CHAPTER XIX.

THE STATUTE OF FRAUDS.

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142. History of the Statute.-In 1676 there was passed in England a statute for the "prevention of many fraudulent practices which are commonly endeavored to be upheld by perjury," which is commonly known as the Statute of Frauds. Its object was to prevent fraud in the proof of certain classes of contracts by requiring written evidence in order to prove the same, thus making it more difficult for anyone, by false testimony, to fix a liability upon another. The seventeenth section of this Statute referred to contracts for the sale of goods. This section was as follows: "No contract for the sale of any goods, wares, and merchandise, for the price of ten pounds sterling or upwards, shall be allowed to be good, except the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the bargain or in part payment, or that some note or memorandum in writing of the said bargain be made and signed by the parties to be charged by such a contract, or their agents thereunto authorized."

This Statute, either in its original or in some similar form, has been adopted in most of our states, and though these statutes vary in details, the general scope of them is much the same. The various

29 29 Car. II, c. 3.

provisions of the Statute will be discussed in the following sections.

143. Contract of sale.-It is important to notice. that the Statute has reference not to sales so as to invalidate in any way a title which has passed, but only to contracts which look toward the actual passing of title at some future time, that is, contracts for the sale of goods.

One of the most difficult questions arising under the Statute is, What is meant by a contract of sale, i. e., does it make any difference whether the thing about which the contract is entered into is now in existence in its finished form or whether money or labor must be expended to put it into the form contemplated by the parties? There are three different views which have been worked out by various courts in reference to this problem. These views are generally spoken of as the English, the New York, and the Massachusetts rule.

144. Same subject-English rule. The case of Lee v. Griffin30 represents the present rule which is followed by the English courts. In this case a woman ordered two sets of artificial teeth to be specially made for her. After the sets of teeth were finished, but before they were fitted, the woman died, and the dentist brought action against her executor for the price. In giving the test as to whether such an agreement was for work and labor, or a contract for the sale of goods, Blackburn, J., said: "If the contract be such that, when carried out, it would result in the sale of a chattel, the party 30 1 Best & Smith 272 (Eng.).

cannot sue for work and labor; but, if the result of the contract is that the party has done work and labor which ends in nothing that can become the subject of a sale, the party cannot sue for goods sold and delivered. * * In the present case the contract was to deliver a thing which, when completed, would have resulted in the sale of a chattel; in other words, the substance of the contract was for goods sold and delivered. I do not think that the test to apply to these cases is whether the value of the work exceeds that of the material used in its execution." Though it is generally conceded that the English rule is the most logical and affords the most accurate test for deciding a particular case, it has not found much support in the United States; only one state, Missouri, seems to have followed it. 145. Same subject-New York rule.-In the case of Parsons v. Loucks, there was an oral contract to manufacture and deliver a quantity of paper. In deciding that the Statute did not apply to such a case, Hunt, C., said: "The distinction is between the sale of goods in existence, at the time of making the contract, and an agreement to manufacture goods. The former is within the prohibition of the Statute. The latter is not. The Statute alludes to a sale of goods, assuming that the articles are already in existence." This rule does not furnish a satisfactory test for a great number of cases where it may be very difficult to determine whether the article is really in existence at the time the contract is made, even though work and labor may be

*

81 48 N. Y. 17.

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*

*

necessary to put it into final form as contemplated by the contract, or whether so much is still to be done that it amounts in fact to a manufacturing of goods from the materials which enter into the final product, so that the goods contracted for cannot be said to be in existence at the time of the contract. Though its application may be doubtful in a particular case, the rule of the New York cases is that the mere fact that something still remains to be done to make the goods ready for delivery will not change the case from a contract of sale to a contract for work and labor. The New York rule is followed in a number of states.

146. Same subject-Massachusetts rule.-The rule most generally followed in this country is that known as the Massachusetts rule, as developed in the cases of that state. In the case of Mixer v. Howarth,32 the plaintiff had on hand the body of a carriage nearly completed, which he finished according to special directions given by the defendant. Shaw, C. J., in delivering the opinion of the court that this was not a sale as contemplated by the Statute of Frauds, said: "When the contract is a contract of sale, either of an article then existing, or of articles which the vendor usually has for sale in the course of his business, the Statute applies to the contract, as well where it is to be executed at a future time, as where it is to be executed immediately. But where it is an agreement with a workman, to put materials together and construct an article for the employer *

82 21 Pick. 205 (Mass.).

* it is not a sale

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until an actual or constructive delivery and acceptance." The same distinction was more clearly stated by Ames, J., in Goddard v. Binney, as follows: "A contract for the sale of articles then existing, or such as the vendor in the ordinary course of his business manufactures or produces for the general market, whether on hand at the time or not, is a contract for the sale of goods, to which the Statute applies. But on the other hand, if the goods are to be manufactured especially for the purchaser, and upon his special order and not for the general market, the case is not within the Statute."

147. Same subject Sales Act.-The Massachusetts rule has had the largest following in this country and has been adopted in the Sales Act 34 in the following terms: "The provisions of this section apply to every such contract or sale, notwithstanding that the goods may be intended to be delivered at some future time or may not at the time of such contract or sale be actually made, procured, or provided, or fit or ready for delivery, or some act may be requisite for the making or completing thereof, or rendering the same fit for delivery; but if the goods are to be manufactured by the seller especially for the buyer and are not suitable for sale to others in the ordinary course of the seller's business, the provisions of this section shall not apply."

148. Goods, wares and merchandise.-In general, in this country, the wording of the Statute, "goods, wares, and merchandise," has been held to be prac

88 115 Mass. 450, LEADING ILLUSTRATIVE CASES.

84 § 4 (2).