In the world we live in, we make agreements with other people, with companies, and with other businesses. Sometimes they’re formal and in writing, but other times (in the real world), they are not. Can that agreement be enforceable if it’s not in writing? It could be. If it is in writing, is it foolproof?
First, written agreements obviously are preferred. In a perfect world, all agreements would be in writing. How foolproof are they? To the extent that they clearly state the intentions of the parties, the parties should be able to rely on that agreement to enforce its terms. Clarity is what is important. Parties should try and make sure, and have their lawyers make sure, that their written agreements state very clearly what they’ve agreed upon.
Resorting to legalese and scattered Latin oftentimes are not effective or helpful. If an agreement is not well drafted, or is ambiguous, a court can look outside of the four corners of the document to try and determine what the parties intended. Leaving it up to a third party to determine the intentions of the parties and the meaning of contractual provisions should be avoided whenever possible.
What happens if the agreement is not in writing? Can it be enforced?
The answer is, it depends. New York, like other states, has a “Statute of Frauds” (General Obligations Law Section 5-701). The Statute of Frauds provides, in part, that an agreement that, by its terms, is not to be performed within one year is void if not in writing. (There are other types of agreements which have to be in writing in all circumstances to be enforced, such as guarantees of the obligations of others.) Therefore, when considering an oral agreement, the first question then is whether or not it is enforceable or void under the Statute of Frauds, and the second question becomes a question of proof.
With respect to whether or not it is enforceable, if the contract is capable of being performed within one year and is not one of the specifically enumerated agreements that must in all instances be in writing, it will be enforced. If it is not capable of being performed within a year, or is one of those enumerated agreements, it will not be.
The larger question, of course, is proof. What are the terms of the agreement? If in writing, the terms should be clear. If not in writing, the parties will have to establish the terms through oral testimony or other evidence. The parties could agree on the terms, or there could be a significant amount of credible evidence establishing them; or the decider of fact may have to choose between two different versions—a “he said-she said” situation. How do you avoid that? Put it in writing.
Contact me today with questions or comments.
Bart J. Eagle
Attorney & Mediator
1700 Broadway, 41st Floor
New York, New York 10019