Thursday, December 3, 2009

Contracts/Sales: Statute of Frauds

Question:

When an oral agreement is made for the purchase of land and a statute of frauds defense is asserted by the defendant, but the plaintiff has partially performed by making a down payment(accepted by seller) but the buyer and seller dispute what the final agreed to price is, will the court find partial peformance and enforce the sale? If so, how would they determine the total price to be paid by the buyer?


Response:

Part performance is an exception to the rule that contracts creating an interest in land must be memorialized in writing (as per the statute of frauds). All this means is that if there is part performance, for example in the manner you've stated in your question, then the contract need not have been in writing to be enforceable. In other words, the statute of frauds will not apply. Keep in mind, that part performance usually requires more than simply partial payment; usually the purchaser of the land will have to have taken possession, or made valuable improvements upon the land.

The court will look towards any evidence available to determine how much the parties intended as a contract price, and provided that price is not too indefinite, then specific performance can be awarded so that the buyer can remain in possession of the land, even though the contract was not in writing.

--Sean