84-2-201. Formal requirements; statute of frauds. (1) 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.
(2) 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 (1) against such party unless written notice of objection to its contents is given within ten days after it is received.
(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable
(a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or
(b) 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
(c) with respect to goods for which payment has been made and accepted or which have been received and accepted (section 84-2-606).
History: L. 1965, ch. 564, § 25; January 1, 1966.
KANSAS COMMENT, 1996
1. This section sets out the circumstances under which a contract for the sale of goods must be evidenced by some sort of writing. In general, it relaxes many of the requirements of the traditional statute of frauds. See K.S.A. 33-106. Of course, the mere existence of a writing that satisfies the statute does not necessarily mean that a contract has been formed. In other words, even if the requirements of the statute of frauds are satisfied a party is not precluded from arguing that a contract did not exist or that the terms of the contract differ from those claimed by the other party.
2. Subsection (1) states the general rule. A contract for the sale of goods for $500 or more is not enforceable unless three requirements are met: (1) there is some writing that evidences a contract for the sale of goods; (2) the writing is signed by the party against which enforcement of the contract is sought; and (3) the writing states a quantity term. Southwest Eng'g Co. v. Martin Tractor Co., 205 K. 684, 473 P.2d 18 (1970). Oral sales contracts with a price of less than $500 are enforceable. The writing required under this section need only be sufficient to show that a sales contract has been made; the contract itself need not be in writing. The writing may be silent as to price, time, payment, delivery, quality, and the like. See Southwest Eng 'g Co. v. Martin Tractor Co., supra. The only required term is the quantity term, and even the quantity term need not be accurate, although the contract is enforceable only to the extent of the quantity specified in the writing. The signature requirement likewise is lenient, since the Code defines "signed" as including "any symbol executed or adopted by a party with present intention to authenticate a writing." 84-1-201(39). The advent of electronic data interchange and other forms of electronic messaging strains the Article 2 formulation of the statute of frauds, but a strong argument can be made that an electronic message is a signed writing and thus satisfies the statute. 84-1-201(46) (definition of writing); 84-1-201(39) (definition of signed); see Deborah L. Wilkerson, Comment, Electronic Commerce Under the U.C.C. Section 2-201 Statute of Frauds: Are Electronic Messages Enforceable?, 41 K.L.R. 403 (1992).
3. Although Subsection (1) states that a writing is required "[e]xcept as otherwise provided in this section" (emphasis added), the Kansas Supreme Court has nonetheless recognized the continued applicability of common law exceptions to the statute of frauds. Thus, in Decatur Coop. Ass'n v. Urban, 219 K. 171, 547 P.2d 323 (1976), the Court held that the doctrine of promissory estoppel was available as an exception to the statute of frauds. See also Quaney v. Tobyne, 236 K. 201, 689 P.2d 844 (1984) (given resolution of other issue in case, court did not decide estoppel issue, but in dicta referred parties to Decatur Coop case).
4. Subsection (2) is known as the "merchants exception" to the statute of frauds: it defines when a contract can be enforced against a party on the basis of a writing that the party did not sign. The following requirements must be met: (1) both parties to the contracts are merchants; (2) the party seeking to enforce the agreement sends a confirmatory memo within a reasonable time; (3) the memo is good against the sender under section 84-2-201 (i.e., it evidences that a contract for sale was made with the other party, is signed by the sender, and includes a quantity term); (4) the other party receives it; (5) the other party has reason to know of its contents); and (6) the other party does not object to its contents in writing within ten days of receipt.
5. Subsection (3) sets out total exceptions to the statute of frauds, circumstances in which an otherwise qualifying contract is enforceable even without a writing. Under paragraph (3)(a), no writing is required in cases involving goods specially manufactured for the buyer when the seller has substantially changed its position in reliance on the contract. In such a case, the contract is enforceable in its entirety.
