## Facts

- Max M. Farash owned a commercial building in Monroe County, New York.
- Sykes Datatronics, Inc. negotiated to lease space in Farash’s building and requested substantial renovations and modifications on an expedited schedule to meet a planned move-in date.
- Farash performed the requested work and incurred expenses, allegedly in reliance on Sykes’s statements and for Sykes’s anticipated occupancy.
- No written lease was executed, and Sykes never occupied the premises.
- Farash sued asserting: (1) enforcement of an oral lease for a term longer than one year; (2) recovery of the value of work performed in reliance on Sykes’s statements and requests; and (3) enforcement of an oral agreement to enter into a lease for a term longer than one year.
- The trial court denied Sykes’s motion to dismiss for failure to state a claim.
- The Appellate Division reversed and dismissed all causes of action.
- The New York Court of Appeals granted leave to appeal.

## Issues

1. Whether claims seeking to enforce an oral lease (or an oral agreement to enter into a lease) for a term exceeding one year are barred by New York’s Statute of Frauds.
2. Whether a claim seeking the value of renovations performed at the prospective tenant’s request, in reliance on its representations, is barred by the Statute of Frauds when no lease was executed.
3. Whether a quasi-contract/restitution claim may be stated where the defendant did not occupy the premises and may not have received a direct benefit from the improvements.

## Decision

- The Court of Appeals held the first and third causes of action were barred by the Statute of Frauds (General Obligations Law § 5-703).
- The Court held the second cause of action stated a viable quasi-contract claim and was not barred by the Statute of Frauds.
- The Court modified the Appellate Division’s order to reinstate the second cause of action and, as modified, affirmed.

## Legal Principles

- An oral lease for a term longer than one year, and an oral agreement to enter into such a lease, are unenforceable under the Statute of Frauds.
- The Statute of Frauds does not necessarily bar a claim that does not seek to enforce the unenforceable lease bargain, but instead seeks restitution for expenditures made at the defendant’s request in reliance on the defendant’s representations.
- Quasi-contract may rest on a duty imposed by law to prevent injustice and does not require proof of an enforceable promise.
- A restitutionary claim may be pleaded even when the related contract-based claims fail under the Statute of Frauds, so long as the restitution claim is conceptually independent of enforcing the oral agreement.

## Conclusion

The court enforced the Statute of Frauds to bar enforcement of an alleged long-term oral lease and an alleged oral agreement to enter into such a lease, but allowed the landlord to pursue quasi-contract recovery for renovation costs allegedly incurred at the prospective tenant’s request and in reliance on its statements, notwithstanding the absence of an executed lease and alleged lack of direct benefit to the tenant.


Farash v. Sykes Datatronics, Inc., 59 N.Y.2d 500 (1983)