In a recent decision, Hopwood v. Infinity Contracting Services Corp., a New York appellate court addressed the application of the statute of frauds in a dispute concerning compensation for negotiating business opportunities. The plaintiffs alleged that Infinity Contracting Services Corp. (“Infinity”) had failed to honor an oral agreement to pay a commission for securing a contract with the New York City Department of Education (“DOE”). According to the plaintiffs, Infinity’s CEO had verbally agreed to pay them 5% of the contract’s value for their role in procuring the DOE contract. However, Infinity allegedly failed to fulfill this promise, prompting claims for breach of contract and unjust enrichment.
At the trial level, the court granted Infinity’s motion for summary judgment, dismissing the breach of contract and unjust enrichment claims on the basis that they were barred by the statute of frauds. This legal doctrine requires that certain agreements, including those involving compensation for negotiating business opportunities, be in writing and signed by the party to be charged. The appellate court upheld the dismissal, finding that the emails presented by the plaintiffs were insufficient to satisfy the statute of frauds, as they lacked the essential terms of a binding agreement.
For a writing to comply with the statute of frauds, it must designate the parties involved, describe the subject matter, and set forth all essential terms necessary to form a complete agreement. In this case, the court concluded that the emails did not meet these requirements, and as a result, the plaintiffs’ claims for breach of contract and unjust enrichment could not proceed.
This decision highlights the importance of putting business agreements in writing to ensure enforceability. The New York Statute of Frauds, codified in General Obligations Law § 5-701, requires that certain agreements be in writing and signed by the party to be charged in order to be enforceable. These include agreements that cannot be performed within one year, contracts involving real property, promises to answer for the debt of another, agreements made in consideration of marriage, promises to make a testamentary disposition, contracts for the sale of goods over $500, and agreements to pay compensation for negotiating a business opportunity.
This case serves as a reminder of the limitations of oral agreements and the potential pitfalls associated with failing to comply with statutory requirements. By ensuring that agreements are properly documented in writing, parties can avoid disputes, establish clear expectations, and safeguard their rights.
Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel in the New York office of Duane Morris LLP, where he is a member of the Construction Group and of the Cuba Business Group. Mr. Aquino focuses his practice on construction law, lien law and government procurement law. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys.