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The general rule is that contracts which admit of performance within a year, though unlikely to be thus performed, are not within the statute of frauds. But, where a contract requires the defendant, for an unlimited period of time, to pay commissions on orders accepted from the plaintiff, its performance within a year is impossible.
Plaintiff filed an action to recover on his oral agreement with defendant corporations. Under the parties' agreement, defendant corporations agreed to allow the plaintiff a discount on purchases of gasoline from defendant corporations for gasoline orders that the defendants accepted. In their motion for summary judgment, the defendants argued that the oral agreement was barred by the statute of frauds, as it was, by its terms, not performable within one year. The trial court denied the motion. The Appellate Division of the Supreme Court (New York) reversed the judgment and granted the motion. Plaintiff sought review.
Was the parties’ oral agreement barred by the statute of frauds?
The Court held that the statute of frauds was inapplicable, as the agreement was clearly one at will that was for no definite or specific time; thus, by its terms, it did not extend beyond one year from the time of its making. Under the agreement, neither party obligated itself to do anything. Unless and until individual offered to place an order for gasoline and corporations accepted and filled the order, there was no legal obligation to pay the discount. Moreover, the corporations' promise of a discount did not obligate the plaintiff to purchase his gasoline from corporations. The Court held that it was clear that each order and acceptance was a separate contract and that the parties had performed and executed a series of contracts.