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OK, enough of the mumbo jumbo. There is not going to be any defense based on statutes of fraud, because he can't defend against the suit by voiding the contract, but then still claim a right to keep the $7500. If a judge allows him to void the contract with a defense of statute of frauds, the judge will also order him to give you back the $7500 (to void the contract would be to put the parties in the same position they would have been in had the contract not been entered).

But in the real world, that's neither here nor there, because there is never going to be a judicial determination on the defense of statute of frauds on a $7500 claim.

Sorry to hear about your loss, and that the $7500 is a significant financial loss to you. The reality is, you are very likely going to have a very uphill battle ever collecting a penny from this guy.

So you don't want to dig your hole deeper, i.e., throw good money after bad.

Putting myself in your shoes, this is what I would do:

1. First, is the guy collectible, or is just a total fly-by night flake? I.e., does he own a house, have any roots anywhere, still under the control of his parents, etc.? I'm going to assume the worst: He owns nothing, is an adult, is fairly transient, and is a total flake.

2. The lack of a written contract is most relevant b/c without a written contract, with an attorney's fee provision, in most states, you can't recover your attorneys' fees, even if you prevail. Therefore, given the amount and the likely inability to recover attorneys fees (both to get an award, and to be able to enforce it if you could), hiring an attorney is not going to be worth it. You won't find any attorney to take it on a contingency fee (amt is too small, but if you find one, even one that will take 50% of the recovery, jump on it!), and on an hourly arrangement, your $7500 loss will quickly escalate to a $10,000+++ loss.

I usually have an attorney or two kicking around, and if someone stiffed me for $7500, I'd have them write a demand letter, threatening to sue. But that will cost you at least $500 in SF (2 hours x $250 if you got out cheap).

You know your friend, and are in the best position to guess if such an attorney demand letter will have any affect on him. I've had mixed results, sometimes people come to the table, sometimes they ignore it. You have to decide if you think the $500 will be well spent, or a waste of money.

3. If you decide not to have an atty send a demand letter, or if he ignores the letter, I'd agree that you should sue him in small claims court. The thing you will have to be careful with is the jurisdiction issue. The forms will have specific questions relating to jurisdiction - where he lives, where the contract was made or to be performed, etc. It sounds to me like you can say the contract was entered into in San Francisco, was to be performed in SF, etc. If you have a California address for him, you might want to use that, too. If on the face of the form, there is no basis for jurisdiction shown, the court may summarily toss your case, even if he doesn't show.

I don't know how you can serve him, but make sure you find out. I doubt you can serve by mail. Certified mail, maybe, but probably only if he signs some kind of receipt. He likely won't sign for it. The small claims paperwork should explain the various ways you can get it done. Be sure to follow it and serve in an authorized way.

This is worth doing, because it is very low cost. Probably can get it filed, and served, for under $100.

If you serve him, hopefully that brings him to the table and you can work out a settlement where you get at least some of your money back. If he ignores it, and you can get a default and a default judgment, then you have to consider what you want to do after that point.

Sorry to hear your "friend" did this to you, but I think that from a "psychological" standpoint, you need to start accepting that you made a mistake in trusting him, too a big risk, and the money was likely "gone" the second you handed it to him. People have paid a lot more to learn lessons, it could have been a lot worse, and in the grand scheme of things, you'll be ok. Do the steps you can do without throwing significant amounts of money at it, but mentally start preparing to accept the loss and move on, as hard as that may be.