Metro-Goldwyn-Mayer Inc. v. Scheider
75 Misc. 2d 418, 1972 N.Y. Misc. LEXIS 2342, 347 N.Y.S.2d 755 (1972)
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Rule of Law:
An oral agreement that cannot be fully performed within one year is unenforceable under the Statute of Frauds, and a unilateral option held by the party seeking enforcement to extend the obligation beyond one year does not remove the agreement from the statute's requirement for a signed writing.
Facts:
- On September 30, 1971, Metro-Goldwyn-Mayer, Inc. (MGM) and actor Roy Scheider's agent orally agreed to terms for Scheider to star in a pilot film and a potential television series.
- The terms included Scheider's compensation for the pilot and escalating per-episode pay for a potential series over five years.
- The agreement granted MGM a one-year option, beginning from the completion of the pilot, to require Scheider's services for the series.
- Based on this oral understanding, Scheider filmed the pilot in Munich over a six-week period starting in October 1971.
- Between October 1971 and February 1972, lawyers for both parties negotiated a formal written contract and agreed on all terms except for the start date of the potential series.
- The parties understood that industry custom for a September television premiere would require filming to begin in the spring or early summer.
- On February 17, 1972, after failing to agree on a start date, Scheider's attorney advised MGM that Scheider considered himself free of any obligation.
- MGM later exercised its option for the series and demanded Scheider report for filming by June 5, 1972, but Scheider refused.
Procedural Posture:
- Metro-Goldwyn-Mayer, Inc. (MGM) filed a lawsuit in a New York trial court against Roy Scheider and Roy Scheider Productions, Inc.
- MGM sought an injunction to prevent Scheider from working for others and sought damages for his refusal to perform.
- Scheider filed a counterclaim against MGM.
- The case proceeded to a trial in the court of first instance.
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Issue:
Is an oral agreement for personal services, which grants one party a unilateral option that could be exercised more than one year after the agreement's formation, unenforceable under the Statute of Frauds?
Opinions:
Majority - Fein, J.
Yes, such an agreement is unenforceable under the Statute of Frauds. While the court found that the parties had formed a valid contract by agreeing to essential terms and beginning performance, with missing terms like a start date being suppliable by industry custom, the contract is nevertheless void because it violates the Statute of Frauds. The oral agreement was made on September 30, 1971, but MGM's option to require Scheider's services extended for one year from the completion of the pilot in November 1971, meaning the option could be exercised up to 14 months after the agreement was made. A contract that by its terms cannot be performed within one year must be in writing. The court reasoned that a unilateral option to terminate or extend, held only by the party seeking enforcement (MGM), does not take the agreement out of the statute's purview for the party being charged (Scheider). Since Scheider was bound to remain available at MGM's discretion for a period exceeding one year, the agreement is unenforceable without a writing signed by him.
Analysis:
This decision underscores the critical importance of the Statute of Frauds, even in industries like entertainment where oral agreements and 'deal memos' are common practice. The court demonstrates a two-step analysis: first, it determines if a contract was formed at all, and second, it assesses whether that contract is enforceable. The ruling clarifies that even when a court is willing to imply missing terms like a start date based on industry custom to find the existence of a contract, the statutory requirement for a writing for agreements over one year is a separate and dispositive barrier. It reinforces the legal principle that a unilateral option that binds one party for longer than a year does not save an oral contract from the Statute of Frauds.
