Gural v. Drasner, Appellate Division, First Department Index No. 103283/2008
The Appellate Division, First Department has limited the applicability of the part performance exception to the Statute of Frauds.
As many real estate lawyers know, the Statute of Frauds, which requires certain contracts for conveyances of interest in real property to be in writing and signed, contains an exception for “part performance.” by the party claiming the existence of a binding agreement. The alleged part performance must be “unequivocally referable” to the alleged contract. In Gural, the plaintiff attempted to enforce a purported oral agreement to improve land in exchange for a promise to use the land and to reimburse the plaintiff for his expenses upon the sale of the land. The plaintiff improved the land and used it as a pasture for his horses. Apparently, it takes more than one year to improve land so that it may be used for pasture. Thereafter, the land was sold and the seller/defendant did not pay plaintiff’s alleged expenses for the land’s improvement. The plaintiff contended that his improvement of the land constituted part performance taking the case out of the statute of frauds and entitling him to assert a claim based upon an alleged oral agreement to reimburse his expenses of improving the land upon its sale.
The Gural court held that the part performance exception could not apply. The part performance exception to the statute of frauds appears in General Obligations Law 5-703 which applies only to certain contracts concerning real property. But General Obligations Law 5-701, the general statute of frauds, applies to all contracts that cannot be performed in less than a year. Because it takes more than one year to improve land so that it may be used for pasture, General Obligations Law 5-701 applied to these facts. The text of General Obligations Law 5-701 does not contain a part performance exception. Thus, because the plaintiff was stating a claim within the scope of 5-701, the First Department ruled that it was compelled to grant summary judgment for the defendant. The plaintiff’s alleged contract was not in writing, could not be performed in less than one year, and no part performance exception was available.
The lesson of Gural is clear. Where the contract is incapable of being performed in less than one year, it must be written. Plaintiffs, then, are well-advised to structure cases alleging breach of an oral contract in such a manner as to insure that the contract can be performed in under one year.