initials in this case are intended to authenticate the writing as being from a particular signer mr john's in one case and mr carstens in the final document good enough so under all of these rules crabtree was able to satisfy the statute of frauds and get over that hurdle such that he could proceed to trial for breach of contract against the elizabeth arden company so let's change up the facts just a little bit as we see review question four assume facts that are the same except that crabtree decided that at the six-month mark he didn't like working for elizabeth arden so he quit to join a competitor then at that point elizabeth arden sued crabtree to prevent him from leaving and to get damages from him in his breach of the two-year employment contract what would be the result there if crabtree rather than elizabeth arden raised the statute of frauds as a defense is it exactly the same situation or is there something different there is actually something quite different about it look on your screen at section 135 of the restatement where a memorandum of a contract within the statute is signed by fewer than all parties to the contract and the statute is not otherwise satisfied the contract is enforceable against the signers but not against the others think back to the facts of the arden case none of the writings that we've been relying on here were actually signed by nate crabtree they were only signed by representatives of the arden corporation what that means is that crabtree is able to use the writings against elizabeth arden but it doesn't work the other way elizabeth arden corporation cannot use the writings that it prepared and that only its employees sign and then turn around and use its own writings against crabtree in a breach of contract suit be very careful in statute of fraud situations where you realize which party to the writings the writings are being used against because that will impact whether the writings can satisfy the statute of frauds in a specific dispute that brings us to the end of this lesson on sufficiency of writings under the statute of frauds remember the writings do not have to be the contract them itself so here the contract was actually oral our next lesson will explore the role of electronic records and potentially special requirements for real estate contracts