Is An Agreement Which Falls Within the Ambit of Statute of Frauds Void for Being Unwritten ?
In Boening v. Kirsch Beverages, 63 NY2d 449, 472 N.E.2d 992, 483 N.Y.S.2d 164, the parties' predecessors entered into a "verbal agreement" for the distribution of beverages which, regarding the petitioner's obligations to distribute the product, stated in relevant part: "for as long as they satisfactorily distributed the product, exerted their best efforts and acted in good faith."
Subsequently, the plaintiff requested that the agreement be reduced to writing which the defendant refused. Defendant thereafter terminated the agreement and plaintiff sued.
In affirming the Appellate Division, Second Department, which reversed the Supreme Court's ruling that the agreement was terminable by the defendant at any time and, hence, did not necessarily extend beyond one year and was not within the ambit of the Statute of Frauds, the Court of Appeals stated:
Here, as the Appellate Division correctly held, the oral agreement between the parties called for performance of an indefinite duration and could only be terminated within one year by its breach during that period.
As such, the agreement fell within the Statute of Frauds and was void.The alleged agreement in the present case was one which could only be terminated within [the first year] by a breach of one or the other party to it.'
... and other than such a breach, there was no provision under the terms of the agreement for it to come to an end. Neither party had an option to cancel, and there was no specified time or event which automatically would cause the agreement to terminate. Instead, under a reasonable interpretation of its own terms, the agreement would extend beyond the first year and, indeed, would continue in perpetuity unless plaintiff failed to perform its part of the bargain.
Being terminable only by plaintiff's breach, the agreement alleged in the complaint was not one which by its terms could be performed within one year. As such, it came within the ambit of the Statute of Frauds and is void for being unwritten.