ISSUE
The issue you presented is whether oral loans made to Claimant Yvonne P~ (hereinafter
"Claimant") by Claimant's father-in-law are enforceable contracts under applicable
state law.
SUMMARY
The oral loans create a debt that is enforceable under the applicable state law.
SUMMARY OF EVIDENCE
From February through July 1999, Claimant's father-in-law (hereinafter "the lender")
executed a series of loans in the total amount of $5300.00 to Claimant and her husband.
An alleged oral agreement provided that Claimant was to begin repayment in July 2000,
at the rate of $25.00 to $75.00 per month. The lender resides in Guam. Claimant may
have resided in Guam when one of the loan agreements was made. Claimant now resides
in California.
ANALYSIS
1. Choice of Law
For purposes of SSI eligibility, the proceeds of the oral loans do not count as income
to Claimant if she must repay the loans and they are enforceable contracts under relevant
state law. Social Security Ruling 92-8p.
The law of the state with the most significant relationship to the contract determines
the enforceability of an oral contract, unless the parties have made an effective
choice of law. 1 Witkin, Summary of California Law (9th ed. 1987), Contracts § 55,
pp. 90-91. In this matter, the lender resides in Guam. Moreover, at least one of the
loan agreements was made in Guam. Based on these facts, a court is likely to find
that Guam has the most significant relationship to the contracts and that Guam law
should apply.
The Government of Guam has adopted the statute of fraud provisions of the California
Civil Code. See Gogo v. Ada, (1955) 128 F.Supp. 92, 94 (D. Guam A.D.); G.C.A. T. 18,
§ 86106(1); Cal.Civ.Code § 1624(1). We were unable to locate any Guam case law relating
to the facts of this matter. However, the decisions of the California courts provide
guidance as to the construction to be given to the statute of fraud provisions in
the Guam Code. Roberto v. Aguon, 519 F.2d 754, 755 (9th Cir. 1975); Gogo v. Ada, 128
F.Supp. at 94.
2. California Statute of Frauds
Under the statute of frauds, an oral contract is unenforceable if, by its terms, it
is impossible that it will be performed within a year from the date it is made. Plumlee
v. Poag, (1984) 150 Cal.App.3d 541, 549; G.C.A. T. 18, § 86106(1); Cal.Civ.Code §
1624(1). The statute of frauds does not bar enforcement of contracts that are unlikely
to be performed within one year, or those in which the period of performance is indefinite.
Blaustein v. Burton (1970) 9 Cal.App.3d 161, 185; see also 1 Witkin, Summary of California
Law (9th ed. 1987), Contracts § 284, p. 275.
3. P~ Contract
Where, as in this matter, a contract has been fully performed by one party (the loans
have been fully dispersed) and nothing remains to be done except the payment of money
by the other party, the statute of frauds is inapplicable. Blaustein v. Burton, 9
Cal.App.3d at 185; see also In re William Duncan & Son, 165 F.Supp. 159, 161-162 (N.D.
Cal. 1958); 1 Witkin, Summary of California Law (9th ed. 1987), Contracts § 289, p.
278. The purpose of the exception is to prevent unjust enrichment by one party to
a contract when the other party already has fully performed his obligation under the
contract. In re William Duncan & Son, 165 F.Supp. 159, 162.
CONCLUSION
The statute of frauds is inapplicable to the oral loans made to Claimant because the
lender fully performed his promises of loaning Claimant $ 5300.00. The oral loans
are enforceable under California law, which provides guidance as to the construction
to be given to the Guam statute of frauds. The loans should not be counted as income
to Claimant for purposes of SSI eligibility.