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Current Developments in the Commercial Divisions of the
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Posted: October 12, 2015

Performance Exceptions to Statute of Frauds Unavailable to Defeat Summary Judgment Motion

On September 21, 2015, Justice Whelan of the Suffolk County Commercial Division issued a decision in Morais v. Malguarnera, 2015 NY Slip Op. 31831(U), rejecting a statute of frauds defense.

In Morais, the defendant raised the statute of frauds as an affirmative defense to the plaintiff’s partition claim. The defendant argued that partition should be denied because the oral agreement not to sell the property it alleged “was fully performed by the parties for almost 20 years.” The court disagreed, explaining:

[T]he court rejects the contention that [the defendant] has raised an issue of fact whether the alleged oral agreement is enforceable under an exception to the statute of frauds for full performance . . . . Pursuant to GOL 5-703(3), a contract to devise real property or establish a trust of real property, or any interest therein or right with reference thereto, is void unless the contract or some note or memorandum thereof is in writing and subscribed by the party to be charged therewith, or by his lawfully authorized agent. Black’s Law Dictionary defines performance as the successful completion of a contractual duty, usually resulting in the performer’s release from any past or future liability; execution (2) Also termed full performance. Through his counsel, [the defendant] claims that the alleged oral agreement has been partially performed by [the parties].

Part performance, also an exception to the statute of frauds, will render a contract enforceable only where such performance is unequivocally referable to the alleged agreement. That is, the acts relied upon to indicate part performance must be unintelligible, or at least extraordinary unless incident to the contract. If the actions of the parties are reasonably explicable on some other ground, they are not sufficient to take the case out of the statute.

[E]ven accepting as fact the allegation that [the parties] did not sell the properties for almost 20 years, [the defendant’s] contention that said act should be interpreted as part performance of an alleged oral contract not to sell without the consent of both parties is without merit. The fact that the property was not sold for an extended period of time is not the only reasonable explanation of that act.

(Internal quotations and citations omitted) (emphasis added).

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