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Current Developments in the Commercial Divisions of the
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Posted: August 12, 2015

Retraction of Contract Repudiation Ineffective if it is Not Bona Fide

On August 4, 2015, the First Department issued a decision in Beinstein v. Navani, 2015 NY Slip Op. 06403, holding that an attempted repudiation of a contract is effective only if it is a bona fide retraction.

In Beinstein, the parties brought claims and counterclaims relating to the defendants’ failure to close on their purchase of a condominium from the plaintiffs. The trial court held that the “defendants repudiated the contract in August 2012 when they informed plaintiffs that they did not intend to perform under the contract because of” improper “firestopping.” The First Department affirmed, explaining:

Because defendants had no right to insist that the firestopping issue be resolved as a condition to closing, their retraction of the purported repudiation was ineffective. In order to be effective, a retraction of a contract repudiation must be bona fide. Defendants’ acceptance of plaintiffs’ offer to schedule a closing was not bona fide, because it was conditioned on plaintiffs’ provision of documents and information establishing to defendants’ satisfaction that the firestopping had been completed.

(Internal quotations and citations omitted).

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