Delaware Contracts and the Statute of Frauds
As a Delaware business attorney, one of the questions I get asked a lot is whether an oral contract can be enforced. The short answer, not surprisingly, is “it depends on the facts.” The governing rule is known as the “Statute of Frauds.” Maybe you’ve heard of it.
Under the Delaware Statute of Frauds, a contract that requires more than 1 year for performance is not enforceable unless there’s evidence of a written agreement. On the other hand, if there’s any possibility of performing the contract within1 year, then the contract is enforceable even though there’s nothing in writing.
Delaware’s Statute of Frauds also applies to contracts for the sale of real estate. Simply stated, an oral agreement to purchase real estate in Delaware has to be in writing; otherwise it’s not enforceable. There is, however, an exception to this rule. An oral contract to purchase real estate can be enforced in Court if there’s been “part performance” of the contract.
In order to constitute part performance, the act has to be something that would not have been done unless there was in fact a contract. In Delaware, the Courts have found that the following acts can be considered part performance:
1. Making partial payment or full payment of the purchase price
2. Performing services that were agreed to be exchanged for the land
3. Making valuable improvements to the land
The reason why part performance is accepted as a substitute for a written agreement is that
acts such as those listed above provide substantial evidence that a contract actually exists, and this evidence protects against fraud which is the purpose of the Statute of Frauds.
