Second Circuit: Oral Agreement to pay Commissions not Barred by Statute of Frauds
1 min read
Nov 6, 2014
A recent opinion from the Second Circuit Court of Appeals reaffirms that the Statute of Frauds will not void an oral agreement to pay commissions if the agreement lacks a fixed duration.
In Kroshnyi v. U.S. Pack Courier Services, Inc., 11-2789-cv (2d Cir. Nov. 4, 2014), several delivery drivers filed suit for — amongst other things — failure to pay commissions, in violation of Section 198 of the New York Labor Law, and for two violations of the Franchise Sales Act (“FSA”). To obtain delivery assignments from the company, the company mandated that the drivers sign franchising agreements. The franchising agreements required the drivers to pay a subscription fee of $15,000 as well as a series of other payments. The drivers alleged that, while not set forth in the franchising agreements, the company made an oral promise to pay them a commission for each delivery in the amount of 60% of the customer’s payment to the company.
The trial court dismissed the drivers' wage claim on summary judgment, holding that the oral commission agreements violated the Statute of Frauds because they could not be completed within one year. At trial, eight plaintiffs prevailed on their FSA claim. Each side appealed.
On appeal, the Second Circuit — interpreting New York law — held that the Statute of Frauds does not void an oral agreement to pay commissions unless such an agreement is of fixed duration. The Court explained that “oral employment agreements lacking a fixed duration are not covered by the statute of frauds” because they create an at-will relationship which is “terminable at any time by either party." As such, the Court found that the company’s oral contracts with the drivers were capable of completion within one year and, as a matter of law, therefore, fell outside the purview of the Statute of Frauds.
With questions about this case, please contact your regular Hinshaw employment attorney.
Topics
Featured Insights

Event
September 27–29, 2026
Hinshaw Partners Discuss Key Compliance and Litigation Issues at the 2026 MBA Conference

Press Release
Sep 24, 2026
Hinshaw Recognized as a 2027 “Powerhouse in Litigation” by BTI Consulting

Press Release
Sep 22, 2026
Vaishali Rao Selected as a Global 2026 INvolve Heroes Role Model

Consumer Crossroads: Where Financial Services and Litigation Intersect
Sep 23, 2026
Another Court Finds the TCPA Does Not Apply to Texts —Time for Supreme Court Intervention?

Press Release
Sep 22, 2026
Min Kang Appointed to the Washington State Bar Association Board of Governors

In The News
Sep 22, 2026
Spencer Kook Analyzes California's Liability Influence in the National Insurance Market

In The News
Sep 21, 2026
Marisa Roman Cautions Clickwrap Agreements Are Not Enough to Let Companies Off “Scot-Free”

Press Release
Sep 18, 2026
Paris Glazer Named to Chicago Daily Law Bulletin’s 2026 40 Attorneys Under Forty




