One of the first things an attorney thinks about when defending claims based on oral contracts is whether such claims are barred by the Statute of Frauds. The State of Frauds is a common law defense which has been incorporated into statute in Florida.
Traditionally, the Statute of Frauds requires a signed writing in the following circumstances:
- Contracts in consideration of marriage. This provision covers prenuptial agreements.
- Contracts which cannot be performed within one year. However, contracts of indefinite duration do not fall under the statute of frauds regardless of how long the performance actually takes.
- Contracts for the transfer of an interest in land. This applies not only to a contract to sell land but also to any other contract in which land or an interest in it is disposed, such as the grant of a mortgage or an easement.
- Contracts by the executor of a will to pay a debt of the estate with his own money.
- Contracts for the sale of goods involving a purchase price of $500 or more.
- Contracts in which one party becomes a surety (acts as guarantor) for another party’s debt or other obligation.
However from a practitioner’s point of view the SOF generally needs to be considered with contracts not performed within one year. With respect to the “within one year performance” requirement, complete performance may successfully defeat the SOF defense.
Florida’s Statute of Frauds Provision
Promise to pay another’s debt, etc.
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No action shall be brought whereby to charge any executor or administrator upon any special promise to answer or pay any debt or damages out of her or his own estate, or whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person or to charge any person upon any agreement made upon consideration of marriage, or upon any contract for the sale of lands, tenements or hereditaments, or of any uncertain interest in or concerning them, or for any lease thereof for a period longer than 1 year, or upon any agreement that is not to be performed within the space of 1 year from the making thereof, or whereby to charge any health care provider upon any guarantee, warranty, or assurance as to the results of any medical, surgical, or diagnostic procedure performed by any physician licensed …, unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.
Complete Performance
Florida Courts have consistently held that, “… despite the non-performing party’s asserted defense, Florida law provides the performing party with possible counterarguments to the statute of frauds. According to the applicable case law, the statute of frauds cannot be used as a defense when an oral agreement has been fully performed by the other party. See, W.B.D., Inc. v. Howard Johnson Co., 382 So.2d 1323, 1327 (Fla. 1st DCA 1980); see also, Venditti-Siravo, Inc. v. City of Hollywood, Fla., 418 So.2d 1251, 1253 (Fla. 4th DCA 1982).
Further, it is well established that the statute of frauds may not be utilized as a defense to a verbal contract that has been fully performed on the part of the person claiming the benefit thereof. Dionne v. Columbus Mills, 311 So.2d 681 (Fla. 2d DCA 1975). The statute of frauds applies only to executory and not to executed contracts.[1] Miami Beach First National Bank v. Shalleck,182 So 2d 649 (Fla. 3d DCA.1966).
Partial Performance
In limited circumstances, partial performance of an oral contract will defeat a statute of frauds defense. Generally, a partial performance avoidance is appropriate in the case of land/property transactions.
COTTAGES, MIAMI BEACH, Inc., et al. v. WEGMAN,
The rule that the rendition of services by the promisee in consideration of the promisor’s oral pledge to convey an interest in land is ordinarily treated as equivalent to payment of the consideration of the contract, and, while this is not in itself sufficient part performance, the rendition of services together with possession of the property to which the contract relates is a sufficient part performance to take the contract out of the statute. 58 C.J. 1020; 101 A.L.R. 1095; Holmes v. Caden, 57 Vt. 111; Denlar v. Hile, 123 Ind. 68, 24 N.E. 170; Winfield v. Bowen, 65 N.J.Eq. 636, 56 A. 728; Ayres v. Short, 142 Mich. 501, 105 N.W. 1115.
This Court has held that the taking of possession and, in addition, the payment of some part or all of the consideration is such part performance as will take an oral contract out of the Statute of Frands. Pedrick v. Vidal, 95 Fla. 952, 116 So. 857; Clark & Lewis v. Gardner, 91 Fla. 1059, 109 So. 192; Demps v. Hogan, 57 Fla. 60, 48 So. 998.
PARTIAL PERFORMANCE TO AVOID STATUE OF FRAUDS DEPENDS ON RELIEF SOUGHT
(Specific Performance v. Action for Damages)
Where the contract is for the sale of land and the relief sought is for specific performance or other equitable relief, partial performance may remove an oral agreement from the statute of frauds. However, the doctrine of partial performance does not remove the bar of the statute of frauds for actions seeking damages based on the breach of an oral contract. See Hosp. Corp. of Am. v. Assocs. in Adolescent Psychiatry, 605 So. 2d 556, 558 (Fla. 4th DCA 1992) (noting the distinction that where the contract is for the sale of land and the relief sought is for specific performance, partial performance may remove the contract from the statute of frauds); see also Collier v. Brooks, 632 So. 2d 149, 153 (Fla. 1st DCA 1994) (holding that “the doctrine of partial performance is not available in an action solely for damages at law”); Miller Constr. Co. v. First Indus. Tech. Corp., 576 So. 2d 748, 750 (Fla. 3d DCA 1991) (holding that the doctrine of partial performance does not apply to personal service contracts); Johnson v. Edwards, 569 So. 2d 928, 929 (Fla. 1st DCA 1990) (“It is now well established that partial performance of a contract for personal services is not an exception to the provisions of the Statute of Frauds.” (citing Tobin & Tobin Ins. Agency, Inc. v. Zeskind, 315 So. 2d 518 (Fla. 3d DCA 1975); Rowland v. Ewell, 174 So. 2d 78 (Fla. 2d DCA 1965))).
Full performance of an oral agreement, however, may remove the agreement from the statute of frauds if the agreement is capable of being performed within a year and was, in fact, performed within one year.
LaRue v. Kalex Constr. & Dev., Inc., 97 So. 3d 251, 253-254 (Fla. Dist. Ct. App. 3d Dist. 2012)
[1] Courts often look to the bankruptcy courts for the definition of “executory contract” where such courts have adopted the definition of an executory contract as: “a contract under which the obligation of both the bankrupt and the other party to the contract are so far unperformed that the failure of either to complete performance would constitute a material breach excusing the performance of the other.” Countryman, Executory Contracts in Bankruptcy: Part I, 57 Minn. L. R. 439, 460 (1973); In re Murexco Petroleum, Inc., 15 F.3d 60 (5th Cir. 1994); In re Texscan Corp., 976 F.2d 1269 (9th Cir. 1992); United States v. Floyd, 882 F.2d 233, 235 (7th Cir. 1989); Sharon Steel Corp. v. National Fuel Gas Distrib. Corp., 872 F.2d 36, 39 (3d Cir. 1989); In re Speck, 798 F.2d 279, 279-80 (8th Cir. 1986); Gloria Mfg. Corp. v. International Ladies Garment Workers’ Union, 734 F.2d 1020, 1021 (4th Cir. 1984); In re Chateaugay Corp., 130 B.R. 162, 164 (S.D.N.Y 1991); H.R. Rep. No. 95-595, 95th Cong., 1st Sess. 347 (1977)(“[t]hough there is no precise definition of what contracts are executory, it generally includes contracts on which performance remains due to some extent on both sides.”).