Tennessee Business Litigation Lawyers Blog
In Tennessee, certain kinds of contracts are not enforceable unless (1) they are in writing and (2) they are signed by the party against whom enforcement is sought (the defendant, typically). Why? Because the Tennessee Statute of Frauds says so. (Keep in mind that most contracts in Tennessee are enforceable even if they are not in writing and even if they are not signed.)
For those types of contracts which must be written, such as contracts to buy or to sale real estate, you should not assume that you cannot enforce a contract because of the statute of frauds just because you do not have a formal agreement which has been signed. You may well be able to satisfy the statute of frauds if you have one or more different kinds of informal writings related to the sale, such as, for example, a signed check combined with an MLS Listing Sheet describing the property.
As a recent opinion of the Court of Appeals of Tennessee establishes, you may even be able to enforce an agreement to buy or to sale real estate if you have no signed document whatsoever relating to that agreement. In McKinnis v. Hammons, the seller (“Seller”) of a piece of real estate sued the buyer (“Buyer”). Here are the facts of the case in a nutshell:
- Seller and Buyer both agreed that they had entered into a verbal agreement for the sale of the property
- Both parties signed a deed for the property
- The deed apparently did not state the purchase price
- The deed was recorded
- Seller claimed that she and Buyer had agreed that the purchase price was $32,000
- Buyer denied that she and Seller had ever agreed on the purchase price, and claimed that it was not to be determined until after Buyer made the property livable
- Buyer also claimed that there was never any writing signed by either Buyer or Seller relating to their verbal agreement
- Seller stated that Buyer had, in fact, signed a promissory note in connection with the sale which contained the terms of the agreement between Buyer and Seller, including the agreed upon purchase price of $32,000
- For whatever reason, no one had a copy of the promissory note which contained the signature of the Buyer, but Seller had an unsigned copy
- Two witnesses, besides Seller, testified that they had seen Buyer sign the promissory note (in contradiction of Buyer’s claim that she had not signed any documents)
Buyer filed a motion for summary judgment. The trial court granted Buyer’s motion on the grounds that there was not a document relating to the sale signed by Buyer, and, thus, the Tennessee Statute of Frauds barred the enforcement of the contract.
The Court of Appeals of Tennessee reversed the trial court’s grant of summary judgment. Its reasoning was that the loss or destruction of a writing evidencing the sale of real estate which did comply with the statute of frauds does not render the contract unenforceable under the statute of frauds. Quoting another Tennessee case, the court said “enforcement of a contract is not prevented by the fact that the written document has been lost or destroyed: its contents may then be proven by oral testimony.”
Unless and until you have received advice from a Tennessee lawyer who handles breach of contract cases, do not assume that you cannot win your breach of contract case because of the statute of frauds. By the same token, if you have a breach of contract case filed against you, do not assume that you will win just because the other side has no writing signed by you or because you believe that whatever you signed is not adequate. As the above case demonstrates, there are ways around the Tennessee Statute of Frauds.