Enforceability of contracts for goods under Ohio’s Statute of Frauds

When you make a business agreement, parties to the agreement may hold to its terms for many reasons. For some, living up to the agreed upon terms is a matter of reputation, for others, it may simply seem the moral thing to do. Of course, in some instances, following through on a contract is matter of legal duty.

When a party to a contract does not live up to his or her obligations, the aggrieved party may have to turn to the legal system for enforcement of the agreement. However, in order for the courts to be able to enforce a contract, certain legal formalities must be present. Under Ohio law, one of the most important requirements for enforceability of a contact for sale of goods is that it passes muster under the Uniform Commercial Code Statute of Frauds.

Statute of Frauds requires writing

The Statute of Frauds applies to contracts for the sale of goods when the price has been set at $500 or more. The most basic requirement for enforcement of such a contract is that there is some writing indicating that the contract has been made. This does not mean that the contract itself has to be in writing; rather, it just means that at a minimum some memorandum of the contract has been put to print. "Writing" is typically construed broadly, and even electronic writings like emails count.

This writing may omit and even incorrectly state terms of the contract and still satisfy the Statute of Frauds. But, if you are the one seeking enforcement of the contact, the writing must be signed by the other party ("signed" is also construed broadly, and even an email signature or a name typed at the end of an email may suffice). In addition, one thing the writing must include is the quantity of goods to be sold; the contract is not enforceable beyond the quantity of goods mentioned in the writing, even if further oral modifications were meant to change this amount.

Exceptions to writing requirement

There are a few exceptions to the Statute of Frauds for contacts involving a sale of goods. For example, a writing may not be required for enforceability of a contract if the goods are custom-made specifically for the buyer and cannot be sold to another in the normal conduct of the seller's business, the seller has already begun manufacture before receiving notice that the buyer will not adhere to the contract and circumstances objectively indicate that the items being made were meant for the buyer.

Other exceptions that negate the requirement of a writing include instances in which both parties admit that the contract was indeed made and instances in which payment was made and accepted or the goods were delivered and properly accepted by the buyer.

Even if the Statute of Frauds was not satisfied and a contract is therefore unenforceable, you may have other legal remedies against a nonperforming party, such as those available under a theory of unjust enrichment.

An Ohio business law attorney can help you get the benefit of your bargain

In business, you expect to be able to rely on agreements made with other parties. If another individual or organization reneged on a promise and you were put in a poorer position as a result, you may be able to take legal action.

To learn more about the Statute of Frauds and to discuss remedies for breach of contract, get in touch with an Ohio business law attorney today.