Commercial Division Blog

Posted: May 22, 2016 / Categories Commercial, Contracts

No Oral Modification Clause Bars Breach of Contract and Promissory Estoppel Claims

On May 9, 2016, Justice Singh of the New York County Commercial Division issued a decision in Rivera v. Cumulus Media, Inc., 2016 NY Slip Op. 30870(U), dismissing breach of contract and promissory estoppel claims based on a contract's no oral modification and integration clauses.

In Rivera, the plaintiff's production company entered into a letter agreement under which the plaintiff "would host a radio program for" one of the defendants. The contract expired on December 31, 2015, but the plaintiff alleged that defendants orally agreed to extend the agreement "on terms that varied from the original." The defendants refused to perform under the alleged new, oral terms, but did continue to pay the plaintiff after the termination of the written agreement on that agreements' terms. The plaintiff and his production company sued the defendants for breach of contract and promissory estoppel. The court granted the defendants' motion to dismiss, explaining:

It is clear that the . . . contract both contemplated that the parties might continue plaintiffs' employment relationship after the contract expired, and also provided that any agreement to formalize that continued employment relationship would have to be reduced to writing and signed in order to be enforceable. Plaintiffs' argument that the parties' continuation of their employment relationship on allegedly modified terms somehow constitutes a waiver of the . . . contract is unpersuasive. That contract also plainly provides that such behavior would give a party the right to deem the agreement terminated, and provides for a procedure for an aggrieved party to follow in that event. Plaintiffs have made no such claim. Instead, they merely claim that, after the . . . contract expired on December 31, 2015, they continued their "pay or play" relationship with defendants as they had before. As a result, they are now "at will" employees, as the Rivera contract provides, until or unless they execute a new written agreement with defendants. The alleged 2016 oral contract did not change this, and cannot serve as the basis for plaintiffs' anticipatory repudiation claim, as a matter of law, because it does not constitute an "allegation of a definite and final communication by defendant of its intention to forgo its obligations under the" . . . contract, under which any such purported change would be invalid unless it was in writing and executed.

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

The court dismissed the promissory estoppel claim for the same reason, explaining:

The First Department has long acknowledged that the existence of a valid contract containing a "no-oral modification clause" precludes an aggrieved party from proving the "reasonable reliance" element of a promissory estoppel claim. Here, the . . . contract plainly contains such a clause. As a result, plaintiffs cannot prove "reasonable reliance" on the alleged 2016 oral agreement, as a matter of law.

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