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CHAPTER II.

FORMATION OF CONTRACT (Continued)-UNDER THE STATUTE OF FRAUDS.

18-20. What Contracts are Within the Statute.

21-22. What are Goods, Wares, and Merchandise.

23. What is a Contract for the Price or Value of £10 ($50). 24-26. Acceptance and Receipt.

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37-38.

39-40.

Signature of the Party.

Agents Authorized to Sign.

41. Effect of Noncompliance with the Statute.

WHAT CONTRACTS ARE WITHIN THE STATUTE.

18. The seventeenth section of the English statute of frauds, which has been substantially followed in most of the states and territories of the United States, enacts that "no contract for the sale of any goods, wares, or merchandises, for the price of ten pounds sterling, or upwards, shall be allowed to be good, except

(a) The buyer shall accept part of the goods so sold, and actually receive the same,

(b) Or give something in earnest to bind the bargain, or in part payment,

(c) Or that some note or memorandum in writing of the said bargain be made and signed by the parties to be charged by such contract, or their agents thereunto lawfully authorized."

19. The statute of frauds applies to executory as well as executed contracts of sale.

20. The statute does not apply to contracts for work, labor and materials. The rule for determining whether the contract is for work, labor and materials, or a contract of sale, varies in different jurisdictions.

(a) ENGLISH RULE. The English rule, which is followed in some states, is that a contract whereby the property in a chattel is to be transferred for a price from one person to another is a contract of sale, and is within the statute, although the chattel is to be the product

of the work, labor, and materials of the person who is to transfer the property.

(b) MASSACHUSETTS RULE. The Massachusetts rule, which is followed in some states, is the same, except that if the chattel is to be manufactured especially for the buyer, upon his special order, and is not such as the seller in his ordinary business manufactures for the general market, the contract is for work, labor, and materials, and is not within the statute.

(c) NEW YORK RULE. The New York rule, which is followed in some states, is that a contract for the sale of a chattel not in existence, which the seller is to manufacture, is a contract for work, labor, and materials, and is not within the statute; but, if the chattel is in existence, the contract is one of sale, and is within the statute, although the seller is to adapt it to the use of the buyer.

The common law, which recognized the validity of verbal contracts of sale of personal property for any amount, and however proved, was greatly modified by the seventeenth section of the statute of 29 Car. II. c. 3, known as the "statute of frauds," which has been quoted above. To reproduce here the language of the various similar enactments in the United States would be impossible,1 nor is it necessary to do so, as their provisions are in the main substantially the same as those of the English original. The latter will therefore serve as the basis of discussion.

Executed and Executory Contracts.

A question arose at an early, day, on which in England the cases were conflicting, whether the words "contract of sale," as used in the statute, applied to executory contracts, or merely to executed contracts, of sale. The question was settled in

1 This section seems not to be in force in Alabama, Delaware, Illinois, Kentucky, Louisiana, New Mexico, North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, and West Virginia.

Some changes have been made by the English Sale of Goods Act, § 4, and still others by the Sales Act, § 4.

2 That executory contracts were not within the statute, see Towers v. Osborne, 1 Strange, 506; Clayton v. Andrews, 4 Burrows, 2101; Groves v. Buck, 3 Maule & S. 178. Contra, Rondeau v. Wyatt.

England by "Lord Tenterden's Act," so called, which enacted that the provisions of the seventeenth section "shall extend to all contracts for the sale of goods of the value of ten pounds sterling and upwards, notwithstanding the goods may be intended to be delivered at some future time, or may not at the time of such contract 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." The two enactments must be construed together, and Lord Tenterden's act appears to be merely declaratory of the true construction of the statute of frauds." In the United States, it has been universally held, without the intervention of the Legislature, and in conformity with the apparent policy and natural construction of the statute, that it applies as well to executory as to executed sales."

Contract of Sale or Contract for Work, Labor, and MaterialsEnglish Rule.

Another question has arisen as to the meaning of "contract of sale," on which there was long a conflict of opinion in England and on which different conclusions have been reached in the United States, namely, whether a contract for the sale of goods to be afterwards manufactured is a "contract of sale," or a mere contract for work and labor done and materials furnished, to which the statute does not apply. The conclusion

2 H. Bl. 63; Cooper v. Elston, 7 Term R. 14; Garbutt v. Watson, 5 Barn. & Ald. 613.

89 Geo. IV. c. 14, § 7.

4 Chalm. Sale, 8; Scott v. Railway Co., 12 Mees. & W. 33; Harman v. Reeve, 18 C. B. 587, 25 Law J. C. P. 257.

Langd. Cas. Sales, 1025.

