Facts
- L. G. Riley agreed by an oral arrangement to supply water-methanol to Capital Airlines, Inc. for use in its operations.
- Riley contended the parties agreed to a five-year term, with an option to renew.
- Riley bought and installed equipment to meet Capital’s specifications so he could supply the product in the manner Capital required.
- After the relationship began, Capital stopped purchasing from Riley.
- Riley claimed Capital’s refusal to continue buying was a breach of the alleged five-year agreement.
- Capital denied making a binding five-year contract and argued that, even if such a contract was made, it was unenforceable under Alabama’s Statute of Frauds because it was not in writing.
- Riley sued Capital for breach of contract based on the asserted five-year supply commitment.
Issues
- Does Alabama’s Statute of Frauds bar enforcement of an alleged oral contract obligating Capital to purchase water-methanol from Riley for five years?
Decision
- The court held that an oral agreement requiring performance over a five-year term falls within Alabama’s Statute of Frauds.
- Because the alleged five-year commitment was not memorialized in a sufficient writing, it was unenforceable to support Riley’s breach-of-contract claim for the unperformed remainder of the term.
- The court entered judgment against Riley on the claim seeking to enforce the multi-year oral agreement.
Legal Principles
- Under Alabama’s Statute of Frauds, an agreement that, by its terms, cannot be performed within one year must be supported by a sufficient writing to be enforceable.
- A plaintiff seeking damages for breach of a multi-year oral contract must overcome the Statute of Frauds; proof of an oral promise alone does not permit enforcement of the executory portion of the agreement.
- Expenditures made in preparation to perform an alleged multi-year oral agreement do not, by themselves, supply the writing required by the Statute of Frauds to recover contract damages for the remaining term.
Conclusion
Riley alleged a five-year oral supply contract and showed he purchased equipment to perform, but the court concluded that Alabama’s Statute of Frauds required a sufficient writing for such a multi-year agreement; absent that writing, Riley could not enforce the alleged five-year commitment through a breach-of-contract damages award for the unperformed term.