Articles Posted in Contracts

Virginia’s statute of frauds provides that “[u]nless a …contract…is in writing and signed by the party to be charged or his agent, no action shall be brought…[u]pon any agreement that is not to be performed within a year.” Va. Code Ann. § 11-2(8). A party wishing to assert the statute of frauds as an affirmative defense to a breach of contract action must show that the parties’ oral agreement was within the statute of frauds. The issue is whether the contract as a whole can be fully performed on one side within a year, even through the occurrence of some improbable event. If a court can conjure up some contingency, no matter how unlikely, that would allow either party to completely perform all of its contractual obligations within one year, the statute of frauds will not apply. The United States District Court for the Eastern District of Virginia recently examined this issue in Blue Sky Travel v. Al Tayyar.

Blue Sky purchased airline tickets that Al Tayyar Group (“ATG”) then resold to the Saudi Arabian Ministry of Higher Education (the “Ministry”). The parties orally agreed to share the profits that ATG realized from the re-sales. When Blue Sky sued ATG for breach of contract, ATG asserted the statute of frauds as an affirmative defense arguing that since Blue Sky’s share of the profits could not be calculated until after the end of the calendar year, an oral contract for profit sharing could not have been performed within a year and therefore fell within the statute of frauds.

The court found that the parties’ agreement was premised on ATG receiving orders for tickets from the Ministry and that without an order, Blue Sky would not purchase tickets and the parties would not share any profits. The contract did not obligate the Ministry to order tickets, so it was possible that the Ministry could have decided not to order any tickets in a year or stopped ordering tickets at any time such that neither Blue Sky nor ATG would be required to perform. Also, the Ministry contract could have been terminated within a year of the parties’ agreement. Therefore, either or both parties could have completed their performance under the oral agreement within a year without breaching or terminating the agreement. The court held that ATG failed to carry its burden of establishing that the parties’ oral agreement could not have been fully performed by either party within a year, and that the oral contract was therefore outside the statute of frauds.

A plaintiff must prove his damages claim with reasonable certainty by providing sufficient facts and circumstances to allow the fact finder to make an intelligent and probable estimate of the damages sustained. In Crum v. Anonymizer, the Fairfax Circuit Court refused to modify a jury verdict awarding the plaintiff less than he contended he was owed when the court found he failed to present sufficient evidence of his damages.

In Crum, the jury found that Anonymizer, Inc. had breached its Sales Incentive Plan when it capped Daniel Crum’s total commissions and cut his commission percentage from 6% to 3%. The jury awarded Crum $139,458.17 in damages, but it determined that Crum had not proven his breach of contract claim with regard to post-termination commissions.

Crum made a Motion for Judgment Notwithstanding the Verdict, asserting that the Sales Incentive Plan contained the only conditions he had to satisfy to earn commissions and that no evidence had been presented that he had failed to satisfy those conditions. Crum contended that the only evidence shown was that Anonymizer stopped payments once it no longer employed Crum. Anonymizer produced evidence that corporate practice was to stop paying sales commissions after termination, but there was no evidence that continued employment was a condition of the Sales Incentive Plan. Accordingly, Crum argued that the jury had no basis to conclude that continued employment was a condition and should have awarded him damages on his post-termination claim.