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When An Oral Agreement Is Perfectly Valid Under New York Law

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In the breach of contract context, one of the most common - and potent - defenses to these cases is that the agreement was never reduced to writing, and therefore barred by New York's Statute of Frauds. There is a narrow, but important exception to this rule: when the contract is terminable at will, or, in other words, if either party to the agreement is free to walk away at any time. This limited exception falls within the ambit of the larger exception that the Statute of Frauds does not apply to agreements that "are capable of being performed within one year." (For more on this topic, please see "How Some Important Exceptions to NY's Statute of Frauds Can Sustain a Breach of Contract Action.") This exception has been applied by New York's courts in several different contexts, ranging from the breach of an agreement to supply goods to oral joint business venture agreements - even when they apply to real estate (which normally must be reduced to writing as a matter of law). For example, in the recent case of Mendelovitz v. Cohen, a Brooklyn court held that a formal writing is not necessary to enforce such an oral joint venture agreement because the alleged joint venture agreement was capable of being performed within one year. Likewise, in the Queens County case of Reliable Realtors v. Guerre, where the parties' alleged joint venture was only to invest in and develop property, rather than creating a new property interest, the oral agreement was upheld as well. The moral of the story is clear: don't assume that your failure to reduce your agreement to writing is fatal to your breach of contract case.

Category: Breach of Contract


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