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Contracts • Defenses to Enforcement and Formation
K#062
Legal Definition
If the contract is for the sale of specially manufactured goods, the Statute of Frauds is satisfied as soon as the seller makes a substantial beginning.
Plain English Explanation
Many types of goods are not that unique and are often mass produced. However, when a contract exists for specially created goods, like custom designed goods, or even mass produced goods that are heavily modified and customized, then the Statute of Frauds can be satisfied as soon as the seller has put in enough effort to show they are working on the custom order.
This may seem a bit odd because why is the bar set so low for this type of scenario? Think of it from the court's perspective: the purpose of the Statute of Frauds is to keep out frivolous claims of oral contracts where there isn't enough proof to show such a contract existed. If someone creates a custom order for someone, it is a pretty easy assumption for the court to believe that the custom order was requested to be made. After all -- why else would it be made? And how would they have known to make it without direction from the purchaser?
This may seem a bit odd because why is the bar set so low for this type of scenario? Think of it from the court's perspective: the purpose of the Statute of Frauds is to keep out frivolous claims of oral contracts where there isn't enough proof to show such a contract existed. If someone creates a custom order for someone, it is a pretty easy assumption for the court to believe that the custom order was requested to be made. After all -- why else would it be made? And how would they have known to make it without direction from the purchaser?
Hypothetical
Hypo 1: Bob is planning his birthday party. He wants it to be epic. He wants it to be memorable for all of his guests. Bob decides he wants to order 1,000 balloons shaped like himself and printed with his photo. He contacts Sam who runs a local balloon factory. They speak on the phone about the order and Sam gets to work. Sam begins designing and carving a mold that looks like Bob. The next day, Bob calls Sam and says he changed his mind and he no longer wants the balloons. Result: Imagine if Sam only sold regular balloons and Bob wanted 1,000 normal balloons. It would be hard for a court to determine that such an oral agreement existed simply because Sam had 1,000 extra balloons. After all, Sam sells balloons. He likely has many balloons on hand at any time. However, why would Sam be working on a balloon shaped and designed to resemble Bob if not for the fact that it was specifically requested? Even though Sam hadn't yet created the 1,000 balloons, he had begun the design process and can show that he was acting on the agreement. This substantial beginning can satisfy the Statute of Frauds and enable Sam to enforce the oral agreement.
Visual Aids
Related Concepts
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