Commercial Division Blog
Posted: November 22, 2014 / Categories Commercial, Contracts
Acceleration Clause Saves Oral Agreement for Payment Over Time from Invalidity Under the Statute of Frauds
On November 21, 2014, the Fourth Department issued a decision in Stevens v. Perrigo, 2014 NY Slip Op. 08195, affirming that provision for immediate payment under certain circumstances saved an oral agreement for payment over a five year period from being invalid under the statute of frauds.
In Stevens, the parties entered into an oral agreement for the purchase an accounting practice, with payments made over five years. When a dispute over the agreement arose, the defendant moved to dismiss on statute of frauds grounds. The Fourth Department affirmed the trial court's refusal to dismiss on this ground, explaining:
As long as an agreement may be fairly and reasonably interpreted such that it may be performed within a year, the statute of frauds will not act as a bar to enforcing it however unexpected, unlikely, or even improbable that such performance will occur during that time frame. Here, although the parties' original agreement provided that the purchase price would be paid in monthly installments over a period of five years, the agreement was revised to provide that if plaintiff, inter alia, transferred the accounting practice or ceased to practice for a period of 30 days, plaintiff would owe defendant the remainder of the purchase price in a lump sum. Thus, because plaintiff could have fully performed the alleged agreement within the first year by paying defendant such a lump sum, defendant did not meet her burden of establishing that the statute of frauds renders the agreement void and unenforceable.
(Internal quotations and citations omitted) (emphasis added).