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Lost But Not Forgotten: Overcoming the Statute of Frauds in Tennessee With A Lost Contract

Lost But Not Forgotten: Overcoming the Statute of Frauds in Tennessee With A Lost Contract

A prospective client comes to you for an initial consultation regarding a possible breach of contract. This individual describes a deal they made years ago with a large out-of-state company where the individual agreed to do X in exchange for the company’s payment of Y dollars over the next 10 years. X has indisputably been completed, but 6 years into the contract the other party stopped paying Y. You tell the prospective client that if all of these facts are true they likely have a good breach of contract case. You excitedly engage your new client, and as they leave you mention that you just need a copy of the contract to begin drafting the Complaint. Your excitement switches to panic when your now-client informs you that the contract has been lost for years. Even worse, when you ask for a copy from the opposing party, they now maintain that no writing ever existed.

At this point your once-bulletproof case appears destined for a quick motion to dismiss premised upon the Statute of Frauds. If you file your case in a federal court in Tennessee, however, you may be able to use the interplay between Tennessee substantive law and federal evidentiary law to overcome such a dispositive motion.

While the Statute of Frauds requires a writing signed by the party to be, the Tennessee Court of Appeals has held that “[e]nforcement of a contract is not prevented by the fact that the written document has been lost or destroyed; its contents may then be proved by oral testimony.”[1] In other words, Tennessee courts recognize that the Statute of Frauds is not intended to act as an evidentiary rule, rather it requires only that a signed contract existed at some point. This rule of law can then be coupled with Federal Rule of Evidence 1004, which has been applied such that “[w]hen a proponent cannot produce original evidence of a fact because of loss or destruction of evidence, the court may permit proof by secondary evidence.”[2]

Based on the two rules above, a party can still enforce a promise that is subject to the Statute of Frauds even if the contract evidencing that promise has been lost. First, the party will need to show that that they conducted a good faith, reasonably diligent search but were unable to uncover the document.[3] Once this showing is made, FRE 1004 permits proof of the existence and terms of the lost document, and such proof can take any form, including oral testimony.[4] Thus, following the path above may resuscitate the case you thought was lost with your client’s written contract.

Beau C. Creson

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[1] Petty v. Estate of Nichols, 569 S.W.2d 840, 847 (Tenn. Ct. App. 1977) (citing Corbin on Contracts, pp. 486-52) (emphasis added).

[2] Sicherman v. Diamoncut, Inc., 225 B.R. 896, 902 (6th Cir. 1998).

[3] See Doucet v. Drydock Coal Co., 397 B.R. 36, 48 (S.D. Ohio 2008).

[4] Id. (“secondary evidence, presented pursuant to FRE 1004, can be in any form”).