Also known as: UCC 2-201 · U.C.C. § 2-201 · Uniform Commercial Code § 2-201 · UCC statute of frauds · sale of goods statute of frauds
Written by attorneys — see sources below.
A statutory rule rendering a contract for the sale of goods priced at five hundred dollars or more unenforceable unless a record indicates that a contract for sale has been made between the parties and is 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 beyond the quantity of goods shown in the record.
Umar Usmani and Upstream Petroleum orally agreed on the sale of drilling equipment for six hundred dollars. Three weeks later Upstream Petroleum sent a letter confirming the deal and signed it. When Upstream Petroleum later refused to deliver, Usmani sued. The letter serves as a sufficient record under the statute because it indicates a contract was made and bears the signature of the party to be charged.
Apex Autos verbally agreed with Metro Electronics to buy navigation units for eight hundred thousand dollars. Metro Electronics faxed a signed order form listing quantity and price. Apex Autos immediately emailed denying any contract. Metro Electronics sued. The fax satisfies the statute against Metro Electronics but provides no signed record from Apex Autos, so the agreement remains unenforceable against Apex Autos.
ProCD, Inc. compiled information from more than 3,000 telephone directories into a computer database. The database cost more than $10 million to compile and is expensive to keep current. ProCD sells a version of the database called SelectPhone on CD-ROM discs. The company sold the database to the general public for personal use at a low price of approximately $150 for the set of five discs while selling information to the trade for a higher price. Every box containing its consumer product declares that the software comes with restrictions stated in an enclosed license. This license is encoded on the CD-ROM disks as well as printed in the manual and appears on a user's screen every time the software runs. The license limits use of the application program and listings to noncommercial purposes. Matthew Zeidenberg bought a consumer package of SelectPhone in 1994 from a retail outlet in Madison, Wisconsin. He formed Silken Mountain Web Services, Inc. to resell the information in the SelectPhone database. Zeidenberg purchased two additional SelectPhone packages, each with an updated version of the database. He made the latest information available over the World Wide Web for a price through his corporation. ProCD filed this suit seeking an injunction against further dissemination that exceeds the rights specified in the licenses. The district court held the licenses ineffectual because their terms do not appear on the outside of the packages. The court added that the second and third licenses stand no different from the first because they might have been different.
View caseThe record must indicate that a contract for sale has been made and state a quantity. It need not contain all agreed terms and may be signed by the party to be charged or that party's agent.
Between merchants a confirmation sent within a reasonable time that is sufficient against the sender satisfies the statute against the recipient unless the recipient objects in a record within ten days after receipt.
No. The ten-day objection rule applies only between merchants. A non-merchant recipient is not bound by a confirmation lacking its own signature.
The contract is not enforceable under subsection (1) beyond the quantity shown in the record. Absence of any quantity term defeats enforceability.
A modification is subject to the statute only if the contract as modified is for goods priced at five hundred dollars or more. Modifications of contracts below that threshold need no additional writing.
…Inc. v. Krack Corp. , 794 F.2d 1440, 1442 (9th Cir.1986). : See UCC § 2-206(1)(b) and comment 2. Note that under UCC § 2-201, the oral contract would not be enforceable in the absence of a writing or part performance because each order typically involved more than $500 in goods. However, courts have typically…