As a business person, you’re certainly familiar with some legal concepts. You may, for example, very likely have a strong awareness of what a statute of limitations is and how it works. On the other hand, a legal phrase like “statute of frauds” may be something with which you’re less familiar. Even if you’re not familiar with that phrase, be aware that it can be very important to your business, especially your business’s commercial litigation cases. Rest assured that your knowledgeable South Florida business attorney is keenly familiar with that phrase and how it can help you in court.
Despite what you might think based on the wording, the “statute of frauds” is not something that only applies in cases involving fraud claims (although it may involve such a claim). A recent case between a South Florida real estate corporation and a Central Florida real estate broker was an example of how the statute of frauds can be the key to a success. The two sides reportedly inked a deal in 2004 for the broker to operate one of the corporation’s franchises, which was located in Maitland, Florida. 10 years later, they executed second franchise agreement, this time in regard to a franchise in Orlando.
The franchisor approached the franchisee about renewing the Maitland franchise agreement for an additional term. Allegedly, the franchisee expressed interest in doing so while secretly negotiating with a competing real estate firm. The franchisee allegedly dragged out the negotiation process until he had time to complete negotiations and sign an agreement with the competing firm, which he did in December 2014.
The franchisor then sued the franchisee for breach of the agreement, fraudulent misrepresentation, negligent misrepresentation, promissory estoppel and unjust enrichment. The jury sided with the plaintiff and awarded it nearly $750,000.
The franchisee appealed and won. The key to their success on appeal was the statute of frauds. The Florida statute of frauds says that you cannot bring a lawsuit based “on any agreement or promise that cannot be performed within one year unless the agreement or promise is in writing and signed by the party.”
In this case, the basis for the franchisor’s fraudulent misrepresentation and promissory estoppels claims was an oral agreement between the two sides. Because the terms of that oral agreement “were not intended to be performed within one year,” then the statute of frauds applied to this situation. That meant that a written agreement was required in order to sue and win damages. Because the plaintiff did not have one in this case, it was statutorily barred from collecting a judgment on its fraudulent misrepresentation and promissory estoppel claims.
The franchisor tried to argue that the agreement was simply one to renew the franchise in Maitland, but the evidence in support of that assertion wasn’t persuasive. Even if the court accepted that the oral agreement was an agreement simply to “renew the Maitland agreement for an additional five years,” that fact did not “remove the agreement from the scope of the statute of frauds.”
In this case, the franchisee was able to use the statute of frauds effectively to avoid an otherwise very costly judgment. Winning your case will often rely on having someone on your side who knows both the facts of your situation and knows the law inside and out, too. Protect your business interests by calling upon the skilled South Florida commercial litigation attorneys at Stok Kon + Braverman, who have been representing clients in a wide range of commercial litigation cases, including franchise agreement disputes, here in Florida for many years.
Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.