Statute of Frauds No Bar to Claim for Breach of Oral Contract to Transfer Delivery Agreement

The United States District Court for the District of Massachusetts recently held that a promissory estoppel claim for assignment of a contract was not barred by the Statute of Frauds.  The Court held that, where the complaint did not allege that the parties had any “absolute and certain” understanding that the transfer of the contract could not be performed in one year, the Statute of Frauds did not apply.  Acadia Delivery Service, Inc. v. FedEx Ground Package Systems.

WFM Trucking had an Independent Service Provider agreement (“ISP”) with FedEx Ground Package System, Inc. (“FedEx”) to provide pick-up and delivery services for FedEx. In 2017, WFM negotiated to transfer that ISP to Acadia Delivery Service, Inc. (“Acadia”).  FedEx offered Acadia the opportunity to acquire the WFM ISP if it reached a deal with WFM, which Acadia did.

According to the Complaint, Acadia agreed to acquire the WFM ISP, to manage the ISP until the official transfer, and FedEx agreed to commence the transfer process. Acadia then spent substantial funds on revitalizing the WFM ISP in anticipation of its official acquisition of the contract.  FedEx later informed WFM that it was withholding final contractual approval of the transfer.  Acadia filed suit, alleging it had an enforceable oral contract with FedEx for the transfer of the ISP.

FedEx argued that Acadia’s claim was barred by the Statute of Frauds. Codified at Mass. Gen. Laws ch. 259 § 1, the Statute of Frauds bars certain actions unless the alleged “promise, contract, or agreement upon which such action is brought” is in writing and signed by the party being charged. The two most common modern applications are for contracts involving the sale or transfer of interests in land, or as alleged in this case, “an agreement that is not to be performed within one year from the making thereof.”

FedEx argued that the Statute of Frauds barred the claim because the ISP in question ran through May 10, 2019, more than 18 months beyond the date of the alleged oral contract. The Court disagreed, holding that Acadia was not alleging a breach of the ISP contract itself, but rather of the oral contract to transfer the ISP to Acadia. Where the complaint was “devoid of any allegations that the parties had any ‘absolute and certain’ understanding that the transfer could not be performed within one year, the Court refused to apply the Statute of Frauds to bar the claim.

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