Does this contract need to be in writing to be enforceable in North Dakota?
Only if it falls on one of two overlapping lists. For contracts generally, N.D.C.C. § 9-06-04 provides that specified agreements "are invalid, unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged, or by the party's agent": an agreement not performable within a year; a suretyship promise (subject to an exception in § 22-01-05); a lease over one year or a sale of real property or an interest in it; and, distinctively, "[a]n agreement or promise for the lending of money or the extension of credit in an aggregate amount of twenty-five thousand dollars or greater," along with a parallel rule for a promise to alter repayment or forgive a debt of that size. Roth v. Meyer applied the $25,000 loan clause to bar recovery on two oral loans that together exceeded the threshold: "Oral contracts that, in aggregate, loan over $25,000 must be in writing, and if not, are unenforceable under the statute of frauds." Roth also states what the writing has to contain: it "must contain all the essential or material conditions and terms of the contract," including "the identity of the parties, the subject matter of the agreement, and express consideration." Carbon copies of two checks marked "loan" did not do it, and the Court reversed the judgment that had made the borrower pay. For a sale of goods, N.D.C.C. § 41-02-08 (UCC 2-201) independently requires a signed record wherever the price is $500 or more: "a contract for the sale of goods for the price of five hundred dollars 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."
The trap
Section 9-06-04's $25,000 aggregate-loan clause is easy to miss when importing a form from a state whose general statute of frauds stops at the classic categories (year, suretyship, marriage, real property): it reaches an INFORMAL, oral extension of credit regardless of who is lending, and Roth shows courts AGGREGATE separate loans between the same parties rather than testing each one against the threshold alone; two loans of $50,000 and $2,500, made two years apart, were combined to trigger the statute, and Roth relied on First State Bank of Goodrich v. Oster as "holding oral agreement for three loans due 18 months apart were in aggregate greater than $25,000 and unenforceable under N.D.C.C. § 9-06-04(4)." Separately, § 41-02-08 has real escape hatches from its own writing requirement that a drafter relying on the general rule can overlook: a merchant's unanswered written confirmation can bind the recipient within ten days, and the contract is enforceable without any writing at all for specially manufactured goods once the seller has begun manufacture, for a quantity admitted in pleadings or testimony, or for goods actually paid for and accepted. Its first subsection also caps what a record can prove: "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." Nothing read for this rule states whether § 9-06-04's own categories (for example, an agreement not performable within a year) and § 41-02-08's $500 goods threshold apply cumulatively to a single transaction that satisfies both descriptions, that interplay is an open question, not resolved here.
6 authorities
- statuteN.D.C.C. § 41-02-08enactment date not established
The words that state the rule
Except as otherwise provided in this section, a contract for the sale of goods for the price of five hundred dollars 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.
- statuteN.D.C.C. § 41-02-08enactment date not established
The words that state the rule
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 against the party unless notice in a record of objection to its contents is given within ten days after it is received. - A contract that does not satisfy the requirements of subsection 1 but which is valid in other respects is enforceable: - 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; - If the party against whom enforcement is sought admits in that 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 - With respect to goods for which payment has been made and accepted or which have been received and accepted (section 41-02-69).
- statuteN.D.C.C. § 9-06-04enactment date not established
The words that state the rule
The following contracts are invalid, unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged, or by the party's agent: - An agreement that by its terms is not to be performed within a year from the making thereof. - A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in section 22-01-05. - 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 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. - An agreement or promise for the lending of money or the extension of credit in an aggregate amount of twenty-five thousand dollars or greater. - An agreement or promise to alter the terms of repayment or forgiveness of a debt that is in an aggregate amount of twenty-five thousand dollars or greater.
The words that state the rule
Oral contracts that, in aggregate, loan over $25,000 must be in writing, and if not, are unenforceable under the statute of frauds. N.D.C.C. § 9-06-04(4). “A writing ‘must contain all the essential or material conditions and terms of the contract,’” which includes “the identity of the parties, the subject matter of the agreement, and express consideration.” Trosen v. Trosen, 2014 ND 7, ¶ 12, 841 N.W.2d 687.
The words that state the rule
Gary Meyer raised the statute of frauds defense in his amended answer. The district court found Gary Meyer and Mary Roth entered two loans. One loan was for $50,000, dated April 26, 2009, and the other for $2,500, dated August 15, 2007. The court found the agreements were made orally, and included that Gary Meyer would pay Mary Roth when he could. Loans in aggregate greater than $25,000 must be in writing. N.D.C.C. § 9-06-04(4). Here, the only writing was the carbon copy of the checks that said “loan” and the amount.
The words that state the rule
The copies of the checks identify the parties and the amount of the loan. Because Mary Roth’s loans are in aggregate greater than $25,000 the statute of frauds applies and the loans are unenforceable against Gary Meyer. See First State Bank of Goodrich v. Oster, 500 N.W.2d 593, 594-95 (N.D. 1993) (holding oral agreement for three loans due 18 months apart were in aggregate greater than $25,000 and unenforceable under N.D.C.C. § 9-06-04(4)). We reverse because the district court erred when it did not apply the statute of frauds and when it found Gary Meyer was required to pay $52,500 for breaching the contracts with Mary Roth.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.