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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: November 4, 2019

Statute of Frauds Bars Claim Based on Oral Guarantee of Rent Obligations

On October 16, 2019, Justice Borrok of the New York County Commercial Division issued a decision in 388 Broadway Owners, LLC v. Mary MeGee, on Television, Ltd., 2019 NY Slip Op. 33074(U), holding that the Statute of Frauds bars a claim based on an alleged oral guarantee of rent obligations, explaining:

Pursuant to General Obligations Law ยง 5-701, a special promise to answer for the debt of another person is void unless it is in writing and signed by the party to be charged with the obligation arising thereunder. Here, there is no evidence of a writing in which Ms. Megee personally guaranteed OTL’s rent, and 388 Broadway admits that no such writing exists. In his deposition testimony, Barry Leon acknowledged that the alleged personal guaranty was based on an oral agreement and was not reduced to a writing. Without such a writing, any alleged oral agreement in which Ms. Megee personally guaranteed OTL’s rent obligations violates the statute of frauds and is therefore unenforceable. 388 Broadway has failed to come forward with evidence to raise an issue of fact as to the enforceability of the purported personal guaranty of OTL’s rent. Accordingly, the branch of the motion for partial summary judgment as to Ms. Megee’s personal liability for OIL’s rent obligations is granted.

(Internal quotations and citations omitted).

New York contract law–usually straightforward–has traps for the unwary, like the requirement that some contracts be in writing (the statute of frauds). There are ways to escape from those traps, but the exceptions are narrow and difficult to meet. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.

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