Opinion ID: 1628702
Heading Depth: 1
Heading Rank: 1

Heading: parol evidence to establish fifteen-day payment provision

Text: In its memorandum opinion the trial court stated: The meeting of December 5, however, served to resolve at least partially the differences between the parties. At this meeting the plaintiff agreed to pay for potatoes within fifteen days of delivery. Acting on this parol agreement, the defendant under the reinstated contract shipped six loads of potatoes to the plaintiff commencing with a shipment on January 9 and ending with two shipments on February 10. Such shipments by the defendant were in execution of the oral agreement of December 5 and served to alter and modify the original agreement of the parties so that the plaintiff was obligated to make payments for potatoes within fifteen days of delivery which he failed to do. Not having received payment within the stipulated fifteen day period the defendant was justified in cancelling the contract which he effectively did by oral notification thereof, an affirmative action on his part, written notice therefor not being a code requirement. While not explicitly stated, the trial court appears to have found an enforceable oral modification of the contract based upon §§ 41-02-15 (2-208) and 41-02-16 (2-209), NDCC, which provide: 41-02-15. (2-208) Course of performance or practical construction. 1. Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement. 2. The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade (section 41-01-15). 3. Subject to the provisions of the next section on modification and waiver, such course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance. 41-02-16. (2-209) Modification, rescission and waiver. 1. An agreement modifying a contract within this chapter needs no consideration to be binding. 2. A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party. 3. The requirements of the statute of frauds section of this chapter (section 41-02-08) must be satisfied if the contract as modified is within its provisions. 4. Although an attempt at modification or rescission does not satisfy the requirements of subsection 2 or 3 it can operate as a waiver. 5. A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver. In considering the oral modification provisions of the Uniform Commercial Code in Farmers Elevator Co. of Reserve v. Anderson, 552 P.2d 63, 65-66 (Mont.1976), the Supreme Court of Montana stated: Section 87A-2-209(4) provides that an attempt at modification which is void under the statute of frauds may still operate as a waiver to assert the defense through the course of performance engaged in by the parties under section 87A-2-208, R.C.M.1947. 2 Williston on Sales (4th Ed.), § 12-6, p. 23. While the trial court did not make a specific finding holding there was a waiver, its findings when read as a whole, do find there was a waiver and consent by Anderson. Under section 87A-1-103, the Uniform Commercial Code can be supplemented, for purposes of interpretation, by the general principles of law and equity, unless specifically displaced by the Code. The facts presented in the instant case, require that we find that a waiver such as is contemplated by section 87A-2-209(4) occurred and we agree.       By delivering, pursuant to contract, approximately 36 truckloads of wheat to the elevator between March 27 and May 30, 1973, Anderson established a course of conduct sufficient to constitute a waiver of his right to assert a defense under the statute of frauds. [1] In addition to our recognition of Uniform Commercial Code interpretations from other states as urged by § 41-01-02(2)(c) (1-102), NDCC, we think there is another basis here for determining that the oral modification is enforceable. Section 41-02-16(3) (2-209), NDCC, provides that the requirements of the Statute of Frauds must be satisfied if the contract, as modified, is within its provisions. Since this oral modification does come within the Statute of Frauds it must fall within one of the enumerated exceptions to Section 41-02-08 (2-201), NDCC, to be enforceable. 41-02-08. (2-201) Formal requirementsStatute of frauds. 1. 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 some writing 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 his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing. 2. Between merchants if within a reasonable time a writing 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 such party unless written notice of objection to its contents is given within ten days after it is received. 