6. Under paragraph (3)(b), a party that admits in court—by pleading, stipulation, deposition, or otherwise—that a contract was made may not rely on the statute of frauds as a defense. See Wending v. Puls, 227 K. 780, 610 P.2d 580 (1980). Both voluntary and involuntary admissions qualify. For this exception to apply, the party need not admit making an oral contract. Instead, it is sufficient that the party's words or admitted conduct reasonably lead to that conclusion. See Quaney v. Tobyne, supra. The contract is enforceable only to the extent of any quantity admitted.
7. Under paragraph (3)(c), part performance makes a contract enforceable without regard to the statute of frauds. The contract is enforceable only to the extent goods have been received and accepted by the buyer or payment has been made to and accepted by the seller—in other words, only to the extent of the part performance.
8. This section applies only to contracts for the sale of goods. Other UCC articles contain statutes of frauds that should be consulted for cases within those articles. See 84-2a-201 (leases); 84-9-203 (creation of security interests in personal property); 84-1-206 (writing requirement for contract for sale of certain intangible personal property); see also K.S.A. 50-672 (statute of frauds for telemarketing sales). Note that a contract for the sale of goods must satisfy not only the U.C.C. statute of frauds, but also the general Kansas statute of frauds if applicable. See K.S.A. 33-106.
Law Review and Bar Journal References:
The uniform commercial code, the statute of frauds, and the farmer, 25 K.L.R. 318, 319, 320, 325, 326 (1977).
Survey of contracts, UCCC and UCC, Franklin E. Lynch and Larry Schneider, 15 W.L.J. 324, 328, 329 (1976).
"U.C.C.: The Farmer is Not a Merchant Under the U.C.C.—Promissory Estoppel to Avoid the Operation of the Statute of Frauds," Mark A. Buck, 16 W.L.J. 230, 231, 234, 237 (1976).
Use of estoppel to avoid statute discussed in note, 26 K.L.R. 327 (1978).
Warranty violations in tripartite finance lease agreements, Winton A. Winter, Jr., 25 K.L.R. 573, 581 (1977).
"Survey of Kansas Law: Civil Procedure," Jerry G. Elliott, 27 K.L.R. 185 (1979).
Discussed in "Survey of Kansas Law: Contracts," Mary Kathleen Babcock, 27 K.L.R. 215, 218 (1979).
"The Realtor in Court Recognizing Natural Areas of Conflict," Bruce Kent, 1 J.K.T.L.A. No. 2, 40, 41 (1977).
"Lender Liability: A Survey of Theories, Thoughts and Trends," Troy H. Gott and William L. Townsley III, 28 W.L.J. 238, 241, 272 (1988).
"Electronic Commerce Under the U.C.C. Section 2-201 Statute of Frauds: Are Electronic Messages Enforceable?" Deborah L. Wilkerson, 41 K.L.R. 403 (1992).
"Electronic Commerce: Digital Signatures and the Role of the Kansas Digital Signature Act," Anthony Martin Singer, 37 W.L.J. 725 (1998).
"Electronic Commerce in Kansas: Contract Formation and Formalities Under Article 2," Christopher R. Drahozal, 68 J.K.B.A. No. 5, 22 (1999).
"What's your authority? And other issues in oral settlement agreements," Daniel E. Blegen, 69 J.K.B.A. No. 5, 26 (2000).
CASE ANNOTATIONS
1. The essential elements of an enforceable contract are that it evidence a sale of goods, that it be in writing signed by the party sought to be charged and that it specify quantity. Southwest Engineering Co., Inc. v. Martin Tractor Co., Inc., 205 Kan. 684, 688, 689, 473 P.2d 18.
2. Terms with respect to time and place of payment or delivery may be omitted from the written instrument required hereunder. Southwest Engineering Co., Inc. v. Martin Tractor Co., Inc., 205 Kan. 684, 689, 473 P.2d 18.
