Formal requirements; statute of frauds

(1) Except as otherwise provided in this section, a contract for the sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is a record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the party's authorized agent or broker. A record is not insufficient because it omits or incorrectly states a term agreed upon, but the contract is not enforceable under this subsection beyond the quantity of goods shown in the record. (2) Between merchants if within a reasonable time a record in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of Subsection (1) of this section against the party unless in a record notice of objection to its contents is given within ten days after it is received. (3) A contract that does not satisfy the requirements of Subsection (1) of this section but that is valid in other respects is enforceable: (a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or (b) if the party against whom enforcement is sought admits in the party's pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or (c) with respect to goods for which payment has been made and accepted or that have been received and accepted (Section 55-2-606 NMSA 1978). History: 1953 Comp., § 50A-2-201, enacted by Laws 1961, ch. 96, § 2-201; 1978 Comp., § 55-2-201; 2023, ch. 142, § 7. OFFICIAL COMMENTS UCC Official Comments © by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. Prior uniform statutory provision. — Section 4, Uniform Sales Act (which was based on Section 17 of the Statute of 29 Charles II). Changes. — Completely rephrased; restricted to sale of goods. See also Sections 1- 206 [55-1-206 NMSA 1978], 8-319 [55-8-319 NMSA 1978] and 9-203 [55-9-203 NMSA 1978]. Purposes. — This section is intended to make it clear that: 1. The required record need not contain all the material terms of the contract and such material terms as are stated need not be precisely stated. All that is required is that the record afford a basis for believing that the offered oral evidence rests on a real transaction. It may be written in lead pencil on a scratch pad or another medium. It need not indicate which party is the buyer and which the seller. The only term which must appear is the quantity term which need not be accurately stated but recovery is limited to the amount stated. The price, time and place of payment or delivery, the general quality of the goods, or any particular warranties may all be omitted. Special emphasis must be placed on the permissibility of omitting the price term in view of the insistence of some courts on the express inclusion of this term even where the parties have contracted on the basis of a published price list. In many valid contracts for sale the parties do not mention the price in express terms, the buyer being bound to pay and the seller to accept a reasonable price which the trier of the fact may well be trusted to determine. Again, frequently the price is not mentioned since the parties have based their agreement on a price list or catalogue known to both of them and this list serves as an efficient safeguard against perjury. Finally, "market" prices and valuations that are current in the vicinity constitute a similar check. Thus, if the price is not stated in the record evidencing the contract it can normally be supplied without danger of fraud. Of course, if the "price" consists of goods rather than money the quantity of goods must be stated. Only three definite and invariable requirements as to the record are made by this subsection. First, it must evidence a contract for the sale of goods; second, it must be "signed", a word which includes any authentication which identifies the party to be charged; and third, it must specify a quantity. 2. "Partial performance" as a substitute for the required memorandum can validate the contract only for the goods which have been accepted or for which payment has been made and accepted. Receipt and acceptance either of goods or of the price constitutes an unambiguous overt admission by both parties that a contract actually exists. If the court can make a just apportionment, therefore, the agreed price of any goods actually delivered can be recovered without a writing or, if the price has been paid, the seller can be forced to deliver an apportionable part of the goods. The overt actions of the parties make admissible evidence of the other terms of the contract necessary to a just apportionment. This is true even though the actions of the parties are not in themselves inconsistent with a different transaction such as a consignment for resale or a mere loan of money. Part performance by the buyer requires the delivery of something by him that is accepted by the seller as such performance. Thus, part payment may be made by money or check, accepted by the seller. If the agreed price consists of goods or services, then they must also have been delivered and accepted. 3. Between merchants, failure to answer a record confirming a contract within ten days of receipt is tantamount to a record under Subsection (2) and is sufficient against both parties under Subsection (1). The only effect, however, is to take away from the party who fails to answer the defense of the Statute of Frauds; the burden of persuading the trier of fact that a contract was in fact made orally prior to giving a record confirming a contract is unaffected. Compare the effect of a failure to reply under Section 2-207 [55-2-207 NMSA 1978]. 4. Failure to satisfy the requirements of this section does not render the contract void for all purposes, but merely prevents it from being judicially enforced in favor of a party to the contract. For example, a buyer who takes possession of goods as provided in an oral contract which the seller has not meanwhile repudiated, is not a trespasser. Nor would the statute of frauds provisions of this section be a defense to a third person who wrongfully induces a party to refuse to perform an oral contract, even though the injured party cannot maintain an action for damages against the party so refusing to perform. 5. The requirement of "signing" is discussed in Section 1-201 [55-1-201 NMSA 1978], Comment 37. 6. For purposes of subsection (1), it is not necessary that the record be delivered to anybody. It need not be signed by both parties but it is, of course, not sufficient against one who has not signed it. Prior to a dispute no one can determine which party’s signing of the memorandum may be necessary but from the time of contracting each party should be aware that to him it is signing by the other which is important. 7. If the making of a contract is admitted in court, either in a written pleading, by stipulation or by oral statement before the court, no additional record is necessary for protection against fraud. Under this section it is no longer possible to admit the contract in court and still treat the Statute as a defense. However, the contract is not thus conclusively established. The admission so made by a party is itself evidential against him of the truth of the facts so admitted and of nothing more; as against the other party, it is not evidential at all. 8. In furtherance of medium neutrality, references to "writing" and "written" in the pre-2022 text of this section have been changed to refer to a "record." Cross references. — See Sections 1-201, 2-202, 2-207, 2-209 and 2-304 [55-1-201, 55-2-202, 55-2-207, 55-2-209, 55-2-304 NMSA 1978, respectively]. "Action". Section 1-201. "Between merchants". Section 2-104. "Buyer". Section 2-103. "Contract". Section 1-201. "Contract for sale". Section 2-106. "Goods". Section 2-105. "Notice". Section 1-201. "Party". Section 1-201. "Reasonable time". Section 1-204. "Sale". Section 2-106. "Seller". Section 2-103.