Contracts and Sales Multistate Bar Practice Exam

Which of the following exceptions allows for oral contracts to be enforceable despite the statute of frauds?

1. Promising repayment for a loan of any amount

2. Specially made goods for a specific buyer

3. Any verbal agreements made in front of witnesses

4. A vague commitment to an undisclosed service

The correct answer is: Specially made goods for a specific buyer

The correct answer is that specially made goods for a specific buyer are an exception to the statute of frauds, allowing oral contracts to be enforceable. This exception is based on the principle that if goods are uniquely manufactured for a particular buyer and are not suitable for sale to others, a contract for those goods does not fall within the requirements of the statute of frauds, which typically necessitates a written agreement for certain types of contracts, such as those involving the sale of goods over a specific value. When the goods are specially made, the seller’s reliance on the buyer’s order creates a situation where it would be unfair or unjust to allow the buyer to back out of the agreement, particularly if the seller has commenced production based on the buyer’s request. This exception ensures that sellers can enforce agreements related to unique or customized items without a written contract, recognizing the practical realities of business transactions. Other options do not adequately align with the exceptions to the statute of frauds. For example, simply promising repayment for a loan typically requires written documentation if the amount exceeds a certain threshold. Verbal agreements made in front of witnesses or vague commitments to services generally do not meet the stringent requirements for enforcement without written evidence, as they lack the specificity and clarity necessary to