When Is an Oral Agreement Sufficiently Definite to Be Enforceable?

Commercial litigators often take for granted that contract cases—at least, “real” and meritorious contract cases—involve a written agreement. Written contracts are certainly what our clients and transactional partners typically hand to us when business disputes start heading to litigation. Most of us can remember more than one case where the parties endlessly briefed the proper construction of a sentence in a lengthy agreement that seems to account for every bit of minutiae surrounding the possible interpretation of that sentence. After all, contracts are creatures of agreement and, absent mutual assent on material terms, there is no agreement.

Surely, then, no credible plaintiff could come to court seeking to enforce an alleged 20-year-old oral agreement to jointly develop real property worth millions where the intended disposition of the property was left TBD. Indeed, the terms of an agreement are required to be sufficiently definite so that “the judiciary can give teeth to the parties’ mutually agreed terms and conditions when one party seeks to uphold them against the other.” At the same time, New York law tolerates some uncertainty in enforceable agreements and, in fact, permits courts to supply missing essential terms when those terms can be supplied “objectively.” Similarly, case law has construed New York’s statute of frauds narrowly, giving effect to oral agreements that may seem unenforceable at first glance. The combination of these factors gives plaintiffs latitude to plead non-dismissible contract claims based on oral “agreements.”