Question

Coca-Cola Bottling Company of Indiana (Coke Indy) had an agreement with Babyback’s International, Inc. (BBI), under which Coke would pay BBI to arrange for coolers to display the companies’ products side by side in Indianapolis. BBI then began discussions with Coca-Cola Enterprises (CCE) about a similar plan in Louisville. BBI performed pursuant to the discussion but no contract was signed. They continued discussions in Atlanta about nationwide expansion, which would have lasted more than a year. BBI alleged that a memorandum faxed to it by CCE summarized the oral agreement. The day after BBI made the claim, it was denied by CCE. BBI sued to enforce the contract, arguing that its past performance and the memo made CCE’s statute of frauds defense invalid. Is this correct? Explain.

Answer 1

Under Statute of frauds US laws specifically require certain promises to be in writing, to be legally enforceable ,in a court of law.

Under normal circumstances, oral contracts are perfectly enforceable. However, the below mentioned categories of contracts must be put in writing under this provision of Statute of Frauds, to be legally enforceable ,by either of the parties to the contract, for non-performance ,on the defaulter's part.

Those are contracts involving :

sale of an interest in land

sale of goods for $500 or more

marriage as consideration

contracts that require more than one year to be performed

rendering of suretyship

estate executor who agrees to pay estate debts from his personal funds

Any other types of contracts need not be in writing & are considered outside the statute.

Now, BBI has fully performed(displayed Coca-Cola's products-along-side their products) pursuant to the discussion , even though no contract was signed.

So, BBI can very well enforce the contract , on the basis of full performance ,based on oral discussions.

Also BBI's argument that its past performance (of display of Coca-Cola's products,alongside its own,in Indianapolis) set a trend ----confirmed by CCE's memo made the latter's statute of frauds defense invalid--is perfectly correct

It is legally binding on the part of CCE to settle BBI's claim for dispaly Louisville.

Statute of defense provisions will not help CCE , after the orally agreed contract has been fully performed by BBI---going by the precedents set by CCE & its subsidiary.