One of the first things lawyers check for when contesting an oral contract is the statute of frauds. The statute of frauds comes from an English rule dating back to the 1600’s. At its most basic level, the statute of frauds requires certain types of contracts to be in writing or else they are not enforceable in court actions. However, sometimes, even when a contract is in writing, it still will not satisfy the statute of frauds.
That is what happened in SS-II, LLC v. Bridge Street Associates, an advanced opinion released today by the Connecticut Supreme Court. The dispute involved an option to purchase property pursuant to a commercial lease that was in writing. The tenant wanted to exercise the option and the seller did not want to close on the sale.
When the tenant brought a lawsuit for specific performance trying to force the sale, the owner raised the Connecticut Statute of Frauds as a defense and won in court. In Connecticut, the agreements that must be in writing under the statute of frauds include the following:
- any agreement by any executor promising to answer damages out of his own property
- any promise to answer for the debt, default or miscarriage of another
- any agreement made upon consideration of marriage
- any agreement for the sale of real property or any interest in or concerning real property
- any agreement that is not to be performed within one year
- any agreement for a loan in an amount which exceeds fifty thousand dollars.
Not only do these agreements have to be in writing, but they also have to contain the contract’s essential terms. In a contract to sell land, the terms must describe a certain price, the parties to the contract, and the land. In the SS-II case, the contract did not comply with the statute of frauds because the purchase price was not certain and was subject to some conditions. Although there are counter defenses to the statute of frauds, such as partial performance, the court deemed that they did not apply.
The takeaway from this case is to be cautious with oral contacts and do not assume a writing alone will make the agreement enforceable. A contract has to be in writing, signed, and have the proper terms in it or else you may not have an enforceable agreement if the statute of frauds applies.