Buffaloe v. Hart
441 S.E.2d 172 (1994)
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Rule of Law:
An oral contract for the sale of goods over $500, though normally unenforceable under the Statute of Frauds, can be enforced if the parties' conduct demonstrates part performance, such as when the buyer receives and accepts the goods or the seller accepts payment.
Facts:
- Homer Buffaloe, a tobacco farmer, had an oral agreement to rent five tobacco barns from Patricia and Lowell Hart for the 1988 farming year.
- In late October 1988, Buffaloe and the Harts made a handshake agreement for Buffaloe to purchase the five barns for $20,000, to be paid in four annual installments of $5,000.
- Buffaloe was already in possession of the barns from the prior rental agreement and continued to possess them after the sale agreement.
- During 1989, Buffaloe acted as the owner by reimbursing the Harts for insurance coverage on the barns, paying for repairs, and placing a newspaper advertisement to sell them.
- On October 23, 1989, Buffaloe delivered a personal check for $5,000 to Mrs. Hart as the first installment payment, with the check's 'for' line indicating it was for the five barns.
- Mrs. Hart initially accepted the check and offered a receipt.
- The next night, Mrs. Hart called Buffaloe to repudiate the sale, stating she had sold the barns to someone else.
- A few days later, Buffaloe received a letter containing his check, which Mrs. Hart had torn up before mailing it back.
Procedural Posture:
- Homer Buffaloe filed a complaint for breach of contract against Patricia and Lowell Hart in Franklin County Superior Court (trial court).
- The case was tried before a jury.
- At the close of the plaintiff's evidence, the Harts (defendants) moved for a directed verdict, which the trial court denied.
- At the close of all evidence, the Harts again moved for a directed verdict, which was also denied.
- The jury returned a verdict for Buffaloe (plaintiff), finding that a contract existed, that it was breached, and awarded $21,000 in damages.
- The Harts filed a motion for judgment notwithstanding the verdict, which the trial court denied.
- The Harts (defendants-appellants) appealed the denial of their motions to the Court of Appeals of North Carolina (intermediate appellate court).
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Issue:
Does an oral contract for the sale of goods over $500 become enforceable under the part performance exception to the UCC Statute of Frauds when the buyer exercises ownership over the goods and the seller temporarily possesses a check for partial payment before returning it?
Opinions:
Majority - Greene, Judge
Yes, an oral contract for the sale of goods over $500 can become enforceable under the part performance exception. The court first determined that the contract did not satisfy the primary writing requirement of the UCC Statute of Frauds (N.C.G.S. § 25-2-201(1)) because the check, though containing the essential terms, was not signed by the Harts, the party against whom enforcement was sought. However, the court then analyzed the part performance exception under § 25-2-201(3)(c), which allows enforcement 'with respect to goods for which payment has been made and accepted or which have been received and accepted.' The court found there was substantial evidence for a jury to conclude both conditions were met. Buffaloe's conduct—possessing the barns, paying for insurance and repairs, and attempting to sell them—constituted 'acceptance' of the goods. Similarly, Mrs. Hart's physical acceptance and possession of the check for a few days before returning it was sufficient evidence for a jury to find she had 'accepted' the payment, even though the check was never cashed. Therefore, the parties' conduct took the oral agreement out of the Statute of Frauds, making it enforceable.
Analysis:
This decision clarifies the application of the part performance exception to the UCC Statute of Frauds, particularly what constitutes 'acceptance' of goods and payment. It establishes that 'acceptance' is a question of fact for the jury, which can be inferred from the parties' conduct rather than requiring formal acknowledgment. The ruling's significance lies in its broad interpretation of accepting payment, suggesting that a seller's temporary physical possession of a check can satisfy the statute, even if the check is ultimately returned and uncashed. This lowers the bar for enforcing oral contracts where the parties have begun to act on their agreement, providing a pathway to enforcement where a signed writing is absent.
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