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Current Developments in the Commercial Divisions of the
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Posted: March 29, 2016

Right to Sue on an Obligation does not Accrue Until an Amount is Due and Payable

On March 17, 2016, the First Department issued a decision in Wald v. Graev, 2016 NY Slip Op. 01910, holding that a breach of contract claim, while untimely with respect to a claim based on a breach at the time of contracting, was timely with respect to a claim based on a later payment due, explaining:

The July 12, 2013 complaint alleges breach of an April 12, 2006 agreement promising the immediate vesting of 120,000 stock warrants, the vesting of an additional 100,000 warrants on March 31, 2007, and the vesting of a final 100,000 warrants on March 31, 2008. Accepting these allegations as true, affording the pleading a liberal construction, and giving plaintiff the benefit of every possible inference, we conclude that Supreme Court properly held that the claim was barred by the applicable six year statute of limitations to the extent it was based on the promise to immediately vest warrants on April 12, 2006, and to vest an additional 100,000 warrants on March 31, 2007. However, the right to sue on an obligation does not accrue until an amount is due and payable. To the extent plaintiff alleges breach of an agreement to vest a final 100,000 warrants on March 31, 2008, the claim did not accrue until approximately April 2008; hence, the July 2013 complaint was timely as to that particular claim.

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

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