3. The term "signed," defined herein by subsection (39), includes any symbol executed or adopted by a party with the present intention to authenticate a writing; such authentication may be printed, stamped or written and may be on any part of the document. Southwest Engineering Co., Inc. v. Martin Tractor Co., Inc., 205 Kan. 684, 690, 473 P.2d 18.
4. The writing required hereunder must be sufficient to indicate that a contract of sale has been made and to afford a substantial basis for a belief that it evidences a real transaction. Southwest Engineering Co., Inc. v. Martin Tractor Co., Inc., 205 Kan. 684, 473 P.2d 18.
5. Contractual relationship based on specifications and bids upheld; implied warranty of fitness; disclaimer inadmissible. Christopher and Son v. Kansas Paint and Color Co., 215 Kan. 185, 192, 523 P.2d 709. Modified: 215 Kan. 510, 525 P.2d 626.
6. Applied; action to recover property; damages for detention. Nelson v. Hy-Grade Construction & Materials, Inc., 215 Kan. 631, 633, 527 P.2d 1059.
7. Wheat farmer not a merchant within purview of statute; doctrine of promissory estoppel invoked. Decatur Cooperative Association v. Urban, 219 Kan. 171, 175, 177, 547 P.2d 323.
8. Testimony held not to be an admission under subsection (3)(b) of this section. Miller v. Sirloin Stockade, 224 Kan. 32, 578 P.2d 247.
9. Statute of frauds does not apply with respect to goods which were received and accepted by buyer. Pedi Bares, Inc. v. P & C Food Markets, Inc., 567 F.2d 933, 934, 936.
10. "Mixed contract" principally for rendition of services not within purview of statute of frauds; judgment for damages affirmed. Care Display, Inc. v. Didde-Glaser, Inc., 225 Kan. 232, 237, 589 P.2d 599.
11. Contract enforceable where parties have admitted existence of contract and essential terms thereof. Wendling v. Puls, 227 Kan. 780, 788, 610 P.2d 580.
12. Directed verdict for defendants erroneous; UCC applicable to transaction involving irrigation system with defective hose not manufactured by dealer. Stair v. Gaylord, 232 Kan. 765, 769, 659 P.2d 178 (1983).
13. Promissory estoppel may be asserted to preclude statute as defense to oral contract. Quaney v. Tobyne, 236 Kan. 201, 212, 689 P.2d 844 (1984).
14. Statute requires that writing afford basis for believing that offered oral evidence rests on real transactions. Rajala v. Allied Corp., 66 B.R. 582, 593 (1986).
15. Kansas recognizes cause of action for fraud based on promise of future action with present intent not to perform. Zuru Constructors, Inc. v. B.F. Goodrich Co., 746 F. Supp. 1051, 1058 (1990).
16. Purchase contract within merchants exception to statute of frauds. Busby, Inc., v. Smoky Valley Bean, Inc., 767 F. Supp. 235, 236 (1991).
17. Defendant's claim of unenforceable contract based on statute of frauds unsuccessful as court finds in defendant's deposition testimony that an oral agreement existed. St. Francis Mercantile Equity Exchange, Inc. v. Newton, 27 Kan. App. 2d 18, 996 P.2d 365 (2000).
18. Oral contract for goods received for pilot project not barred, oral contract for non-pilot goods barred. School-Link Technologies v. Applied Resources, 471 F. Supp. 2d 1101, 1118 (D. Kan. 2007).
19. Cited in case involving statute of frauds where oral agreement recited in court. In re Marriage of Takusagawa, 38 Kan. App. 2d 401, 166 P.3d 440 (2007).
20. Distributorship agreement was exclusive dealings contract that satisfied statute of frauds even though quantity not stated. Fisherman Surgical Instruments v. Tri-amin Health, 502 F. Supp. 2d 1170, 1176 (2007).
21. A writing is not insufficient because it omits a term agreed upon, exception. Cravotta v. Deggingers' Foundry, Inc., 42 Kan. App. 2d 700, 215 P.3d 636 (2009).
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