Minnesota’s Statute of Frauds, codified at Minn. Stat. §§ 513.01–513.06, serves as a critical safeguard against fraudulent claims by requiring written documentation for specific categories of contracts. However, the statute is not an absolute bar to enforcement, as courts have recognized numerous exceptions to mitigate its rigidity. This article provides an examination of these exceptions, including rare and granular defenses, while synthesizing Minnesota case law, statutory provisions, and scholarly analysis^1.
Historical and Policy Foundations of the Statute
The Statute of Frauds aims to prevent “frauds and perjuries by denying force to oral contracts of certain types which are peculiarly adaptable to those purposes”^1. Rooted in English common law, Minnesota’s version retains its core focus on contracts implicating long-term obligations, suretyship, marriage, and bankruptcy-related debts^1. As an affirmative defense under Minn. R. Civ. P. 8.03, the burden lies with the defendant to prove its applicability^1.
Exceptions to the Statute of Frauds
1. Partial Performance
Minnesota recognizes partial performance as an equitable exception to the Statute of Frauds, though its application is narrowly tailored. Under Minn. Stat. § 513.06, courts may compel specific performance of oral contracts for the sale of land if one party has partially performed in a manner “unequivocally referable” to the agreement^1. For example, a buyer who takes possession, makes improvements, or pays a portion of the purchase price may invoke this exception. However, partial performance does not apply to actions at law seeking monetary damages, as emphasized in Becker v. First Am. State Bank (1988), where the court declined to enforce an oral contract for loan repayment despite partial performance^1.
The exception is grounded in preventing unjust enrichment and requires clear evidence that the parties’ conduct aligns with the alleged oral terms. In Alamoe Realty Co. v. Mutual Trust Life Ins. Co. (1938), the Minnesota Supreme Court upheld specific performance where the buyer had constructed a building on the land, demonstrating irreversible reliance on the oral agreement^1.
2. Promissory Estoppel
Promissory estoppel may override the Statute of Frauds when enforcing an oral promise is necessary to prevent injustice. Minnesota courts apply this doctrine sparingly, requiring:
- A clear and definite promise,
- Intent to induce reliance,
- Substantial reliance to the promisee’s detriment, and
- Equitable enforcement to avoid unconscionable results.
For instance, if Party A orally promises to sell land to Party B, and Party B incurs significant expenses in reliance (e.g., selling their current home), a court may estop Party A from asserting the Statute of Frauds as a defense. This exception is particularly relevant in commercial contexts where reliance is demonstrable and quantifiable^1.
3. Uniform Commercial Code (UCC) Exceptions
Minn. Stat. §. Specially Manufactured Goods
Oral contracts are enforceable if the goods are specially manufactured for the buyer, unsuitable for sale to others, and the seller has substantially begun production or committed to procurement before repudiation^1. This exception balances the statute’s fraud-prevention goals with commercial realities, as seen in Grand Forks Lumber Co. v. McClure Logging Co. (1908), where custom-cut timber ordered orally was deemed enforceable once production commenced^2.
b. Judicial Admissions
If the party against whom enforcement is sought admits the existence of the contract in pleadings, testimony, or court submissions, the oral agreement becomes enforceable up to the quantity admitted. This exception circumvents evidentiary disputes but is rarely invoked, as parties seldom concede critical facts in litigation^1.
c. Payment or Acceptance of Goods
Oral contracts are enforceable to the extent that payment has been made and accepted or goods have been received and accepted under Minn. Stat. § 336.2-606. For example, if a buyer accepts delivery of 100 widgets under an oral agreement for 500 widgets, the contract is enforceable for the 100 units accepted^1.
4. Full Performance by One Party
An oral contract may escape the Statute of Frauds if one party has fully performed their obligations. In Langaun v. Iverson (1889), the Minnesota Supreme Court enforced an oral contract where the plaintiff had completely performed services within one year, reasoning that the statute’s purpose—preventing fraud—was irrelevant once performance eliminated evidentiary uncertainties^2. Similarly, Kruse v. Tripp (1915) upheld an oral land sale contract where the buyer had fully paid the purchase price^2.
