Breach of Oral Contract Claim Barred by Statute of Frauds

On August 21, 2019, the Second Department issued a decision in Martin Greenfield Clothiers, Ltd. v. Brooks Bros. Group, Inc., 2019 NY Slip Op. 06225, holding that a claim for breach of an oral contract was barred by the statute of frauds, explaining:

Pursuant to the terms of an alleged oral agreement, the plaintiff, a men's tailored clothing manufacturer, was to be the exclusive manufacturer of certain custom suits for the defendant, a retail clothier. As per the terms of the alleged oral agreement, either party could terminate the agreement upon one-year notice. Allegedly, the defendant breached the oral agreement by terminating it without providing the requisite notice.

Based on the foregoing, the plaintiff, by its amended complaint, sought to recover damages for breach of contract and under the theory of promissory estoppel. The defendant made a pre-answer motion pursuant to CPLR 3211(a) to dismiss the amended complaint. The Supreme Court granted the motion, and the plaintiff appeals.

We agree with the Supreme Court's determination directing dismissal of the plaintiff's breach of contract cause of action pursuant to CPLR 3211(a)(5), since the alleged oral agreement is unenforceable as violative of the statute of frauds. The plaintiff's contention that UCC 2-201(1) is not applicable to the alleged oral agreement is improperly raised for the first time in a reply brief on appeal. Further, contrary to the plaintiff's contention, the alleged oral agreement does not fall within the exception to UCC 2-201(1) for specially manufactured goods. Moreover, the alleged oral agreement, which by its terms cannot be performed within one year, also is unenforceable under General Obligations Law § 5-701(a)(1).

(Internal quotations and citations omitted).

Contract law--usually straightforward--has traps for the unwary, like the requirement that some contracts be in writing (the statute of frauds). And as this decision shows, sometimes there are ways to escape from those traps, but the exceptions are narrow and, as shown here, difficult to meet. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.