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THE PARTIAL PAYMENTS MADE TOWARD THE DOWN PAYMENT ON THE REAL ESTATE PURCHASE CONTRACT DID NOT CONSTITUTE PART PERFORMANCE OF THE ALLEGED ORAL MODIFICATION OF THE AGREEMENT; THE STATUTE OF FRAUDS RENDERED THE ALLEGED ORAL MODIFICATION UNENFORCEABLE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the alleged oral modification of the real estate purchase contract was unenforceable pursuant to he statute of frauds. The original contract called for a $750,000 down payment by a specified date. The payment was not made. Plaintiff argued defendant had orally agreed to take installment payments toward the down payment and two partial payments had in fact been made and accepted. Plaintiff sued for specific performance of the contract. The defendant asserted the statute of frauds affirmative defense. The Second Department held that the two payments did not constitute part performance which would excuse the absence of a writing:

While the statute of frauds empowers courts of equity to compel specific performance of agreements in cases of part performance (see General Obligations Law § 5-703[4]), “the claimed partial performance must be unequivocally referable to the agreement” … . Unequivocally referable conduct is conduct that is “inconsistent with any other explanation” … . It is insufficient “that the oral agreement gives significance to plaintiff’s actions” … . “Rather, the actions alone must be ‘unintelligible or at least extraordinary,’ explainable only with reference to the oral agreement” … . “Significantly, the doctrine of part performance is based on principles of equity, in particular, recognition of the fact that the purpose of the Statute of Frauds is to prevent frauds, not to enable a party to perpetrate a fraud by using the statute as a sword rather than a shield” … . S&G Golden Estates, LLC v New York Golf Enters., Inc., 2023 NY Slip Op 02548, Second Dept 5-10-23

Practice Point: In order to constitute part performance of a contract such that the statute of frauds does not apply, the part performance must be inconsistent with any other explanation. The actions must be explainable only with reference to the oral agreement (not the case here).

 

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