<b><i>Decision of Note</b></i> Statute of Frauds Bars Enforcement Of Executive Deals

The Court of Appeals of Tennessee, at Nashville, has decided that the Statute of Frauds barred record executives from enforcing unsigned two- and three-year contracts for them to operate a proposed but canceled country music label. Shedd v. Gaylord Entertainment Co., M2002-00258-COA-R3-CV. The statute voided the contracts because they couldn't be performed within one year, the court noted.

The plaintiffs contended that the contracts nevertheless were enforceable based on partial performance. This included one of the plaintiffs attending staff meetings at the defendant's offices as well as going to artist showcases prior to the proposed effective date of the contract. Another plaintiff attended label development meetings and called upon potential buyers.

But the appeals court noted 'preparing to perform under a contract is not quite the same as actually performing. ' a plaintiff's partial performance has been deemed sufficient to bring a multi-year employment contract out of the Statute of Frauds only where that performance has been substantial and where it began after the effective date of the contract.'

The plaintiffs alternatively argued that the employment contracts should be enforced under the doctrine of promissory estoppel. The appeals court ruled, however, 'There are no allegations in the present case of any conduct by the defendant that verges on actual fraud. It appears rather that the defendant simply decided to abandon its plan to launch a new record label before entering into enforceable contracts with the plaintiffs. While the plaintiffs may have altered their positions in the expectation that the new label would become a reality, there are no indications that the defendant's decision was based on improper motive, or that it obtained an unconscionable advantage by its actions. Thus, we do not believe that this is one of those 'exceptional cases' where promissory estoppel should be applied.'

The Court of Appeals of Tennessee, at Nashville, has decided that the Statute of Frauds barred record executives from enforcing unsigned two- and three-year contracts for them to operate a proposed but canceled country music label. Shedd v. Gaylord Entertainment Co., M2002-00258-COA-R3-CV. The statute voided the contracts because they couldn't be performed within one year, the court noted.

The plaintiffs contended that the contracts nevertheless were enforceable based on partial performance. This included one of the plaintiffs attending staff meetings at the defendant's offices as well as going to artist showcases prior to the proposed effective date of the contract. Another plaintiff attended label development meetings and called upon potential buyers.

But the appeals court noted 'preparing to perform under a contract is not quite the same as actually performing. ' a plaintiff's partial performance has been deemed sufficient to bring a multi-year employment contract out of the Statute of Frauds only where that performance has been substantial and where it began after the effective date of the contract.'

The plaintiffs alternatively argued that the employment contracts should be enforced under the doctrine of promissory estoppel. The appeals court ruled, however, 'There are no allegations in the present case of any conduct by the defendant that verges on actual fraud. It appears rather that the defendant simply decided to abandon its plan to launch a new record label before entering into enforceable contracts with the plaintiffs. While the plaintiffs may have altered their positions in the expectation that the new label would become a reality, there are no indications that the defendant's decision was based on improper motive, or that it obtained an unconscionable advantage by its actions. Thus, we do not believe that this is one of those 'exceptional cases' where promissory estoppel should be applied.'