Does this deal have to be in writing in California, and how much has to be in the writing?
Civil Code § 1624(a) invalidates, absent a writing subscribed by the party to be charged or that party's agent, an agreement not to be performed within a year; a special promise to answer for another's debt; an agreement for a lease longer than a year or for the sale of real property or an interest in it; and an agreement employing an agent or broker to buy, sell or lease real estate, or to find a purchaser, seller, lessee or lessor, for compensation or a commission. Subdivision (a) also invalidates, absent such a writing, an agreement that by its terms is not to be performed during the promisor's lifetime; an agreement by a purchaser of real property to pay an indebtedness secured by a mortgage or deed of trust on the property, unless assumption is specifically provided for in the conveyance; and a contract, promise, undertaking or commitment to loan money or extend credit of more than $100,000, not primarily for personal, family or household purposes, made by a person in the business of lending or arranging loans (§ 1624(a)(5)-(7)). For goods, a contract for $500 or more is unenforceable without a record sufficient to indicate a contract was made, signed by the party against whom enforcement is sought, and is not enforceable beyond the quantity shown (Com. Code § 2201(1)). As to content, the memorandum must contain the essential terms, but if the writing includes the essential terms of the parties' agreement there is no bar to admitting relevant extrinsic evidence to explain or clarify those terms (Sterling); the memorandum, viewed in light of the evidence, "must be sufficient to demonstrate with reasonable certainty the terms to which the parties agreed to be bound", and in Sterling itself the price term failed that test, so the Court of Appeal was reversed with directions to affirm the trial court's summary judgment for the sellers in its entirety. Section 2201 has two more limbs a merchant needs: between merchants, a written confirmation sufficient against the sender satisfies the statute against the RECIPIENT too unless the recipient objects in a record within 10 days (§ 2201(2)); and a contract that fails the writing requirement is still enforceable for specially manufactured goods once the seller has substantially begun manufacture or committed to procurement, to the extent the party to be charged admits a contract in pleading or testimony, and for goods paid for and accepted or received and accepted (§ 2201(3)). Section 1624 itself does not apply to leases under Division 10 of the Commercial Code (§ 1624(c)).
The trap
Two California-specific edges. The real-estate BROKER COMMISSION agreement is inside the statute of frauds here (§ 1624(a)(4)), so an oral commission arrangement is invalid: a trap for out-of-state brokers and for principals who assume the writing requirement runs only to the sale itself. And § 1624(d), read in the same section, provides that an electronic message of an ephemeral nature not designed to be retained (expressly including a text message or instant message) is insufficient to constitute a contract to convey real property absent a written confirmation meeting the qualified-financial-contract requirements of § 1624(b)(3)(B). Do not read that cross-reference as a general electronic-evidence exception: subdivision (b) displaces only paragraph (1) of subdivision (a), and only for a qualified financial contract, which § 1624(b)(2) defines as an agreement as to which each party thereto is other than a natural person and which is one of a closed list of currency, commodity, swap and option instruments, so none of the (b)(3) routes is open to an ordinary party, and the § 2201(4) exemption on the goods side is keyed to the same definition. Sterling cuts the other way for drafters relying on scraps: extrinsic evidence can explain terms that are IN the memorandum, but it cannot supply an essential term the memorandum lacks.
12 authorities
- statuteCal. Civ. Code § 1624enactment date not established
The words that state the rule
(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent: (1) An agreement that by its terms is not to be performed within a year from the making thereof. (2) A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in Section 2794. (3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged. (4) An agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate, or to lease real estate for a longer period than one year, or to procure, introduce, or find a purchaser or seller of real estate or a lessee or lessor of real estate where the lease is for a longer period than one year, for compensation or a commission.
- statuteCal. Com. Code § 2201enactment date not established
The words that state the rule
(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 subdivision beyond the quantity of goods shown in the record.
