Facts
- Professional Bull Riders, Inc. (PBR) organized professional bull-riding events and sought sponsorship from AutoZone, Inc. (AutoZone).
- PBR presented AutoZone with a written sponsorship agreement stating the sponsorship would begin on December 20, 2000 and end on December 31, 2002.
- The draft agreement gave AutoZone a right to terminate early by providing written notice no later than August 15, 2001.
- AutoZone did not sign the written agreement, but PBR alleged AutoZone’s conduct showed acceptance and that an oral agreement existed on the same terms.
- In January 2002, AutoZone notified PBR it would not sponsor PBR events in 2002.
- AutoZone also contended that after ending the relationship, PBR continued using AutoZone’s trade name and logo in event programs.
- PBR sued AutoZone in federal district court for breach of the alleged oral sponsorship agreement.
- Speedbar, Inc., an AutoZone subsidiary, intervened; AutoZone and Speedbar counterclaimed for trademark/service mark infringement, unfair competition, and service mark dilution.
- The district court granted summary judgment for AutoZone on the contract claim, ruling that a two-year oral agreement could not be performed within one year and was unenforceable under Colorado’s Statute of Frauds.
- On appeal, the Tenth Circuit certified a question to the Colorado Supreme Court regarding how Colorado’s one-year Statute of Frauds applies when the agreement includes an early-termination option.
Issues
- Under Colo. Rev. Stat. § 38-10-112(1)(a), is an oral agreement with a stated two-year term unenforceable when it gives the party to be charged an option to terminate in a manner that would complete performance within one year?
Decision
- The Colorado Supreme Court answered the certified question: No.
- The court held that the one-year Statute of Frauds applies only to agreements that, by their terms, cannot be fully performed within one year of formation.
- Because the alleged agreement gave AutoZone a choice that could end the sponsorship relationship within one year (through timely notice), the agreement contemplated an alternative performance capable of completion within one year.
- The court treated the early-termination option as part of the parties’ agreed modes of performance, not merely as an excuse for nonperformance or a breach.
- As a result, the alleged oral agreement was not void under the one-year Statute of Frauds solely because it also allowed a longer, two-year performance.
Legal Principles
- The one-year provision of Colorado’s Statute of Frauds, Colo. Rev. Stat. § 38-10-112(1)(a), bars enforcement only when an agreement’s terms make full performance within one year impossible.
- If an oral agreement provides alternative modes of performance, and at least one alternative can be fully performed within one year, the agreement is outside the one-year Statute of Frauds.
- An early-termination option can qualify as an alternative performance when it is part of the contractual choices defining what completion looks like under the agreement, rather than a provision that merely excuses breach.
- In evaluating the one-year Statute of Frauds, courts focus on what the agreement permits at the time it is made, not what later happens in practice.
Conclusion
Professional Bull Riders held that an oral sponsorship agreement stating a two-year term was not automatically unenforceable under Colorado’s one-year Statute of Frauds where the party to be charged had a contractual option to terminate in a way that could complete performance within one year; the possibility of that shorter, contract-authorized performance placed the agreement outside § 38-10-112(1)(a).