Cravotta v. Deggingers' Foundry, Inc.
215 P.3d 636, 42 Kan. App. 2d 700, 2009 Kan. App. LEXIS 828 (2009)
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Rule of Law:
Under the Uniform Commercial Code, the statute of frauds does not bar evidence of an unwritten contractual term when the existence of a contract for the sale of goods is not in dispute. The admissibility of such evidence is properly determined under the parol evidence rule, which requires a court to ascertain whether the parties intended their writing to be a complete and exclusive statement of their agreement.
Facts:
- In April 2003, Mark Cravotta hired Deggingers’ Foundry, Inc. to manufacture custom chandeliers, sconces, and lanterns for $106,000.
- The initial two-page contract included a 10-step production plan that mentioned a "Final engineering review of the shop drawings."
- During the project, Degginger repeatedly requested crucial information from Cravotta about the mansion's unusual and high-voltage electrical system, believing it was necessary for safe wiring.
- Cravotta never provided the requested electrical system information.
- After disputes arose, the parties entered into a settlement agreement in February 2006, requiring Degginger to complete and deliver the remaining items by April 15, 2006.
- The written settlement agreement did not explicitly state that Cravotta had a duty to provide electrical information.
- Degginger failed to deliver the items by the April 15, 2006 deadline, claiming the failure was due to Cravotta's refusal to provide the necessary electrical specifications.
Procedural Posture:
- On June 20, 2005, Mark Cravotta filed a breach of contract lawsuit against Deggingers’ Foundry, Inc. in the Shawnee County district court, which is the court of first instance.
- The parties subsequently reached a settlement agreement on February 3, 2006, which was entered into the court record to resolve the lawsuit.
- After the settlement deadline passed, Degginger filed motions alleging Cravotta had breached the settlement agreement first.
- The district court held a trial to determine which party breached the settlement agreement.
- The district court found that the UCC statute of frauds barred Degginger's defense and entered judgment for Cravotta for $62,478.22 plus $6,000 in attorney fees.
- Deggingers’ Foundry, Inc. (appellant) appealed the district court's judgment to this court (the intermediate appellate court), with Mark Cravotta as the appellee.
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Issue:
Does the Uniform Commercial Code's statute of frauds bar a party from introducing evidence of an unwritten contractual duty when the existence of the contract and the quantity of goods are not in dispute?
Opinions:
Majority - Hill, J.
No. The Uniform Commercial Code's statute of frauds does not bar evidence of an unwritten term when the contract's existence is undisputed; rather, admissibility depends on the parol evidence rule. The trial court erred by exclusively relying on the statute of frauds (K.S.A. 84-2-201) to bar Degginger's defense. The purpose of that statute is to provide evidence that a contract was made, but it does not require all terms to be in writing. Since both parties admitted a contract existed, the proper analysis falls under the parol evidence rule (K.S.A. 84-2-202). The trial court should have conducted a factual inquiry to determine if the parties intended their settlement agreement to be a final and complete integration of their terms. If not fully integrated, the agreement could be explained or supplemented by evidence of course of dealing, course of performance, or consistent additional terms, such as Cravotta's alleged duty to provide electrical information. The case is remanded for the district court to make these factual findings.
Analysis:
This decision clarifies the distinct functions of the UCC's statute of frauds and the parol evidence rule. It establishes that once the statute of frauds' basic requirements are met (a writing indicating a contract exists), it ceases to be a barrier to proving additional, unwritten terms. The analysis must then shift to the more flexible parol evidence rule, which directs courts to consider the commercial context of the agreement, including course of performance and trade usage. This precedent reinforces the UCC's policy of interpreting contracts in a practical, real-world manner, preventing a party from using the statute of frauds as a technicality to exclude relevant evidence of the parties' true understanding.
