Farash v. Sykes Datatronics, Inc. - 59 N.Y.2d 500, 465 N.Y.S.2d 917, 452 N.E.2d 1245 (1983)

Rule:

Under a theory of quasi contract, a contract implied by law is not a contract at all but an obligation imposed by law to do justice even though it is clear that no promise is ever made or intended. The party who seeks both to enforce the contract that is unenforceable by virtue of the statute of frauds and to recover under a contract implied in law will present contradictory characterizations. This, however, is proper in courts where pleading alternative theories of relief is accepted. The existence of any real promise is unnecessary. 

Facts:

Max Farash claimed that he and Sykes Datatronics, Inc. entered an agreement whereby Sykes would lease a building owned by Farash, who was to complete its renovation and make certain modifications on an expedited basis. Sykes, however, never signed any contract and never occupied the building. Farash pleaded three causes of action in his complaint. The first was to enforce an oral lease for a term longer than one year. The second sought to recover for the value of the work performed by Farash in reliance on statements by and at the request of Sykes, and the third was premised on the theory that the parties contracted by exchanging promises that Farash would perform certain work in his building and Sykes would enter into a lease for a term longer than one year. The Court of Appeals modified the order of the Appellate Division by reinstating the second cause of action, and, as modified, affirmed, holding, in an opinion by Chief Judge Cooke, that the first and third causes of action were barred by the Statute of Frauds, and that the second cause of action could be maintained since Farash was entitled to recover for those efforts that were to his detriment and thereby placed him in a worse position.

Issue:

May Farash recover for the value of the work he performed in reliance on statements by Sykes?

Answer:

Yes

Conclusion:

Farash’s cause of action to enforce an oral lease for a term longer than one year was barred by the statute of frauds. The cause of action was premised on the theory that the parties contracted by exchanging promises that Farash would have performed certain work in his building and Sykes would have entered into a lease for a term longer than one year was also subject to the statute of frauds. The statute of frauds did not bar Farash’s second cause of action seeking to recover for the value of the work performed in reliance on statements by Sykes. Farash could have recovered for those expenditures he made in reliance on Sykes’ representations and that he otherwise would not have made. The order from the appellate court was modified by reinstating Farash’s second cause of action and affirmed as modified.