A small business owner verbally agrees to sell a unique, antique printing press to a collector for $750. The collector pays a $100 deposit and promises to pay the remaining balance upon delivery next week. Before delivery, another collector offers the business owner $1,000 for the press, and the owner accepts, selling the press to the second collector. When the first collector demands delivery, the business owner refuses, citing the lack of a written contract. Which of the following statements is most accurate regarding the enforceability of the initial agreement?
- AThe initial agreement is enforceable because it was a verbal agreement between two consenting parties.
- BThe initial agreement is unenforceable because the business owner received a higher offer from a third party.
- CThe initial agreement is unenforceable because the Statute of Frauds requires a written contract for the sale of goods over $500.
- DThe initial agreement is enforceable due to the partial performance exception to the Statute of Frauds.
Show answer & explanationAnswer & explanation
Correct answer: D. The initial agreement is enforceable due to the partial performance exception to the Statute of Frauds.
The Uniform Commercial Code (UCC) requires contracts for the sale of goods over $500 to be in writing (Statute of Frauds). However, partial performance, such as the payment of a deposit, can make an otherwise unenforceable verbal contract enforceable to the extent of the performance.
Why the other options are wrong
- A. Verbal agreements for goods over $500 are generally unenforceable unless an exception applies, such as partial performance.
- B. A subsequent higher offer does not negate a valid, enforceable contract.
- C. While the Statute of Frauds generally applies, there are exceptions, and this scenario fits one.
Statute of Frauds (UCC - Partial Performance)
The Statute of Frauds requires certain contracts, including those for the sale of goods over $500, to be in writing to be enforceable. However, under the Uniform Commercial Code (UCC), partial performance (e.g., payment or acceptance of goods) can make an oral contract enforceable to the extent of that performance.
- Applies to contracts for the sale of goods $500 or more.
- Requires a writing signed by the party against whom enforcement is sought.
- Partial performance (payment or delivery/acceptance of goods) is an exception, making the contract enforceable to the extent of the performance.
Memory trick: Written words or partial deeds make contracts real.