Tuesday, May 24, 2011
Statute of Frauds (one-year performace timeframe)
STATUTE OF FRAUDS AS TO AGREEMENTS THAT CANNOT BE PERFORMED WITHIN ONE-YEAR
The statute of frauds, set forth in Section 26.01 of the Texas Business and Commerce Code, provides that to be enforceable, a promise or agreement which cannot be performed within one year from the date of making the agreement must be in writing and signed by the person to be charged with the promise. Tex. Bus. & Com. Code Ann. § 26.01(b)(6); Niday v. Niday, 643 S.W.2d 919, 920 (Tex. 1982). Whether a contract falls within the statute of frauds is a question of law. Beverick v. Koch Power Co., 186 S.W.3d 145, 149 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).
A contract that could possibly be performed within a year, however improbable performance within one year may be, does not fall within the statute of frauds. Niday, 643 S.W.2d at 920 (stating that if an agreement, either by its terms or by the nature of the required acts, cannot be performed within one year, it falls within the statute of frauds and must be in writing). The fact that the entire performance within one year is not required or expected will not bring an agreement within the statute. Id. The statute of frauds does not apply if performance could conceivably be completed within one year of the agreement’s making. Miller v. Riata Cadillac Co., 517 S.W.2d 773, 776 (Tex. 1974) (contract to pay employee bonus after approximately one year could theoretically be performed before year expired); Young v. Fontenot, 888 S.W.2d 238, 241 (Tex. App.—El Paso 1994, writ denied) (agreement to transfer stocks at unspecified date in future was performable within one year and therefore not within statute). The duration of the agreement here was one which coincided with the duration of [ party's ] membership in the Club. This could be for a lifetime or some other indefinite duration. Agreements to last during the lifetime of one of the parties do not require a signed writing because the party on whose life the duration of the contract is measured could die within a year of the agreement’s making. Young v. Ward, 917 S.W.2d 506, 510 (Tex. App.—Waco 1996, no pet.). Likewise, agreements requiring performance of indefinite duration are generally not within the statute because such agreements could conceivably be performed within a year of their making. Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796 (1961).
The Texas Supreme Court has also held that where an agreement cannot be completed within one year, either by its terms or by the nature of the required acts, that agreement falls within the statute and must be in writing. Niday, 643 S.W.2d at 920. That is, where an oral contract omits the performance term, duration may properly be implied from extrinsic evidence. If that evidence conclusively proves that the contract cannot be completed within one year, the contract violates the statute of frauds as a matter of law. Id. There is no evidence here, extrinsic or otherwise, which conclusively proves the contract could not be completed within one year. It is, in fact, possible that the contract could be performed in one year in the circumstance the share and lake house were sold within that time. [ Party ] points out that the restriction was in place for over two years at the time of trial. The objective determination of whether the contract could be performed within one year does not permit consideration of this factor. See Keystone Int’l, Inc. v. Ingham, 593 S.W.2d 354, 357 (Tex. Civ. App.—Texarkana 1979, no writ). “Texas courts . . . have generally held that, in the absence of a known date when performance will be completed, the statute of frauds does not apply if performance could conceivably be completed within one year of the agreement’s making.” Young, 917 S.W.2d at 509
SOURCE: Texarkana Court of Appeal - 06-10-00047-CV - 4/26/11