Downspout Drainage Company hires Earl to design a Web page for Downspout for $400. Before the project is started, Downspout asks Earl to trouble-shoot Downspout's computer operating system software for an additional $400. Earl agrees. The entire contract is oral. Earl completes the work, but Downspout refuses to pay. Earl files a suit against Downspout, which raises the Statute of Frauds as a defense. Can Earl recover from Downspout? If so, how much, and on what basis?

Question

What will be an ideal response?

Answer 1

Yes, Earl can recover from Downspout for its breach of their oral contract. An oral contract is enforceable unless it falls within the Statute of Frauds. In that situation, it may not be enforced unless it is evidenced by a writing that sufficiently evidences the contract and that has been signed by the party against whom enforcement is sought. Contracts that come under the Statute of Frauds include contracts for transfers of interests in land, contracts that cannot be performed within a year of their making, contracts in consideration of marriage, contracts that involve collateral promises, and contracts for sales of goods priced at $500 or more. The original contract in this question (for the design of a Web page) does not fall within the Statute of Frauds. It is not a contract for the transfer of an interest in land, it could be (and was) performed within a year of its making, it was not entered into in consideration of marriage, it does not include a collateral promise, and it does not involve a sale of goods (it involves services). Thus, it is enforceable even though it is not in writing. The oral modification of the contract (to trouble-shoot the operating system software) is also enforceable for that reason. If Earl can prove the terms of the deal, Earl should recover $800, on the ground that Downspout breached their contract.