Heritage, a general contractor, had filed a breach of contract action against an electrical subcontracting firm that had withdrawn its bid right before the contract was to be performed. A jury had found in favor of the contractor. The subcontractor appealed, arguing, among other grounds, that the statute of frauds barred Heritage’s claim.
Since the agreement is subject to the statute of frauds, we must now determine whether the written agreement or memorandum is sufficient to satisfy the statute.
To satisfy the statute, the writings must be complete in every material detail and contain all of the essential elements of the agreement so that the contract can be ascertained from the writings without resorting to oral testimony. One of the essential elements of the agreement is that it identify the parties to the agreement…. In Cohen, the administrator of the estate of Byron M. McKnight (Cohen) sued Jerry, Gene and Alma McCutchins in a third-party action to recover certain drilling costs due pursuant to two written agreements allegedly entered into by the McCutchinses with McKnight. Before his death, McKnight had entered into an agreement with American Quasar Petroleum Co. to participate in the drilling and completion of an exploratory well in Ward County, Texas.
Although drilled and completed, production of the well was not sufficient to pay the costs. After McKnight’s death, American Quasar sued Cohen, as administrator of McKnight’s estate, to recover McKnight’s share of the drilling costs. Cohen, in turn, filed a third-party action against the McCutchinses seeking to recover their pro rata shares of the costs owed by them pursuant to two written agreements they had allegedly entered into with McKnight. Under these agreements, McKnight allegedly assigned portions of his working interest to each of the McCutchinses. Although the letter agreements were signed by each McCutchins, they were not signed by McKnight and did not identify him in any way…. Under these facts, the Supreme Court held that, since there was no writing that identified McKnight as a party to the letter agreements, the memoranda were insufficient to satisfy the statute of frauds.
This case presents a similar scenario. Heritage points to two writings as supplying the essential terms of the agreement. First, it points to Electric’s written bid.
Electric’s bid is written on the letterhead of Chrietzberg Electric, Inc., and, after reciting that it is regulated by the Texas Department of Licensing and Regulation and giving that department’s contact information, reads as follows:
10/20/2011 East WWTP TexAmerica Gentlemen, Here is our quote for the above project. It includes, but is not limited to, the following:
1. All electrical as specified on the plans and specs with the following clarifications:
2. All SCADA work as specified by the plans and specs.
3. The generator, ATS, fuel, and related appurtenances.
4. Reznor Unit heater.
5. I am in receipt of 6 addenda.
6. All labor, materials, no tax, and all else to complete the job….
Thank you, Nowhere in the written bid is Heritage mentioned or identified as the recipient of the bid. Oral testimony was necessary to identify Heritage as the recipient of the bid. Heritage also asserts that the TexAmericas plans and specifications should be considered part of the agreement. Heritage introduced the Notice to Bidders, the Table of Contents, Division 16 (electrical specs), Section 13400, and Section 13420 of these plans. Again, in none of these documents is Heritage mentioned or identified. Since none of the writings mention Heritage or identify Heritage as a party to the agreement, and oral testimony was necessary to supply an essential term of the agreement, they are insufficient to satisfy the statute of frauds.
Judgment REVERSED in favor of Chrietzberg Electric.
CRITICAL THINKING:
Notice that the court relied on an analogy in coming to its decision that the writing was insufficient. Do you think the analogy is strong? Why or why not? Can you think of any other argument that Heritage might have made to obtain compensation in this case?
ETHICAL DECISION MAKING:
What values are enhanced by this decision? What values were given less weight by the judges in this decision?