III.20. 2. What Is An Agreement That Cannot Be Performed Within A Year?

• Jurisdiction: New York

2. What Is an Agreement That Cannot Be Performed Within a Year?

The Statute of Frauds applies to an agreement that cannot be performed within a year. The statute applies only to executory contracts and is irrelevant if the contract has been fully performed even if the performance took more than one year. The one-year period starts on the date of the agreement, not the date performance begins or is scheduled to begin. The fact that an agreement may be in existence for more than one year, or call for performance over a period longer than a year, does not mean that the Statute of Frauds precludes its enforcement. The determinative issue is whether the agreement could have possibly been performed within a year.

Courts have applied the one-year provision narrowly and will not preclude enforcement of an agreement if there is the slightest possibility that the contract could have been performed within a year. If full performance can possibly take place within a year, no matter how improbable that might be, enforcement of the contract will not be barred by the Statute of Frauds.¹⁷⁴ In determining whether an agreement can be performed within a year, a court must consider the entire agreement and not just a phase of, or a particular performance in, the agreement.

Both parties must be able to perform the agreement within a year.¹⁷⁵ For example, if one party can fully perform but the party’s compensation will not be determined until the next year, the statute requires the agreement to be in writing. The statute is inapplicable, however, if the payment is earned and fixed within the one-year period but calculation of the amount of the payment or payment takes place after the one-year period.

An agreement is deemed performable within a year if it is terminable within the one-year period by one or both of the parties.¹⁷⁶ An agreement that is terminable at will falls outside the Statute...