Quick Summary
C.R. Klewin, Inc. (plaintiff) and Flagship Properties, Inc. (defendant) were involved in a dispute over an oral contract concerning construction management services for a development project near the University of Connecticut.
This case centered around whether such an oral agreement was enforceable without being in writing when performance would likely exceed one year but was not explicitly stated as such. The Supreme Court of Connecticut ruled that such contracts are considered indefinite in duration and are enforceable despite anticipated longer performance times.
Facts of the Case
The plaintiff in this case is C.R. Klewin, Inc. (Klewin), a corporation based in Connecticut specializing in general construction contracting and construction management services. The defendant is Flagship Properties, Inc. (Flagship), a company engaged in real estate development and operating in Connecticut under the trade name ConnTech.
The dispute between the two parties originated from an oral agreement where Klewin was to provide construction management services for Flagship’s housing project near the University of Connecticut. The project’s master plan encompassed twenty industrial buildings, a large hotel and convention center, and graduate student housing, with an estimated total cost of $120 million.
Representatives from both companies had a meeting wherein Klewin was verbally promised the job of construction manager, and terms were agreed upon including payment details. They even held a press conference announcing their agreement.
Initially, Klewin completed the first stage of the project under a separate written contract. However, Flagship later replaced Klewin with another firm for subsequent phases, prompting Klewin to sue for breach of an oral contract among other claims.
Procedural History
- Klewin entered into an oral agreement with Flagship for construction management services.
- After executing the first phase of work under a written contract, Flagship replaced Klewin with another firm.
- Klewin initiated a lawsuit against Flagship for breach of contract and other claims.
- The trial court granted summary judgment for Flagship based on the Statute of Frauds.
- Klewin appealed the decision to the United States Court of Appeals for the Second Circuit.
- The Court of Appeals certified two questions to the Supreme Court of Connecticut regarding the statute of frauds.
I.R.A.C. Format
Issue
Whether an oral contract that does not explicitly specify a performance duration beyond one year falls within the scope of the Statute of Frauds and is therefore unenforceable if not in writing?
Rule of Law
An oral contract that does not expressly provide that its performance will exceed one year is considered as being of indefinite duration and thus falls outside the scope required for a written contract under Connecticut’s Statute of Frauds (General Statutes ยง 52-550 [a] [5]).
Reasoning and Analysis
The Supreme Court of Connecticut adjudicated this matter by adhering to a long-standing tradition that contracts are not within the Statute of Frauds unless it is impossible for them to be performed within one year based on their explicit terms.
The absence of such explicit terms in an oral contract indicates that it could be performed within a year and consequently does not necessitate a written agreement to be enforceable.
Broadening the statute’s application to contracts that do not specify a time frame would unnecessarily complicate legal proceedings and possibly thwart legitimate claims.
Conclusion
The Supreme Court answered ‘yes’ to whether an oral contract without explicit performance duration is considered indefinite and ‘no’ regarding its unenforceability due to anticipated performance exceeding one year.
Key Takeaways
- An oral contract without an express term defining performance beyond one year is considered indefinite and enforceable under Connecticut law.
- The intended or expected time for completion does not render an otherwise indefinite oral contract unenforceable; what matters are the terms explicitly stated within the agreement itself.
- The ruling underscores judicial preference for limiting the application of the Statute of Frauds to cases clearly covered by its language, protecting against potential expansion into ambiguous contractual disputes.
Relevant FAQs of this case
What determines if a contract falls under the Statute of Frauds?
A contract must be in writing if it cannot be performed within one year from its making, involves the sale of land, is a suretyship, concerns sales of goods over $500, or pertains to estate executor payments.
- For example: A verbal agreement to lease a property for 18 months requires a written contract due to the timeframe exceeding one year.
How does an indefinite contract duration affect its enforceability?
An indefinite contract duration does not automatically make it unenforceable; enforceability depends on whether the contract can theoretically be completed within one year, even if unlikely in practice.
- For example: An oral agreement for a project with no set end date may still be enforceable if it’s possible, even if not practical, to complete it within a year.
Can an oral contract be legally binding if performance exceeds one year?
Yes, an oral contract can be binding if there’s a possibility of completing its terms within one year, despite any practical expectations for a longer performance period.
- For example: A verbal agreement to complete a complex software development project may be enforceable even if it realistically takes more than a year to finish.
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