The words that state the rule
If the writing includes the essential terms of the parties’ agreement, there is no bar to the admission of relevant extrinsic evidence to explain or clarify those terms. The memorandum, viewed in light of the evidence, must be sufficient to demonstrate with reasonable certainty the terms to which the parties agreed to be bound. Here, plaintiffs attempt to enforce a price term that lacks the certainty required by the statute of frauds.
- statuteCal. Com. Code § 2201enactment date not established
The words that state the rule
(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 subdivision (1) against the party unless notice in a record of objection to its contents is given within 10 days after it is received.
- statuteCal. Com. Code § 2201enactment date not established
The words that state the rule
(3) A contract which does not satisfy the requirements of subdivision (1) but which 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 which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; (b) If the party against whom enforcement is sought admits in its 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 which have been received and accepted (Section 2606). (4) Subdivision (1) of this section does not apply to a qualified financial contract as that term is defined in paragraph (2) of subdivision (b) of Section 1624 of the Civil Code if either (a) there is, as provided in paragraph (3) of subdivision (b) of Section 1624 of the Civil Code, sufficient evidence to indicate that a contract has been made or (b) the parties thereto, by means of a prior or subsequent written contract, have agreed to be bound by the terms of the qualified financial contract from the time they reach agreement (by telephone, by exchange of electronic messages, or otherwise) on those terms.
- statuteCal. Civ. Code § 1624enactment date not established
The words that state the rule
(d) An electronic message of an ephemeral nature that is not designed to be retained or to create a permanent record, including, but not limited to, a text message or instant message format communication, is insufficient under this title to constitute a contract to convey real property, in the absence of a written confirmation that conforms to the requirements of subparagraph (B) of paragraph (3) of subdivision (b).
- statuteCal. Civ. Code § 1624enactment date not established
The words that state the rule
(5) An agreement that by its terms is not to be performed during the lifetime of the promisor. (6) An agreement by a purchaser of real property to pay an indebtedness secured by a mortgage or deed of trust upon the property purchased, unless assumption of the indebtedness by the purchaser is specifically provided for in the conveyance of the property. (7) A contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or household purposes, made by a person engaged in the business of lending or arranging for the lending of money or extending credit. For purposes of this section, a contract, promise, undertaking, or commitment to loan money secured solely by residential property consisting of one to four dwelling units shall be deemed to be for personal, family, or household purposes.
- statuteCal. Civ. Code § 1624enactment date not established
The words that state the rule
(3) There is sufficient evidence that a contract has been made in any of the following circumstances: (A) There is evidence of an electronic communication (including, without limitation, the recording of a telephone call or the tangible written text produced by computer retrieval), admissible in evidence under the laws of this state, sufficient to indicate that in the communication a contract was made between the parties. (B) A confirmation in writing sufficient to indicate that a contract has been made between the parties and sufficient against the sender is received by the party against whom enforcement is sought no later than the fifth business day after the contract is made (or any other period of time that the parties may agree in writing) and the sender does not receive, on or before the third business day after receipt (or the other period of time that the parties may agree in writing), written objection to a material term of the confirmation.
- statuteCal. Civ. Code § 1624enactment date not established
The words that state the rule
(c) This section does not apply to leases subject to Division 10 (commencing with Section 10101) of the Commercial Code.
The words that state the rule
The trial court properly granted defendants summary judgment. III. DISPOSITION The judgment of the Court of Appeal is reversed with directions to affirm the trial court judgment in its entirety.
- statuteCal. Civ. Code § 1624enactment date not established
The words that state the rule
(b) Notwithstanding paragraph (1) of subdivision (a): (1) An agreement or contract that is valid in other respects and is otherwise enforceable is not invalid for lack of a note, memorandum, or other writing and is enforceable by way of action or defense, provided that the agreement or contract is a qualified financial contract as defined in paragraph (2) and one of the following apply:
- statuteCal. Civ. Code § 1624enactment date not established
The words that state the rule
(2) For purposes of this subdivision, a “qualified financial contract” means an agreement as to which each party thereto is other than a natural person and that is any of the following:
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.