Supreme Court Allows Cause of Action Concerning Oral Sales Contract to Proceed

A recent decision from the Supreme Court, New York County, demonstrates how courts can handle oral contracts between business people. The case involved issues of business law, contract law and civil practice.

The case, Maya NY, LLC v. Hagler, 2012 N.Y. Misc. LEXIS 1711 (Sup. Ct. N.Y. County, April 3, 2012),   involved a loan and investment agreement between two businesses which were supposedly orally guaranteed by the business’ owner. The defendant moved to dismiss the claims, alleging that the oral agreement violated the Statute of Frauds, which can bar enforcement of an oral contract under certain circumstances. The Court dismissed a number of the plaintiff’s contract claims, noting that the plaintiff either had not filed suit early enough or that the claims were barred by the Statute of Frauds. However, the Court declined to dismiss other claims, noting that even though the investment agreement was in effect for more than one year, it technically could have been fully performed within one year. Accordingly, the Court allowed the claim to go forward, noting that the Statute of Frauds would only bar enforcement of an oral contract where there was “absolutely no possibility of full performance within one year.”

Maya NY is an example of issues which many businesses face when trying to enforce verbal contracts. At Tesser, Ryan & Rochman, our attorneys’ experience with business contracts allows us to recognize issues concerning the enforceability of business deals (both oral and written) and anticipate possible ways to address enforceability.