Commercial Division Blog

Posted: October 11, 2013 / Categories Commercial, Contracts

Failure to Comply With Statute of Frauds Bars Any Kind of Action Based On The Alleged Promise

On October 4, 2013, Justice Emerson of the Suffolk County Commercial Division issued a decision in Saldano v. Precision CNC Corp., 2013 NY Slip Op. 51633(U), addressing whether parties which allegedly promised a co-tenant in the same commercial building (which was in default of its lease) that they would take over the lease and permit the co-tenant to continue its business in the same premises as a sub-tenant could be liable not only for breaching the promise but also fraud, for taking over the space and then using that as an opportunity to allegedly steal the co-tenant’s customer. In partially granting defendants motion to dismiss, Justice Emerson held that because the alleged promise concerning real property was unenforceable under the statute of frauds, it could not be the basis for either a breach of contract or fraud action:

An agreement that is unenforceable under the statute of frauds is unenforceable for all purposes and cannot be the basis of another action (61 NY Jur 2d Frauds, Statute of §312). Such a contract confers no rights and creates no obligations between the parties, and no claim can be founded on it against third persons (Id.) It cannot be enforced either directly or indirectly in an action for damages for breach, for specific performance, for fraud and deceit if that action depends on proof of the oral agreement, or for malicious interference therewith. (Id.) In short, the ban of the statute of frauds extends to any device calculated to evade the legislative mandate rendering unenforceable the original obligation. (Id.)