As a general rule in Colorado, an oral contract is just as enforceable as a written contract. However, the “statute of frauds” requires that certain contracts be in writing. The Colorado statute of frauds requires the following types of contracts to be in writing, otherwise they are not enforceable:
- Contracts that cannot be performed within one year;
- Contracts where somebody acts as a guarantor or surety for another party’s debt;
- Contracts in consideration of marriage (including pre-nuptial and post-nuptial);
- Contracts for the transfer of interest in land; or
- Contracts for the sale of goods totaling $500 or more.
Colorado Revised Statutes § 4-2-201 and § 38-10-112. However, Colorado courts have the authority to enforce an oral contract, despite the statute of frauds, in cases of part performance of such agreement. The part performance doctrine will apply if there is part performance of an oral contract which is: (1) substantial; and (2) required by, and fairly referable to no other theory besides that allegedly contained within the oral agreement. Nelson v. Elway, 908 P.2d 102, 108 (Colo. 1995). This rule is based on the premise that the conduct constituting the partial performance must convincingly evidence the existence of the oral agreement. Id at 109.
In the Elway case, which involved Denver Broncos legend John Elway, the Colorado Supreme Court was asked to decide whether Mr. Nelson’s part performance of a contract was enough to overcome the statute of frauds and make Mr. Nelson’s oral contract claim enforceable. Mr. Nelson argued that his conduct in selling a car dealership and establishing a corporation constituted part performance, but the Court disagreed. The Court ruled that Mr. Nelson’s actions did not meet the requirements of the part performance doctrine and, as a result, the underlying oral contract was deemed unenforceable.
The Court stated that Mr. Nelson’s conduct “does not meet the requirement of the part performance doctrine that the conduct be fairly referable to no other theory besides that allegedly contained within the oral agreement.” Id. The Court, therefore, held that Mr. Nelson failed to establish facts indicating a substantial enough part performance to overcome the statute of frauds rule that certain contracts be in writing.