Oral Joint Venture Agreement Barred by Statute of Frauds

On October 7, 2019, Justice Scarpulla of the New York County Commercial Division issued a decision in MProsiemo Ltd. v. Vaygensberg, 2019 NY Slip Op. 32955(U), holding that an oral joint venture agreement was barred by the statute of frauds, explaining:

Vaygensberg argues that, even if the Ukrainian Agreement does not constitute a joint venture under New York law, it constitutes an oral agreement that is not barred by the statute of frauds. Nefyodov and MProsiemo argue that the statute of frauds bars the Ukrainian Agreement because it relates to the purchase and sale of real estate.

Pursuant to General Obligations Law § 5-70l(a)(l0), to be enforceable, an agreement to pay compensation for services rendered in negotiating the purchase, sale, or exchange of any real estate or interest therein, or of a business opportunity, business, its good will, inventory, fixtures or interest therein must be contained in a writing subscribed by the party to be charged. The statue expressly defines negotiating to include procuring an introduction to a party to the transaction or assisting in the negotiation or consummation of the transaction. Further, GOL § 5-70l(a)(10) applies to various kinds of intermediaries who perform limited services in the consummation of certain kinds of commercial transactions.

Here, Vaygensberg allegedly learned of a business opportunity in Ukraine, which included the purchase and sale of real estate. Vaygensberg's alleged role in the Ukrainian Agreement included identifying land to acquire, rezoning the land, and locating buyers for the rezoned lots. These alleged services rendered pursuant to the Ukrainian Agreement were performed in order to assist in the negotiation or consummation of the transaction. Therefore, the alleged Ukrainian Agreement falls within GOL § 5-701 (a)(10) and is barred by the statute of frauds.

(Internal quotations and citations omitted).

New York contract law--usually straightforward--has traps for the unwary, like the requirement that some contracts be in writing (the statute of frauds). 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 an oral contract.