3.4 Exceptions

• Library: Contract Law in Virginia (Virginia CLE) (2019 Ed.)

3.4 EXCEPTIONS

3.401 In General. To avoid the perpetration of fraud, the courts have created certain exceptions to the statute of frauds. These exceptions are ways to circumvent the statute and enforce an oral contract.

3.402 Parol Evidence. Parol evidence is not admissible to establish a connection between a signed paper and an unsigned paper in the absence

[Page 70]

of any internal reference between them. ⁸⁷ If the essential terms cannot be ascertained from the writing itself or from a reference in it to something else, parol evidence generally may not be used to supply the missing terms. ⁸⁸ However, "while parol evidence is not admissible to vary, alter, or contradict what is in writing, it is admissible for the purpose of identifying the subject matter of the contract." ⁸⁹ This applies both to land and to personal property. ⁹⁰ Parol evidence also has been allowed to establish the validity of an oral contract. ⁹¹ A partnership for the purchase and sale of land for speculation, the profits to be divided among the partners, is valid when verbally made, and the existence of the partnership and the extent of the interest of the partners may be shown by parol evidence. ⁹²

In addition, parol evidence may be used when the result otherwise would be fraud. ⁹³ However, "[s]uch an expressed parol agreement would be specifically enforceable only if the fraud would not be compensable by an award of monetary damages and the party seeking specific performance had previously performed all of its obligations under the parol contract." ⁹⁴

3.403 Full Performance.

A. By Both Sides. Full performance by both parties to an agreement renders the statute of frauds inapplicable. If there is full performance, the statute has no power over the parties to the agreement and will not affect their rights, obligations, or duties. ⁹⁵ For example, if two parties enter into an oral contract to exchange lands and the deeds are delivered, a party to the transaction may not then refuse to pay any additional required monetary consideration for the transaction on the basis that the bargain was not in

[Page 71]

writing. The fact that the parties all performed is evidence that such an agreement existed.

B. By One Side. In cases of full performance by one party to a contract otherwise within the statute, such as for the sale of real property, the courts will uphold specific performance of the contract, on the theory that the law otherwise does not furnish an adequate measure of damages. ⁹⁶

3.404 Part Performance. In actions at law for specific performance, part performance generally will not take an oral agreement out of the statute of frauds. ⁹⁷ However, under certain circumstances, to prevent frauds and perjuries, the courts will find part performance sufficient to take a case out of the statute. To prevail, the party relying on part performance must establish (i) that the parol agreement relied on is "certain and definite in its terms;" (ii) that his or her acts of part performance were done "in pursuance of the agreement proved;" and (iii) that the agreement has been "so far executed that a refusal of full execution would operate a fraud" upon the relying party. ⁹⁸ The exception of partial performance applies in actions for specific performance and is not allowed in breach of contract actions. ⁹⁹

In Virginia Home for Boys and Girls v. Phillips, ¹⁰⁰ the Supreme Court of Virginia reversed a trial court decision and ruled that a testator's relative had no claim against an estate because he had no written contract and no independent verification of the terms of the agreement...