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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: June 8, 2015

Agreement to Agree Not Enforceable Contract Even Though Memorialized in Writing

On June 4, 2015, the First Department issued a decision in Northern Stamping, Inc. v. Monomoy Capital Partners, L.P., 2015 NY Slip Op. 04742, holding that even if it is in writing, an agreement to enter into an agreement in the future is not an enforceable contract.

In Northern Stamping, the plaintiff’s claim included breach of an agreement to negotiate an agreement. The First Department affirmed the dismissal of this claim, explaining:

Plaintiff contends that a letter that defendant . . . sent to it on January 28, 2011 and that it countersigned on February 2, 2011 was a Type II agreement under federal case law, requiring defendants to exercise good faith to pursue a transaction jointly with plaintiff to acquire Steel Parts. Our Court of Appeals has rejected the rigid classifications into Types in favor of asking whether the agreement contemplated the negotiation of later agreements and if the consummation of those agreements was a precondition to a party’s performance. The January 28/February 2 letter agreement said that, except for certain sections not relevant on this appeal, all other terms of this Letter constitute statements of present intention adopted to facilitate the negotiation of definitive agreements, do not constitute a contract or agreement and are not to be enforceable against [the defendant].

(Internal quotations and citations omitted).

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