Statute of Frauds. Carol Mann and Gerald Harris worked for Helmsley-Spear, Inc (HSI), as account managers for various HSI properties. In 1983, each received a bonus of $50,000 for their work in converting an HSI apartment complex, known as Windsor Park,

Question

into a cooperative housing unit. The conversion had taken several years to complete. After they had finished the Windsor Park conversion, they were asked to work on another cooperative conversion of two HSI apartment buildings known as Park West Village. Mann and Harris were orally promised compensation, over and above their base salaries, on the basis of a formula similar to the one that had been orally agreed upon with regard to the Windsor Park conversion. In 1987, after they had completed the conversion of Park West Village, they were fired, and HSI refused to pay them the additional compensation. Among other things, HSI contended that their oral agreement concerning the extra compensation was unenforceable under the Statute of Frauds. How should the court rule on this issue, and why?

Answer 1

Statute of Frauds
The court ruled that the oral agreement was "outside the ambit of the Statute of Frauds because the agreement, by its terms, was not incapable of performance within one year." The court stated the general rule (in New York): "The fact that [it] is improbable, or almost impossible, that an oral contract which is susceptible of performance within one year, will actually be fully performed within such period, generally, but not invariably, does not result in bringing such agreement within the scope of the one-year statute of frauds. * * * The test, then, is possibility or impossibility, rather than probability or improbability, of performance within the statutory period." Quoting from an earlier case, the court pointed out that "[t]he critical test * * * is whether ‘by its terms' the agreement is not to be performed within a year. Since neither party has contended that the alleged agreement contained any provision which directly or in-directly regulated the time for performance, the agreement is not within the bar of [the Statute of Frauds]."