5. Contracts Terminable Within One Year
Oral contracts that could be performed within one year, even if unlikely, fall outside the statute. This includes:
- At-will employment agreements, terminable by either party at any time (Stitt v. Rat Portage Lumber Co., 1906)^2.
- Contingent contracts, such as insurance policies where a loss might occur within a year (Wiebler v. Milwaukee Mechanics Mut. Ins. Co., 1883)^2.
- Leases commencing in the future but lasting less than one year from the date of agreement. For example, an oral lease signed on January 30 for a term beginning February 1 and ending January 31 of the following year is enforceable, as the total duration from the agreement date (January 30) remains under one year^2.
6. Equitable Exceptions for Land Contracts
Minn. Stat. § 513.06 explicitly preserves courts’ authority to order specific performance for oral land contracts partially performed. This statutory exception overrides the general Statute of Frauds bar, provided the plaintiff’s actions (e.g., possession, payment, improvements) unmistakably point to a contractual relationship. In Veagie v. Morse (1896), the court enforced an oral agreement where the buyer had cultivated and fenced the land, satisfying the “unequivocal reference” standard^2.
7. Estoppel in Suretyship Agreements
While Minn. Stat. § 513.01(2) requires written evidence for “special promises to answer for the debt of another,” Minnesota recognizes estoppel if the surety’s oral promise was made to benefit their own primary interest (“main purpose” doctrine). For example, if a supplier orally guarantees a customer’s debt to ensure continued business, the promise may be enforceable despite the statute. This rare exception hinges on proving that the surety’s primary motive was self-serving rather than altruistic^2.
8. Bankruptcy Debt Acknowledgment
Oral promises to repay debts discharged in bankruptcy are generally unenforceable under Minn. Stat. § 513.01(4). However, if the debtor reaffirms the debt in writing post-bankruptcy, the new promise becomes binding. Courts scrutinize such agreements to ensure compliance with federal bankruptcy rules, which mandate written reaffirmations approved by the court^1.
9. Marriage Consideration Exceptions
Minn. Stat. § 513.01(3) exempts mutual promises to marry from the Statute of Frauds, reflecting societal recognition of marriage as a unique social contract. However, other agreements made in consideration of marriage (e.g., prenuptial property transfers) require written documentation unless partial performance or estoppel applies. For instance, transferring property titles pursuant to an oral prenuptial agreement may trigger equitable enforcement^2.
10. Judicial Admissions and Collateral Estoppel
A party may be estopped from invoking the Statute of Frauds if they previously admitted the oral contract’s existence in judicial or administrative proceedings. This exception prevents litigants from taking inconsistent positions and is often applied in conjunction with Minn. R. Civ. P. 8.03’s pleading requirements^1.
Rare and Granular Exceptions
Quantum Meruit and Unjust Enrichment
While not a direct exception to the Statute of Frauds, plaintiffs may recover under quantum meruit for the reasonable value of services or goods provided under an unenforceable oral contract. For example, in McRae v. Feigh (1919), the court awarded restitution for labor performed under an oral employment contract barred by the statute, preventing the employer’s unjust enrichment^2.
Implied-in-Fact Contracts
Courts may enforce implied-in-fact contracts arising from conduct consistent with an oral agreement. In Hammell v. Feigh (1919), an oral partnership agreement was upheld based on the parties’ course of dealing, even absent a written contract^2.
Statutory Exceptions for Agricultural Liens
Under Minn. Stat. § 514.95, oral agreements creating agricultural liens on crops or livestock are enforceable if the lienholder takes possession of the collateral. This niche exception reflects legislative intent to protect agricultural creditors^1.
Conclusion
Minnesota’s Statute of Frauds exceptions reflect a balance between preventing fraud and ensuring equitable outcomes. While partial performance, promissory estoppel, and UCC provisions dominate the landscape, rare exceptions such as quantum meruit and agricultural liens demonstrate the law’s adaptability. Practitioners must meticulously document transactions falling under the statute while remaining vigilant to potential equitable defenses that could override formal requirements. Future legislative or judicial developments may further refine these exceptions, particularly in evolving commercial contexts such as digital contracts and cryptocurrency transactions.