Oral Construction Agreements And The Limits Of The Statute Of Frauds At The Pleading Stage

The appellate decision in Landscape Details, Inc. v. Bernard is a reminder that courts are hesitant to dismiss claims at an early stage. The case involved a contractor who performed a landscaping project for a homeowner who was also the contractor’s employee. The parties allegedly agreed that the contractor would be paid through the employee’s bonuses, with any unpaid balance becoming due if the employee left the company before the balance was paid. When the employment ended and no payment was made, the contractor sued to recover the unpaid balance.

The defendant moved to dismiss, arguing that the claim was barred by the statute of frauds because the agreement was oral and could not be performed within one year. The court rejected that argument, reasoning that the statute of frauds applies only if the agreement could not be completed within a year. Since the alleged agreement provided that the balancewould become due upon the employee’s termination—a contingency that could occur within a year—the court concluded that this possibility was sufficient to defeat the statute‑of‑frauds defense at the pleading stage.

The defendant also argued that the agreement was for the sale of goods over $500 and therefore unenforceable without a writing under the Uniform Commercial Code. The court also rejected that argument, noting that even if the UCC applied, there is an exception where goods are received and accepted. The court found that the contractor’s allegations were sufficient to fall within that exception.

The decision holds that oral agreements in a construction setting may be enforceable where performance is alleged, and that statute‑of‑frauds defenses do not warrant dismissal at the pleading stage when the agreement could be performed within one year or falls within a recognized exception. The decision also underscores that, on a motion to dismiss, the court does not assess the ultimate merits but examines only whether the plaintiff has stated a viable claim; if the alleged facts, accepted as true, fit within any cognizable legal theory, the action survives dismissal.

Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel at Duane Morris LLP’s New York office, where he is a member of Construction Group, specializing in construction law, lien law, and government procurement law. He is also a member of the Cuba Business Group.

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