There is a well-known phrase which goes “an oral agreement is not worth the paper it is written on.” This is a common misunderstanding since oral agreements may be enforceable under certain circumstances. A new case in the United States District Court for the Southern District of New York involving an alleged breach of contract has clarified the circumstances in which an oral agreement is enforceable.

            Under the Statute of Frauds, which varies from state to state but has the underlying principle that an oral agreement is not enforceable unless by its terms it cannot be performed within one year of the making thereof. It does not have to actually be performed within one year.

            For example, an agreement at will which is terminable on thirty days notice can therefore be performed within one year (theoretically one day of service plus thirty days notice), even if the actual relationship lasts for years. On the other hand if the term of the oral agreement is for two years, it obviously cannot be performed within one year.

           
The recent case, Pearce v. Manhattan Ensemble Theater, Inc. involves the plaintiff actress, whose stage name is Patty Duke, and her claim that the defendant breached the contract under which she was hired to portray former Israeli Prime Minister Golda Meir in the touring company for the play Golda’s Balcony. The alleged oral agreement was that she would perform as Golda Meir from September 2005 to on or about May 2006, would accept no other entertainment engagements at that time, and would receive specified compensation. In addition, she would receive no less than 15 weeks of full salary even if the show closed before the end of the scheduled run. Thereafter, the defendants distributed press releases and advertising that she would appear in the play.

            The complaint further alleges that the defendants terminated the agreement on the incorrect belief that plaintiff’s heart surgery had disabled her and hired Valerie Harper as a replacement actress.

            The defendant moved to dismiss the breach of contract claim on the basis of the Statute of Fraud, claiming that the complaint alleges that the agreement was made in December 2004 but that the tour was not to conclude until May 2006, which is a period of more than one year.

            The Court upheld the claim at this stage of the proceeding since, the Court found, the contract could have been performed within one year if the producer had exercised the option to close the show early and only had the obligation to pay the plaintiff “no fewer than 15 weeks of full salary.” Therefore, the oral agreement could have been performed within one year, and as stated above, this is sufficient to avoid the provisions of the Statutes of Fraud.

            The case is of interest to photographers since there are numerous oral agreements between photographers and representatives that may or may not have a term extending beyond one year. If the understanding between photographer and representative permits either one to terminate the relationship in such a manner that the time period of the agreement is within one year, then it would be enforceable as an oral agreement under the Statute of Frauds.  

            As I have consistently stated, these issues are avoidable by the simple process of reducing the agreement to writing. In such event, the agreement is certainly worth the paper it is actually written on! 

Attorney Joel L. Hecker lectures and writes extensively on issues of concern to the photography industry. His office is located at Russo & Burke, 600 Third Ave, New York NY 10016. Phone: 1 212 557-9600. E-mail: HeckerEsq@aol.com.