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Contract Which Theoretically Could Be Completed in a Year, Even If Highly Unlikely, Survives Statute of Frauds Defense

The Fourth Department determined a contract which could possibly be performed in a year, even though such performance is unlikely, survives the statute of frauds defense:

…[D]efendants contend that Supreme Court erred in determining that an alleged oral agreement between the parties is not void and unenforceable pursuant to the statute of frauds (see General Obligations Law § 5-701 [a] [1]…).  The alleged oral agreement provided that defendants would purchase plaintiff’s business for $480,000 and make an initial payment of $10,000, followed by 23 monthly payments of $20,000 and a final payment of $10,000.  No party asserted that prepayment of the purchase price was prohibited under the alleged oral agreement.  Plaintiff asserted that she fully performed her obligations under the alleged oral agreement and that defendants made several payments thereunder before defaulting. …

Taking plaintiff’s “allegations as true and resolv[ing] all inferences which reasonably flow therefrom in [her] favor” …, we conclude that the court properly denied the motion.  “As long as [an] agreement may be ‘fairly and reasonably interpreted’ such that it may be performed within a year, the [s]tatute of [f]rauds will not act as a bar [to enforcing it] however unexpected, unlikely, or even improbable that such performance will occur during that time frame” … .  Here, the absence of a term prohibiting payment in full within the first year makes possible full performance of the alleged oral agreement within that year, and thus defendants did not meet their burden of establishing that the statute of frauds renders the alleged oral agreement void and unenforceable… . DeJohn v Speech, Language & Communication Associates …, 1082, 4th Dept 11-8-13

 

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