## Facts

- DF Activities Corporation sought to purchase a Frank Lloyd Wright–designed “Willits Chair” from Dorothy Brown.
- DF alleged Brown orally agreed by telephone on November 26, 1986, to sell the chair for $60,000, payable in two installments.
- DF’s agent sent Brown a letter “confirming the agreement” and a $30,000 check.
- Brown returned the letter and check with a handwritten note stating she had “made other arrangements for the chair” and it was “no longer available for sale” to DF.
- Brown later sold the chair to another buyer for $198,000.
- DF sued in federal court under diversity jurisdiction for breach of contract, seeking damages equal to the difference between $198,000 and $60,000.
- Brown moved to dismiss, asserting the UCC statute of frauds barred the claim because there was no writing signed by her.
- In support, Brown submitted an affidavit denying any agreement to sell the chair and denying recollection of the alleged November 26 conversation, along with correspondence reflecting withdrawn offers during prior negotiations.
- DF sought discovery (including deposing Brown) to try to obtain an in-court admission that a contract had been made.

## Issues

1. Whether a complaint alleging an oral contract for the sale of goods over $500 is subject to dismissal under UCC § 2-201 when there is no signed writing and the defendant submits a sworn denial of any contract.
2. Whether a plaintiff may obtain discovery solely to attempt to elicit a future in-court admission bringing the case within UCC § 2-201(3)(b).
3. Whether the defendant’s handwritten note returning the buyer’s letter and check constituted an “admission” that a contract for sale was made under UCC § 2-201(3)(b).

## Decision

- The Seventh Circuit affirmed dismissal of DF’s breach of contract claim.
- The court held UCC § 2-201 barred enforcement because DF lacked a writing signed by Brown indicating a contract for sale.
- The court held DF was not entitled to discovery aimed only at trying to obtain a later admission contradicting Brown’s sworn denial, absent some existing evidentiary basis indicating an enforceable contract.
- The court held Brown’s handwritten note did not admit that a contract for sale had been made and therefore did not satisfy the judicial-admission exception in UCC § 2-201(3)(b).
- A dissent would have allowed greater district court discretion to permit limited discovery in some statute-of-frauds disputes.

## Legal Principles

- Under UCC § 2-201(1), a contract for the sale of goods for $500 or more is unenforceable without a writing indicating a contract for sale and signed by the party to be charged.
- The UCC § 2-201(3)(b) exception applies only when the defendant actually admits in pleadings, testimony, or otherwise in court that a contract for sale was made; speculation that discovery might produce such an admission is insufficient.
- A statement that negotiations have ended or that the goods are unavailable does not, without more, constitute an admission that a binding contract was formed.
- When the statute of frauds defeats enforceability on the existing record and the defendant provides a sworn denial, discovery may be denied where it serves only to search for a contradiction rather than to develop evidence already grounded in the record.

## Conclusion

The court enforced the UCC statute of frauds as a substantive bar, holding that absent a signed writing or an existing in-court admission of contract formation, a plaintiff cannot use discovery to try to manufacture an admission and avoid dismissal.


DF Activities Corp. v. Brown, 851 F.2d 920 (7th Cir. 1988)