3. A contract which does not satisfy the requirements of subsection 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; or b. if the party against whom enforcement is sought admits in his 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 41-02-69). At trial both Dangerfield and Markel testified that they had orally agreed at the December 5 meeting to continue fulfilling the contract. The only dispute is to the payment provision, and Dangerfield denies that he agreed to pay within fifteen days of delivery. We think that Dangerfield's testimony in court that a contract was made renders the contract enforceable under Section 41-02-08(3)(b) (2-201), NDCC. The official comment to that section states: If the making of a contract is admitted in court, either in a written pleading, by stipulation or by oral statement before the court, no additional writing is necessary for protection against fraud. Under this section it is no longer possible to admit the contract in court and still treat the Statute as a defense. However, the contract is not thus conclusively established. The admission so made by a party is itself evidential against him of the truth of the facts so admitted and of nothing more; as against the other party, it is not evidential at all. (Official comment prepared by National Conference of Commissioners on Uniform State Laws and The American Law Institute.) The effect of an admission that a contract was made is to deprive the one making the admission of any subsequent reliance on the Statute of Frauds as a defense. The theoretical justification for the Code rule, which explicitly extends to testimony as well as pleading, is that a voluntary admission of the existence of a contract should result in loss of the statute as a defense. The statute should not be used to perpetrate frauds, and if under oath the existence of a contract is admitted, the use of the statute should thereupon be denied. The effect of the rule is that it allows the party asserting the contract to present his oral evidence in proof of its existence. 3 Bender's Uniform Commercial Code Service, Duesenberg & King, Sales and Bulk Transfers, § 2.04[3], pp. 2-80, 2-81. In considering the effect of a judicial admission of the existence of a contract upon a term of a contract which was not specifically denied by the plaintiff against whom the term was asserted as a defense, Giant Peanut Company v. Carolina Chemicals, Inc., 129 Ga.App. 718, 200 S.E.2d 918, 920 (1973), states that: The contract of sale is asserted by the plaintiff in the action brought and admits that a contract exists; the testimony of the defendant president shows that a contract for sale exists.    The defense of the defendant here is based upon one of the terms of the contract of sale, and even if in parol, such term of the contract of sale may be proven once the contract itself is admitted. In construing the Statute of Frauds provision of Article 8 which is found in Section 8-319 (§ 41-08-35, NDCC), dealing with contracts for the sale of securities (a Statute of Frauds section almost identical to the Article 2 Statute of Frauds provision), the court, in Kohlmeyer & Company v. Bowen, 126 Ga.App. 700, 192 S.E.2d 400, 405 (1972), stated: Although Bowen further claimed that he was entitled to interest from March 20 rather than from the `due date,' there is no requirement that defendant admit the entire terms of the contract as contended for by the plaintiff but only that he admit a contract of sale of a stated quantity of described securities at a defined or stated price. This is sufficient to take the parol contract out of the statute so that it can be proven and enforced as proven. The court noted that when a contractual term is disputed by the parties, it raises a fact issue for the court, which should be decided in a manner consistent with the other terms of the contract admitted by the parties. See, e. g., Cargill, Inc., Commodity Marketing Div. v. Hale, 537 S.W.2d 667 (Mo.App.1976); Lewis v. Hughes, 276 Md. 247, 346 A.2d 231 (1975); Garrison v. Piatt, 113 Ga.App. 94, 147 S.E.2d 374 (1966). A major purpose of the Uniform Commercial Code's Statute of Frauds provision is to ensure the valid existence of a contract. Comment 1 to § 41-02-08 (2-201) states: All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a real transaction. Once the existence of the contract is established by such solemn evidence as testimony admitted under oath in court, the policy behind the statute is fulfilled, the oral modification of the contract becomes binding under § 41-02-16 (2-209), and the only remaining task is to ascertain the precise terms of the modification by properly admissible evidence. The only limitation placed upon the use of other evidence under § 41-02-08(3)(b) (2-201) is that the contract is not enforceable beyond the quantity of goods admitted. The trial court, after considering the evidence, concluded that the parties had agreed to a fifteen-day payment provision in their oral modification of the contract on December 5, 1972. Although Dangerfield denied such an agreement, the court apparently was persuaded by Markel's testimony, by the circumstances surrounding the December 5 meeting, and by the letter sent to Markel by Dangerfield on December 6, 1972, in which Dangerfield gave assurances that prompt payment would be forthcoming. While we do not accept Dangerfield's argument that that letter represents a confirmatory memorandum intended by the parties as a final expression of their agreement within the purview of § 41-02-09 (2-202), we do think the letter indicates Dangerfield's acceptance of a term modifying the original payment period, evidence consistent with Markel's testimony and sufficient for the trial court to conclude that the parties orally agreed to reduce the period between delivery and payment to fifteen days, a finding of fact which we cannot say is clearly erroneous. Rule 52(a), NDRCivP.