law-statute-of-frauds-sale-of-good | other statutes of frauds |   

Statute of Frauds  A contract for the sale of goods for the price of $500 or more
is not enforceable unless there is some writing sufficient to indicate that a contract has been made between
the parties and signed by the party against whom enforcement is sought. TEX. BUS. & COM.CODE ANN. §
2.201(a) (Vernon 1994). There is an exception to the writing requirements for merchants. "Between
merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the
sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of
Subsection (a) against such party unless written notice of objection to its contents is given within ten days
after it is received." TEX. BUS. & COM.CODE ANN. § 2.201(b) (Vernon 1994). A writing that contains
futuristic language does not constitute a confirmation of a contract already in existence. Martco, Inc. v. Doran
Chevrolet, Inc., 632 S.W.2d 927, 928 (Tex.App.-Dallas 1982, no writ). If a writing does not constitute a
confirmation, then the merchant exception does not apply and the contract is subject to the statute of frauds.
Adams v. Petrade Int'l, Inc., 754 S.W.2d 696, 705 (Tex.App.-Houston [1st Dist.] 1988, pet. denied).  

Section 2.201 of the Business and Commerce Code provides as follows:

(a) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable
by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between
the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. 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.

(b) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is
received and the party receiving it has reason to know its contents, it satisfies the requirements of Subsection (a) against such
party unless written notice of objection to its contents is given within ten days after it is received. (c) A contract which does not
satisfy the requirements of Subsection (a) but which is valid in other respects is enforceable . . .
. . .
(2) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for
sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or

(3) with respect to goods for which payment has been made and accepted or which have been received and accepted (Section
2.606).

TEX. BUS. & COM. CODE ANN. § 2.201 (Vernon 1994) (emphasis added).

Section 2.201 of the Business and Commerce Code contains the Texas version of the
Uniform Commercial Code’s statute of frauds. Section 2.201(a) states, in part as follows:

Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is
not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract
for sale has been made between the parties and signed by the party against whom enforcement is sought or
by his authorized agent or broker. . . .

Tex. Bus. & Com. Code Ann. § 2.201(a) (Vernon 1994).

Whether a contract falls within the statute of frauds is a question of law. Iacono v. Lyons, 16 S.W.3d 92, 94
(Tex. App.—Houston[1st Dist.] 2000, no pet.) McKinzie’s pleadings allege that Amana agreed to sell
“thousands of dollars” of warranty parts for multiple years. Because the alleged agreement thus
contemplated a sale of goods at a price of $500 or more, the agreement is subject to section 2.201 and is
unenforceable as a matter of law. Tex. Bus. & Com. Code Ann. § 2.201(a); Malone v. E.I. du Pont de
Nemours & Co., 8 S.W.3d 710, 715 (Tex. App.—Fort Worth 1999, pet. denied) (holding that statute of frauds
applied to transaction that undisputedly contemplated alleged contract for more than $500).

The written documents here do not show that any agreement existed between Amana and McKinzie for the
sale of goods or services under the Asure warranties. Under the Statute of Frauds, any oral agreement for
the value of the goods or services asserted here was unenforceable. Footnote

01-03-00272-CV

Amana responds to McKinzie’s claim that an oral agreement existed by asserting that the Statute of Frauds
renders the alleged agreement unenforceable. McKinzie’s pleadings allege that the oral dealership
agreement provided for the sale of thousands of dollars worth of Amana products for a term of multiple
years. Thus, the alleged agreement here, for the sale of goods for the price of $500 or more, is
unenforceable under the Statute of Frauds. Tex. Bus. & Com. Code Ann. § 2.201(a); Malone, 8 S.W.3d at
715.

McKinzie contends, however, that the Statute of Frauds does not bar enforcement of the oral agreement
because of the promissory estoppel exception to the Statute of Frauds. Amana counters that, for the
promissory estoppel exception to apply, McKinzie must show that Amana had promised to sign a prepared,
written agreement that complies with the Statute of Frauds. See CRSS, Inc. v. Runion, 992 S.W.2d 1, 7 (Tex.
App.—Houston [1st Dist.] 1995, writ denied); Beta Drilling, Inc. v. Durkee, 821 S.W.2d 739, 741 (Tex. App.—
Houston [14th Dist.] 1992, writ denied).

McKinzie’s brief on appeal asserts only generally that “Amana’s promise to reduce the dealership agreement
to writing removed the agreement from the requirements of the Statute of Frauds.” Even if true, this claim is
not sufficient to defeat the Statute of Frauds because complete agreement on the terms and wording of the
written contract is required to permit the application of promissory estoppel to a statute-of-frauds defense.
CRSS, Inc., 992 S.W.2d at 7. A promise to prepare a written agreement, as alleged here, is not sufficient.
See id. Footnote


Under the U.C.C. statute of frauds, "a contract for the sale of goods for the price of $500 or more is not enforceable by way of
action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the
parties and signed by the party against whom enforcement is sought. . . ." Id.  A "sale" is further defined as ". . . the passing of
title from the seller to the buyer for a price." Tex. Bus. & Comm.Code Ann. § 2.106(a). A "lease" refers to "a contract by which
one owning such property grants to another the right to possess, use and enjoy it for a specified period of time in exchange for
periodic payment of a stipulated price, referred to as rent." Franklin v. Jackson, 847 S.W.2d 306, 308 (Tex.App.-El Paso 1992,
writ denied) (emphasis in original). The August 1, 1999, "Computer Equipment Lease" is not subject to the requirements of
section 2.201(a), as it is not a sale of goods. VIP retained ownership of the equipment, so the agreement is a lease.
Assuming arguendo that the agreement were a sale of goods covered by section 2.201(a), the same partial performance
exception as described above would also remove it from the requirements of the U.C.C. statute of frauds. See Rodriguez v.
Klein,  960 S.W.2d 179, 186 (Tex. App.-Corpus Christi 1997, no pet.). VERMONT INFO. PROC., INC. v. MONTANA BEV. CORP.,
227 SW 3d 846 - Tex: Court of Appeals, El Paso 2007



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