Brief Fact Summary. Individual 1 contracted to lease a piece of real property from individual 2 for a one-year period, with an option to buy at the end of the year. Individual 1 attempted to exercise the option, but individual 2 refused to draw up the requisite paperwork.
Synopsis of Rule of Law. "[A]cts of taking possession and of making part payment, when they are performed under or in reliance upon the oral contract as to be unequivocally referable to the vendor-vendee relationship and not referable to any other relation between the parties, are sufficient to remove the contract from the statute of frauds."
Issue. Does an oral contract for the sale of real estate violate the Statute of Frauds ("SOF") if there is partial performance?
Held. The court first observed that a valid oral contract existed when the Plaintiffs notified the Defendant they wished to exercise their option. The contract was clearly within the SOF unless the partial performance exception was satisfied. Section 197 of the Restatement sets forth the part performance doctrine: "Where, acting under an oral contract for the transfer of an interest in land, the purchaser with the assent of the vendor (b) takes possession thereof or retains a possession thereof existing at the time of the bargain, and also pays a portion or all of the purchase price, the purchaser or the vendor may specifically enforce the contract." In other words, "acts of taking possession and of making part payment, when they are performed under or in reliance upon the oral contract as to be unequivocally referable to the vendor-vendee relationship and not referable to any other relation between the parties, are sufficient to remove the contract from the statute of frauds." Unlike past cases, the party arguing that the SOF does not apply, does not need "proof of irreparable injury through fraud."
• Here, the elements of possession and part payment are both satisfied. As to possession, the court finds that although the original agreement was one of landlord tenant, the parties intended their relationship from the beginning to inevitably be one of vendor-vendee. The purchase of the stove demonstrates this intent. So does the fact that when the Plaintiffs approached the Defendant about exercising the option, evidencing the vendor-vendee relationship, the Defendant did not reject their attempts, but instead said only that he did not have time to draw up the paperwork and that his word was good.
Whether the acts of part performance are unequivocally referable to the vendor-vendee relationship under the oral contract is a question of fact for the trier of fact.View Full Point of Law