Legal Definitions - part performance

The legal term part performance refers to a doctrine that allows a court to enforce an oral contract, even if that contract would ordinarily be required to be in writing under a law known as the Statute of Frauds. This doctrine is applied to prevent unfairness or injustice when one party has already begun to fulfill their obligations under the oral agreement, and their actions clearly demonstrate that a contract exists.

Essentially, if a party has taken significant steps to perform their side of an oral agreement, and those actions are difficult to explain without the existence of that specific contract, a court may decide to enforce the oral agreement despite the lack of a written document. This exception is often applied in contracts involving the sale of land or agreements that cannot be completed within one year.

Here are some examples to illustrate the concept of part performance:

• Example 1: Real Estate Purchase

  Imagine Sarah and Mark orally agree that Sarah will sell her vacant plot of land to Mark for $75,000. There's no written contract. Mark, relying on this agreement, pays Sarah a $15,000 down payment, then hires a surveyor to mark the property lines and a construction crew to clear the land and dig a foundation for a house, all with Sarah's knowledge and without her objection. If Sarah then tries to back out of the deal, claiming there was no written contract, Mark could argue part performance. His actions (the down payment, surveying, and site preparation) are strong evidence that an agreement to purchase the land existed, and it would be unjust to allow Sarah to renege after Mark has invested time and money based on their oral understanding.

• Example 2: Long-Term Service Agreement

  Consider a small catering company, "Gourmet Bites," that orally agrees to provide weekly meal services for a corporate office, "InnovateTech," for a period of two years. After six months of Gourmet Bites consistently delivering and InnovateTech paying for the services as agreed, InnovateTech decides to terminate the arrangement, arguing that a two-year contract needed to be in writing and wasn't. Gourmet Bites could invoke the doctrine of part performance. Their consistent provision of services for half a year, and InnovateTech's regular payments, clearly indicate the existence of a long-term agreement. A court might enforce the remainder of the oral contract to prevent InnovateTech from unfairly benefiting from Gourmet Bites' work and then using the lack of a written document to escape their commitment.

• Example 3: Commercial Lease

  Suppose a landlord, Mr. Henderson, orally agrees to lease a commercial space to Ms. Chen for her new art gallery for a period of three years. Relying on this oral agreement, Ms. Chen pays Mr. Henderson the first month's rent and a security deposit. She then spends a significant amount of money and time renovating the interior of the space, installing specialized lighting and display fixtures, all with Mr. Henderson's full knowledge and without his objection. After the renovations are complete and Ms. Chen is ready to open, Mr. Henderson attempts to evict her, stating there was no written lease. Ms. Chen could argue part performance. Her actions of paying rent/deposit and making substantial, specific renovations to the property are unequivocally linked to a lease agreement and demonstrate her reliance on their oral contract. A court would likely enforce the oral lease to prevent Mr. Henderson from unfairly profiting from Ms. Chen's investment and effort.