DF Activities Corp. v. Brown

United States Court of Appeals for the Seventh Circuit · 1988 · Contracts

Contractsstatute of fraudsoral contractUCC § 2-201judicial admissionUCC 2-201statute of fraudssale of goods

Facts

DF claimed that Brown orally agreed in a November 26 phone conversation to sell DF the Willits Chair for $60,000, payable in two installments. Briggs, DF's art director, then sent Brown a letter confirming the agreement and a $30,000 check. Brown returned both with a handwritten note stating that she had made other arrangements and that the chair was no longer available for sale to DF. Brown later moved to dismiss under UCC § 2-201 and submitted an affidavit swearing that she had never agreed to sell the chair to DF or Briggs and did not recall a November 26 conversation.

Issue

When a plaintiff seeks to enforce an oral contract for the sale of goods barred by UCC § 2-201, may the plaintiff continue with discovery in hopes of obtaining a judicial admission under § 2-201(3)(b) after the defendant has already denied under oath that any contract was made?

Rule

A plaintiff seeking to enforce an oral contract within the statute of frauds may not resist dismissal by arguing that discovery might later produce a judicial admission when the defendant has already denied the contract under oath in an affidavit. Once the defendant has denied the contract under oath, the judicial-admission safety valve of UCC § 2-201(3)(b) is closed.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Milwaukee, Nora Levin sued Owen Park to enforce an alleged oral agreement to sell her a vintage printing press for $18,000. Owen moved to dismiss under UCC § 2-201 and attached a notarized affidavit stating that he never agreed to sell the press to Nora and that no contract was formed.

Nora argues the court should allow discovery because Owen might admit the agreement during his deposition. What is the best answer?

Explanation. Under the majority rule, a plaintiff suing on an oral sale-of-goods contract barred by UCC § 2-201 cannot resist dismissal by speculating that discovery may later yield an admission once the defendant has already denied the contract under oath. The possibility of a contrary deposition admission is considered too remote to justify prolonging the litigation.