Potter v. Hatter Farms, Inc.
641 P.2d 628, 56 Or.App. 254, 29 A.L.R. 4th 997 (1982)
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Rule of Law:
The doctrine of promissory estoppel can be used as an exception to the Uniform Commercial Code's (UCC) Statute of Frauds, allowing for the enforcement of an oral contract for the sale of goods over $500 when a party reasonably relies on the promise to their substantial detriment.
Facts:
- Plaintiff Charles Potter, a turkey hatchery operator, and Gil Kent, a manager for defendant Hatter Farms, a turkey grower, discussed a potential sale of turkey poults.
- In January 1979, Potter and Kent met and orally agreed that Potters would sell Hatter Farms 192,000 poults for eighty cents each, plus additional service charges.
- The parties agreed that transportation from Oregon to Oklahoma should take no more than 40 hours but left the specific method of transportation to be decided later.
- In June 1979, Potter, who had received purchase offers from California customers for the same poults, met with Hatter Farms to confirm their continued interest.
- After the June meeting, Potter believed Hatter Farms still intended to purchase the poults.
- Relying on this belief, Potter turned down the offer from the California buyers.
- In August 1979, Gil Kent informed Potter that Hatter Farms would be unable to purchase the poults.
Procedural Posture:
- Plaintiffs (Potters) filed an action for breach of an oral contract against Defendant (Hatter Farms) in an Oregon trial court.
- The trial court denied Hatter Farms' motion for summary judgment, which argued the contract was unenforceable under the UCC Statute of Frauds.
- Following a trial, the jury returned a verdict in favor of the Potters.
- The trial court denied Hatter Farms' motions for a directed verdict and for judgment notwithstanding the verdict (n.o.v.).
- Hatter Farms, as appellant, appealed the judgment to the Court of Appeals of Oregon, with the Potters as appellees.
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Issue:
Does the doctrine of promissory estoppel operate as an exception to the Uniform Commercial Code's Statute of Frauds requirement that contracts for the sale of goods over $500 must be in writing?
Opinions:
Majority - Gillette, P. J.
Yes, the doctrine of promissory estoppel can bar the application of the UCC Statute of Frauds. The UCC explicitly provides that general principles of law and equity, including estoppel, supplement its provisions unless they are specifically displaced. The UCC's Statute of Frauds (ORS 72.2010) does not expressly displace the doctrine of estoppel; legislative silence is insufficient to do so. Furthermore, applying promissory estoppel aligns with the UCC's overriding obligation of good faith (ORS 71.2030), as it prevents a party from inducing detrimental reliance on an oral promise and then using the statute as a shield to escape liability. This exception does not nullify the statute but rather prevents its use as an instrument of fraud, balancing the need for commercial certainty with equitable principles.
Analysis:
This decision establishes that promissory estoppel is a valid, non-statutory exception to the UCC Statute of Frauds in Oregon, aligning the state with a significant number of other jurisdictions. It clarifies that the enumerated exceptions within the UCC's Statute of Frauds are not exclusive. The ruling reinforces the principle that the UCC is not merely a set of rigid rules but is supplemented by equitable doctrines to prevent injustice and bad faith, ensuring that the Statute of Frauds serves its purpose of preventing fraud rather than facilitating it.
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