Freedman v. Chemical Constr. Corp., 43 N.Y.2d 260 (1977)

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The Statute of Frauds does not require agreements between finders to share a commission received from a third-party principal to be in writing; the statute is intended to protect principals from unfounded claims by finders, not to regulate agreements between finders themselves.

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Summary

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Freedman sued Chemical Construction Corp. to share in a finder’s fee that Chemical Construction received. Freedman claimed they had an oral agreement to work together and split any fee. Chemical Construction argued the Statute of Frauds required such agreements to be in writing. The New York Court of Appeals held that the Statute of Frauds (General Obligations Law, § 5-701, subd. 10) does not apply to agreements between finders to share commissions, as the statute’s purpose is to protect principals from unfounded claims, not to govern relationships between finders. The court reversed the lower court’s decision and allowed Freedman to proceed with his claim.

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Facts

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Lehman Brothers hired Freedman to find a purchaser for Drew Chemical Corporation, promising him a finder’s fee. Freedman offered Chemical Construction the opportunity to work with him on a participating basis, which Chemical Construction accepted. In the presence of Chemical Construction representatives, Freedman informed Lehman Brothers that Chemical Construction would act as his agent. Chemical Construction, through its efforts, found a purchaser (