Get it in Writing

If you want an agreement to be enforceable, get it in writing.  Of course, coming from an attorney, you probably expect that advice.  However this little pearl of wisdom would not be repeated so often if it weren’t useful.  Legally, promises or agreements that you exchange with another are classified as contracts and certain types of contracts can be unenforceable if they are not in writing.  This principle is known as the Statute of Frauds and prevents one from simply inventing agreements or terms that were never actually agreed upon.  Sterling v. Taylor, 40 Cal. 4th 757, 766 (2007).  An alleged breaching party can invoke the Statute of Frauds as a defense to enforcement.  See 1 Witkin Sum. Cal. Law Contracts § 342.

General contract law, while varying slightly between the states, dictates that the Statute applies to several types of agreements that are particularly vulnerable to fraud.  Contracts which must be in writing include those relating to marriage, those which cannot be completed in one year, contracts relating to real estate, promises to pay the debts of another, agreements for the sale of goods worth $500 or more, and promises by executors of wills to pay debts of the estate.  The Law.com,  February 12, 2009See also Cal. Civil Code § 1624.

For example, Humboldt County Bakery orally agrees with Eureka Sugar Suppliers that it will pay $600 each month for sugar during a period of three months.  Humboldt County Bakery would be promising to pay $600 and the Eureka Sugar Suppliers would be promising to deliver the sugar each month for three months.  Thus, an exchange of promises has taken place and the parties have formed a contract (enforceable or not).   If the parties performed in compliance with the agreement, then no Statute of Frauds issue would arise.  However, if Eureka Sugar Suppliers only delivers for one month instead of three, Humboldt County Bakery, without any written evidence, would probably lose in a suit to enforce the contract.  This is because the Uniform Commercial Code, Article 2 § 201 dictates that a contract for the sale of goods worth $500 or more must be in writing to be enforceable.

Of course, since we often have better hindsight than foresight about the agreements we make, this doctrine is not always going to leave the recipient of a broken promise (“promisee”) without a remedy.   As with any legal question, there are exceptions.   These exceptions relax the rigid nature of the Statute of Frauds and often provide equitable remedies for a party who claims he has been promised something, but not received it.   Such exceptions may include where the promisee has relied on the promise or where the breaching party would be unjustly enriched by their breaking the promise.   See generally 1 Witkin Sum. Cal. Law Contracts §§ 401-18.

Consider a situation where Humboldt County Bakery promised that in return for a month’s supply of sugar, it would allow Eureka Sugar Suppliers to use its storage facility in Arcata for that month.   If Eureka Sugar Suppliers delivered the sugar, but Humboldt County Bakery would not provide access to the storage facility, a court might rule that Humboldt County Bakery would be unjustly enriched by the free sugar and order Humboldt County Bakery to pay damages to Eureka Sugar Suppliers.   This would not technically be based on the alleged contract, but rather based on quantum meruit, or the principle that promise breakers cannot receive something for nothing based on a technicality.

What qualifies as a sufficient “writing” is an evolving legal issue.   A memorandum will most likely satisfy the Statute of Frauds if it (1) identifies the subject of the parties’ agreement, (2) shows that they made a contract, and (3) states the essential contract terms with reasonable certainty.  Sterling, 40 Cal. 4th at 766.  The writing must also be signed by the party to be charged (in court).   See Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners, 52 Cal. App. 4th 867, 875 (1997).  However, a note or memo that merely shows that the parties intended to create an agreement may also be enough, depending on the circumstances.  Sterling, 40 Cal. 4th at 766.   Generally deciding whether you have sufficient proof of a contract and what types of damages are available will require the advice of an attorney.

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