On January 2, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in Brand X Editions, Ltd. v. Wool, 2014 NY Slip Op. 50005(U), addressing the applicability of the UCC Statute of Frauds (§ 2-201) to a contract to produce artworks.
In Brand X Editions, the plaintiff printer and the defendant artist entered into an agreement to produce original artworks in which the printer would cover all production costs in exchange for title in 1/3 of the artworks created. After the parties’ relationship broke down and the printer sued for breach of contract, the defendant moved to dismiss on the grounds that no signed writing existed sufficient to satisfy the UCC statute of frauds.
The court rejected this argument for two reasons. The principal reason was that the arrangement between the parties was not a sale of goods covered by the UCC:
In this case, the parties’ agreement was to collaborate on the creation of artwork. Wool, the artist, provided artistic vision, while Brand X, the artisan printer, leveraged its unique methods to bring Wool’s vision to life. Their combined efforts led to the creation of artwork. The parties agreed that, of the completed works to which each contributed, Wool would keep two-thirds and Brand X would keep one-third. This agreement is not a sale. Rather, it is an agreement to divide the fruits of the parties’ joint venture. . . . Consequently, this is not a case in which goods are provided in consideration for services. . . . In contrast, in this case, title to the works did not exist at the time the parties entered into their agreement since the works did not yet exist. The very point of the parties’ agreement was to decide who gets title to the works once they were jointly created. Hence, there is no sale, since title to the works never transferred between the parties.
In the alternative, the court held that even if the UCC applied, an email sent by Brand X to Wool setting forth the “parameters of the parties’ agreement,” which Wool never objected to, was sufficient to satisfy the statute of frauds.
As in other situations where the Statute of Frauds comes into play, the lesson is that if the subject matter of the agreement was substantial enough to sue about when there were problems, it was substantial enough that the parties should have memorialized it in writing.