Part Performance/Statute of Frauds
Michigan requires that agreements for the sale of land be in writing and signed by the seller. Michigan’s statute of frauds contains this rule. The purpose of the statute of frauds is to prevent parties from disputing the terms and conditions of oral contracts pertaining to the sale of lands. Michigan statute of frauds is found at MCL 566.106 and MCL 566.108.
An exception to the application of the statute of frauds is the doctrine of “part performance”. Under this doctrine, a party to an oral contract who has performed his obligation so that it would be a fraud for the other party to attempt to repudiate the contract by claiming statute of frauds, may avoid application of the statute of frauds under the equitable doctrine of part performance.
In the recent case of Harkness v Brickman, Michigan Court of Appeals Docket No. 305769 (December 4, 2012), the doctrine of part performance was revisited. The Court declined to enforce the oral agreement (in this case an alleged oral agreement to allow a party to continue to reside at a resort association lot upon payment to the association of property taxes) despite part performance because the court did not find that the party’s performance was “substantial” and not “so prejudicial” as to qualify for taking the oral agreement outside the statute of frauds. The court cited other cases.
The import of this decision is that a party to an oral contract for the sale of lands cannot automatically avoid the statute of frauds by making part performance. Courts will qualitatively measure the degree of “prejudice”. There is no bright line test for this test and creates a triable issue in part performance cases.
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