In a prior blog post on The Westchester Litigator entitled "Intent to be Bound: The Validity of Settlements Negotiated Over Email,” we discussed the enforceability of settlement agreements achieved via exchange of emails. We cautioned litigators that when all material terms are agreed upon, the New York courts will enforce a settlement by email even in the absence of a written, executed agreement or release. Today we examine how far this concern extends in the contracting sphere. In particular, at what point does an agreement by email butt up against the “statute of frauds” – the 17th century English common law rule, codified at New York’s General Obligations Law § 5–701(a)(1), that certain contracts must be in writing and executed to be legally enforceable.
In a decision just released by the Appellate Division, Second Department, the court was faced with an agreement between two parties regarding a multi-year investment in a new business, memorialized partially over email and partially verbally. Reversing the Supreme Court, Westchester County, the court held that the agreement violated the statute of frauds and so was unenforceable by the plaintiff.
The Case: Bardy v. Bonnem, Index No. 2023-06007 (2d Dep’t June 18, 2025)
In 2016, the defendant contacted the plaintiff seeking help developing a chain of coffee shops. The discussion was memorialized over email between the parties, with the defendant proposing that plaintiff purchase a 25% ownership interest in the coffee chain business in two stages: an 18% interest immediately based on a nominal valuation of the company of $1 million and the remaining 7% interest based on a nominal valuation of $5 million after three years.
The plaintiff alleged that in addition to the emails, the parties had an oral conversation where the defendant agreed that the plaintiff would have an option to purchase the 25% interest, with the initial payment due after the company’s first location opened. The plaintiff alleged that the first company location opened in February 2019, at which time the plaintiff attempted to exercise his option to purchase, which was rejected by the defendant.
The plaintiff filed suit, asserting breach of contract, unjust enrichment, breach of fiduciary duty, recovery in quantum meruit, and seeking the imposition of a constructive trust and an accounting. Among other arguments, the plaintiff contended that the parties’ agreement was not governed by the statute of frauds because he provided services to the defendant in order to leave open the option to purchase. The defendants moved pursuant to CPLR 3211(a) to dismiss the amended complaint as barred by the statute of frauds and for failure to state a cause of action. The Supreme Court denied the defendant’s motion and the defendant appealed.
The Appellate Division, Second Department partially reversed, finding that the November 2016 email failed to set forth the full scope of the alleged agreement between the plaintiff and defendant and therefore, failed to satisfy the statute of frauds. The court further held that the plaintiff’s provision of services did not create an exception to the statute of frauds under General Obligations Law § 5–701, and thus even taking the plaintiff’s allegation of partial performance as true would not obviate the requirement of a written agreement.
All was not lost for the plaintiff, however, the court went on to affirm the Supreme Court’s denial of the defendant’s motion to dismiss the causes of action alleging unjust enrichment and to recover in quantum meruit. The court reasoned that “[the] plaintiff did not plead those causes of action in order to circumvent the statute of frauds by seeking enforcement of an otherwise unenforceable contract,” and therefore those alternative claims could go forward.
The Takeaway
While agreements by email may be enforced on certain facts in the settlement context, parties should not rely on that holding for business contracts more generally. While it may be easier in the moment to make a handshake agreement, it can cost you dearly down the line.
