Under the UCC, a good faith oral modification by merchants that violates the Statute of Frauds has which combination of effects?

Under the UCC, a good faith oral modification by merchants that violates the Statute of Frauds has which combination of effects?

• A. The modification is not enforceable, and it may also operate as a waiver that cannot be retracted if relied upon
• B. The modification is enforceable and does not require writing
• C. The modification cancels the contract
• D. The modification has no effect

Answer: (A)

The key idea is how the UCC handles modifications and the Statute of Frauds. A contract for the sale of goods can be modified in good faith without new consideration, but if the modification would bring the contract within the Statute of Frauds (for example, making it a deal that would require a writing), that modification generally must be in writing to be enforceable. However, there’s also a waiver concept between merchants: a party can waive the writing requirement by acting on the oral modification, and if the other party relies on that waiver, the waiver can become binding. But the modification itself isn’t enforceable as a new contract term unless there’s compliance with the writing requirement or sufficient reliance to create a binding waiver. So, an oral good faith modification by merchants that would violate the Statute of Frauds is not enforceable as a modification, yet it may operate as a waiver of the writing requirement. If the other party relies on that waiver, the waiver cannot be retracted. That combination fits the described answer.

The key idea is how the UCC handles modifications and the Statute of Frauds. A contract for the sale of goods can be modified in good faith without new consideration, but if the modification would bring the contract within the Statute of Frauds (for example, making it a deal that would require a writing), that modification generally must be in writing to be enforceable. However, there’s also a waiver concept between merchants: a party can waive the writing requirement by acting on the oral modification, and if the other party relies on that waiver, the waiver can become binding. But the modification itself isn’t enforceable as a new contract term unless there’s compliance with the writing requirement or sufficient reliance to create a binding waiver.

So, an oral good faith modification by merchants that would violate the Statute of Frauds is not enforceable as a modification, yet it may operate as a waiver of the writing requirement. If the other party relies on that waiver, the waiver cannot be retracted. That combination fits the described answer.