Commercial Division Blog

Posted: May 19, 2016 / Categories Commercial, Contracts

Breach of Contract Claim Barred for Failure to Provide Contractually-Required Notice

On May 18, 2016, the Second Department issued a decision in Schindler Elevator Corp. v. Tully Construction Co., Inc., 2016 NY Slip Op. 03868, holding that a breach of contract claim was barred due to the plaintiff's failure to give the contractually required notice of its claim, explaining:

Where a construction contract contains a condition precedent-type notice provision setting forth the consequences of a failure to strictly comply, strict compliance will be required. Express conditions precedent must be literally performed; substantial performance will not suffice, and failure to strictly comply with such provisions generally constitutes a waiver of a claim.

Here, article 11 of the primary contract between the defendant and the City, which is incorporated into the subcontract, contains such a condition-precedent type notice provision. Article 11.1.2 requires a contractor claiming to be sustaining delay damages to submit, "within forty-five (45) Days from the time such damages are first incurred, and every thirty (30) Days thereafter for as long as such damages are incurred, verified statements of the details and amounts of such damages, together with documentary evidence of such damages." Moreover, pursuant to article 11.2, a failure "to strictly comply with the requirements of Article . . . 11.1.2 shall be deemed a conclusive waiver by the Contractor of any and all claims for damages for delay arising from such condition."

The letters and emails relied upon by the Supreme Court and the plaintiff did not strictly comply with the contractual notice requirement, since they did not contain verified statements of the amount of delay damages allegedly sustained by the plaintiff and were unsupported by documentary evidence. Contrary to the plaintiff's contention, the defendant's actual knowledge of the delay and the claims did not relieve the plaintiff of its obligation to serve a proper notice of claim, and the defendant's alleged breach of the subcontract did not excuse the plaintiff from complying with the notice requirements under the circumstances of this case.

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