Newman v. Morris, 4 Har. & McH. (Md.) 421; Bennett v. Hull, 10 Johns. (N. Y.) 364; Crookshank v. Burrell, 18 Johns. (N. Y.) 58, 9 Am. Dec. 187; Jackson v. Covert's Adm'r, 5 Wend. (N. Y.) 139; Ide v. Stanton, 15 Vt. 685, 40 Am. Dec. 698; Waterman v. Meigs, 4 Cush. (Mass.) 497; Hight v. Ripley, 19 Me. 137; Edwards v. Railway Co., 48 Me. 379; Atwater v. Hough, 29 Conn. 508, 79 Am. Dec. 229; Carman v. Smick, 15 N. J. Law, 252; Finney v. Apgar, 31 N. J. Law, 266; Cason v. Cheely, 6 Ga. 554; Mechanical Boiler-Cleaner Co. v. Kellner, 62 N. J. Law, 544, 43 Atl. 599.

Sales Act, § 4, makes changes to express more accurately the construction given by Lord Tenterden's act and by the courts. 7 Benj. Sales, §§ 94-107.

which has finally been reached in England, and in several states in America, is that if the contract is intended to result in transferring for a price a chattel it is a contract for the sale of a chattel, notwithstanding that the chattel is not in existence at the time of the contract, and is to be the product of the labor and materials of the seller, and that unless the contract is intended to result in the transfer of a chattel the contract is not one of sale. This test was first clearly stated and applied in the leading case of Lee v. Griffin, decided in the Queen's Bench in 1861. That action was brought by a dentist to recover for two sets of artificial teeth ordered by a deceased lady of whom the defendant was executor, and it was held that the contract was one of sale, and not for work, labor, and materials. Blackburn, J., said: "If the contract be such that it will result in the sale of a chattel, the proper form of action, if the employer refuses to accept the article when made, would be for not accepting. But if the work and labor be bestowed in such a manner as that the result would not be anything which could properly be said to be the subject of sale, then an action for work and labor is the proper remedy."

Before the case of Lee v. Griffin, three other principles had been suggested in England as affording a test in such cases, and as the earlier English views have been influential in shaping the decisions in this country, and throw light upon the question involved, they may be briefly stated: First. It was suggested that, if the subject-matter of the contract is not in existence, the contract is not for the sale of goods. Thus in Groves v. Buck 10 it was held on this ground that a contract for the sale of oak pins to be cut by the plaintiff out of slabs owned by him was not within the statute. Second. It was suggested that, if the materials be furnished by the employer, the contract is for work and labor, and not of sale; but that if the materials be furnished by the workman, who makes the chattel, he cannot maintain work and labor, because his labor is bestowed

1 Best & S. 272, 30 Law J. Q. B. 252.

• Groves v. Buck, 3 Maule & S. 178; Garbutt v. Watson, 5 Barn. & Ald. 613, per Abbott, C. J.; Rondeau v. Wyatt, 2 H. Bl. 63, per Lord Loughborough; Cooper v. Elston, 7 Term R. 14, per Lord Kenyon, C. J.

10 3 Maule & S. 178.

TIFF.SALES(2D ED.)-5

on his own materials and for himself.11 The first branch of this rule falls within Lee v. Griffin, because, if the materials are furnished by the employer, there can be no sale of them to him. But the second branch of the rule is inaccurate, since a man may be employed to do work on his own materials without an intention on the part of himself and his employer to transfer the property in the completed article; for example, to expend work and materials in perfecting an invention.1 Third. It was suggested that the true test was "whether the work and labor is the essence of the contract, or whether it is the materials that are found." 18 But the fatal objection to this test, as pointed out by Benjamin,1 and indeed to any test except that applied in Lee v. Griffin, is that, however small the relative value of the materials to the labor, as in the case of a painting, the employer cannot get title to the thing except through the transfer of the property in it from the maker. And it is the acquisition of the thing by the employer which the contract really contemplates. It is true that extreme cases may be put, such as that of an attorney employed to draw a deed and using his own paper and ink, or that of a man sending a button to be used by his tailor in making a coat. But such trifling matters cannot be considered as having entered into the contemplation of the parties, nor as forming part of the real consideration, and are to be disposed of by the rule, "De minimis non curat lex." 15 Same-Massachusetts Rule.

In the English case of Garbutt v. Watson,10 where a contract for the sale of flour to be manufactured was held to be within the statute, Abbott, C. J., remarked: "In Towers v. Osborne [1 Strange, 506], the chariot which was ordered to be made would never, but for that order, have had any existence. But here the plaintiffs were proceeding to grind the flour for

11 Smith v. Surman, 9 Barn. & C. 568, per Bayley, J.; Atkinson v. Bell, 8 Barn. & C. 277, per Bayley, J.

12 Grafton v. Armitage, 2 C. B. 336, 15 Law J. C. P. 20. Or if a farrier be employed professionally, using his own medicines, there is no sale of the medicine, but the contract is for work, labor, and materials. Clark v. Mumford, 3 Camp. 37; Langd. Cas. Sales, 1039. 13 Clay v. Yates, 1 Hurl. & N. 73, 25 Law J. Exch. 237.

14 Benj. Sales, § 106.

15 Benj. Sales, § 107.

105 Barn, & Ald. 613.

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