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Posted: July 12, 2014

Notice Of Breach And Opportunity To Cure Not Required When Breach Not Curable

On June 25, 2014, the Second Circuit issued a decision in Giuffre Hyundai v. Hyundai Motor America, Docket No. 13–1886, holding that contractual obligations to provide notice and an opportunity to cure a breach of contract can be excused.

In Giuffre Hyundai, the defendant “terminated its contract with” the plaintiff car dealer “after a New York State court concluded that the dealer had engaged in fraudulent, illegal, and deceptive business practices—a clear breach of the contract terms.” The plaintiff brought suit in the EDNY, alleging that the termination violated “section 463 of the New York Vehicle and Traffic Law, which provides protections to motor vehicle franchisees in their dealings with automobile manufacturers” because it was not provided notice and an opportunity to cure. The EDNY granted the defendant summary judgment, which the Second Circuit affirmed. One issue addressed by the Second Circuit was whether New York contract law excused a party from an obligation to provide notice of a breach and an opportunity to cure it when the breach could not be cured. Holding that it did, the Second Circuit affirmed the EDNY’s decision, explaining:

New York common law will not require strict compliance with a contractual notice-and-cure provision if providing an opportunity to cure would be useless, or if the breach undermines the entire contractual relationship such that it cannot be cured. In particular, New York law permits a party to terminate a contract immediately, without affording the breaching party notice and opportunity to cure when the breaching party’s misfeasance is incurable and when the cure is unfeasible. When contracting parties agree to a notice-and-cure provision, it is reasonable to assume that they do so with the assumption that the breaches which would be used to terminate the contract would be curable breaches. It is no less reasonable to presume that the legislature operated under the same expectation in drafting section 463.

(Internal quotations and citations omitted) (emphasis added).

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