Facts
- Flagship Properties, Inc. and DKM Properties Corp. (Flagship) developed a large multi-structure project near the University of Connecticut with an estimated cost of approximately $120 million.
- C. R. Klewin, Inc. (Klewin), a construction management firm, met with Flagship representatives in March 1986 to discuss serving as construction manager for the entire project.
- Klewin proposed compensation based on a percentage of construction costs, plus an additional percentage for overhead and profit, subject to adjustment by project phasing.
- The meeting ended with a handshake and an asserted oral commitment that Klewin had the job.
- The parties held a press conference publicizing the arrangement and ceremonially signed an incomplete standard-form construction management agreement (with blanks unfilled).
- Construction began in May 1987 on an initial phase, for which the parties executed a separate written contract limited to that phase.
- Flagship later replaced Klewin for the remaining portions of the project.
- In a federal diversity action, Klewin alleged breach of an oral contract to manage the entire project; Flagship argued the claim was barred by Connecticut’s Statute of Frauds one-year provision.
Issues
- Whether an oral contract that does not specify a time for performance is a contract of indefinite duration outside Conn. Gen. Stat. § 52-550(a)(5).
- Whether the Statute of Frauds applies when completion within one year is extremely unlikely and not contemplated, but not precluded by the contract’s terms.
Decision
- The Connecticut Supreme Court answered the certified questions by holding that an oral contract lacking an explicit time for performance is treated as one of indefinite duration and is not barred by § 52-550(a)(5).
- The Court held that the Statute’s one-year provision applies only when the agreement’s terms make performance within one year impossible.
- The Court rejected an approach that would apply the Statute based on the parties’ expectation or the practical unlikelihood of completion within one year, where the contract’s terms do not foreclose timely performance.
- The Court’s answers meant the alleged oral agreement was not unenforceable solely under the one-year Statute of Frauds.
Legal Principles
- Connecticut’s one-year Statute of Frauds provision applies only to agreements that, by their terms, cannot be fully performed within one year from the date of contracting.
- An oral contract that omits a time-for-performance term is a contract of indefinite duration and generally falls outside the one-year provision because performance within one year remains legally possible.
- The parties’ contemplation that performance will likely extend beyond one year does not trigger the Statute unless the contract’s terms negate performance within one year.
- The one-year provision is construed narrowly; improbability of performance within a year is insufficient without contractual language that makes timely performance impossible.
Conclusion
The court held that an oral construction-management agreement with no specified duration is not barred by Connecticut’s one-year Statute of Frauds merely because the project was expected to take years; the Statute applies only when the contract’s terms make performance within one year impossible.