Question

Anna advertised her 2013 Honda Civic Hatchback for sale in a local newspaper for $11,500 or best offer. Lucy saw the ad and made an appointment with Anna to inspect car. After discussing, Lucy proposed to pay Anna $10,500 for the car, with deposit of $3,000 in cash, and Lucy would pay the balance next week when she could come back with a check of $7,500 to pick up the car. Then Anna agreed and wrote out a simple receipt for Lucy’s deposit.

Week after, Lucy did not appear or respond to Anna’s phone calls concerning the car. Anna was upset because of Lucy's disappearance. Therefore, Anna sold the car to another buyer for $10,000. After that, Anna called the lawyer to handle her car, and filed a district court action against Lucy for receiving less than the agreed price, plus her incidental costs and lawyer’s fees. After receiving service, Lucy filed a Notice of Intention to Defend, where she generally denied Anna’s complaint, and also raised the affirmative defense of the statute of frauds under UCC § 2-201.

Discuss whether UCC § 2-201 excuses Lucy’s performance under the contract.

Answer 1

Before diving into the scenario, let's understand in brief about the statute of frauds and what does the ​UCC § 2-201 state. The UCC, or the Uniform Commercial Code, is a consistent act covering sales and commercial transactions. It serves primarily as a model or guide and can become a law only when a state passes a particular provision. The UCC comprises a model statue of frauds which is a state law that usually requires particular contracts to be written and signed by all the parties in order for it to be enforceable. As outlined in UCC § 2-201, contracts need to be in writing in the following limited scenarios:

​1. contract for sale of goods whose value is $500 or more​,

2. lease for goods whose value is $1000 or more,

3​. ​ certain agreements that make a security interest in the goods however they are not in the custody of the creditor

​Referring to the scenario outlined in the question, the following points need to be focused on in reference to the statute of frauds:

1. the value of goods (Anna's car) was set at $10,500 after a mutual discussion with Lucy,

2. there was no written agreement for the sale of the goods (there was a receipt issued which serves only the purpose of the acknowledgment of receipt of the $3000 in cash as a deposit amount but cannot be considered as an agreement for the sale),

As we have already established the fact that a written agreement is mandated for goods whose value is equal to or more than $500 as stated by UCC § 2-201 - Statute of Frauds, Lucy stands entitled to be excused under this statute. It is needed to re-iterate that the UCC is more of a guide and the end decision would lie with the respective state where the case is filed, however, going by the layout of the statute - Lucy's behavior stands a chance to be excused under UCC § 2-201.