## Facts

- James and Carol Gulden leased a house with an option to purchase it for $62,400 during the lease term; they later fell behind on payments due to unemployment.
- The lessor indicated he would accept the option price if the Guldens found a buyer and would allow them to keep any amount above $62,400 as their accumulated equity.
- In late December 1979, James Gulden and Gary Sloan discussed the house; after the Sloans visited the property, the Guldens asserted the parties reached an oral agreement.
- Under the Guldens’ account credited by the trial court, the Sloans would acquire the house at $68,400, with $6,000 above the option price representing the Guldens’ equity; the parties also agreed to an exchange of possession between the house and the Sloans’ mobile home.
- Sloan completed the purchase of the house from the lessor and took possession; Gulden moved into the Sloans’ former mobile home, and the parties exchanged keys.
- Gulden did not pay rent for the mobile home, and the arrangement did not resemble a landlord–tenant relationship.
- Sloan did not transfer title to the mobile home and later sold it to a third party.
- The Guldens sued to enforce the alleged oral agreement; the trial court awarded $6,000 in lieu of specific performance.

## Issues

1. Whether part performance of an oral agreement involving an interest in real property can remove the agreement from the statute of frauds when the performance clearly and unequivocally proves the agreement’s existence and terms.

## Decision

- The North Dakota Supreme Court affirmed the judgment for the Guldens.
- The evidence supported the trial court’s finding that an oral agreement existed, including the $6,000 equity component tied to the option price.
- The exchange of residences and keys and the resulting change in possession constituted part performance.
- The part performance was sufficiently clear and unequivocal to take the agreement outside the statute of frauds.
- Because the mobile home had been sold, a $6,000 monetary award was a proper substitute remedy.

## Legal Principles

- An oral agreement for the sale or transfer of an interest in real property is generally within the statute of frauds, but equity may enforce it under a part-performance exception.
- Part performance removes the agreement from the statute of frauds only when the conduct clearly and unequivocally demonstrates the existence and terms of the oral agreement.
- The proof must be certain and must not reasonably point to another relationship or explanation for the parties’ conduct (such as a tenancy, charity, or mere preparation).
- A substantial change in possession consistent only with the alleged contract may constitute part performance.
- When specific performance is impracticable, a court may award monetary relief that enforces the proven contractual entitlement.

## Conclusion

The court enforced the orally agreed $6,000 equity component because the parties’ exchange of possession and keys, coupled with the absence of any alternative explanation like a rental arrangement, clearly proved the contract’s existence and terms and therefore satisfied the part-performance exception to the statute of frauds.


Gulden v. Sloan, 311 N.W.2d 568 (N.D. 1981)