§ 2-201: statute of frauds

Definition

§ 2-201 is a provision of the Uniform Commercial Code (UCC) that requires certain types of contracts to be in writing and signed in order to be enforceable. This statute primarily applies to contracts for the sale of goods priced at $500 or more, aiming to prevent fraudulent claims and misunderstandings between parties by ensuring clear evidence of the agreement.

5 Must Know Facts For Your Next Test

1. The statute of frauds under § 2-201 requires a written contract for the sale of goods priced at $500 or more, ensuring enforceability.
2. Oral agreements for the sale of goods under $500 can still be legally binding, but it is advisable to have a written agreement to avoid disputes.
3. The writing must indicate that a contract has been made and must be signed by the party against whom enforcement is sought.
4. Certain exceptions exist for the statute of frauds, such as when goods have been received and accepted or when payment has been made.
5. Failure to comply with § 2-201 can lead to unenforceability of the contract, meaning that a party cannot seek legal remedies for breach.

Review Questions

• How does § 2-201 of the statute of frauds impact the enforcement of oral contracts in commercial transactions?
  • § 2-201 significantly impacts the enforcement of oral contracts by requiring that certain contracts, specifically those for the sale of goods priced at $500 or more, must be in writing to be enforceable. This provision helps prevent disputes arising from misunderstandings and fraudulent claims, as it creates a clear record of the agreement. Therefore, while oral contracts under this threshold may still hold validity, they are far less reliable in terms of legal enforcement.
• What are some exceptions to the requirements set forth in § 2-201 regarding written contracts for the sale of goods?
  • There are notable exceptions to the requirements outlined in § 2-201. For instance, if goods have already been received and accepted by the buyer or if the buyer has made a payment towards the contract, these scenarios can validate an otherwise unenforceable oral agreement. Additionally, if both parties acknowledge an existing oral agreement or if one party has acted based on reliance on that agreement, courts may enforce it despite lacking written documentation.
• Evaluate the implications of § 2-201 on business practices and risk management strategies within commercial transactions.
  • The implications of § 2-201 on business practices are significant as they compel businesses to prioritize written agreements when dealing with substantial transactions. This requirement minimizes risks associated with misunderstandings and fraud, leading to more robust contract management strategies. By adopting clear documentation protocols and ensuring compliance with § 2-201, businesses can protect themselves legally while fostering trust with trading partners, ultimately contributing to smoother commercial operations.

Related terms

Uniform Commercial Code (UCC): A comprehensive set of laws governing commercial transactions in the United States, designed to harmonize and standardize laws across states.

Goods: Tangible items that are movable at the time of identification to a contract for sale, which are primarily governed by UCC provisions.

Written Agreement: A formal contract that is documented in writing, which may include terms, conditions, and signatures from all parties involved.