Commercial Division Blog

Posted: June 6, 2018 / Categories Commercial, Contracts

Court Excuses Failure to Perform Condition Precedent to Bringing Suit

On June 5, 2018, the First Department issued a decision in Danco Electrical Contractors, Inc. v. Dormitory Authority of the State of N.Y., 2018 NY Slip Op. 03935, excusing the failure to perform a condition precedent to bringing suit, explaining:

It is undisputed that plaintiff failed to satisfy a condition precedent to recovering disputed costs for extra work on which defendant forced price reductions. Although plaintiff gave detailed written statements contesting defendant's determinations of the fair and reasonable value of the extra work pursuant to section 8.01(B), it failed to give verified statements pursuant to section 11.03(A) of the contractual General Conditions.

Nevertheless, we conclude that plaintiff should be excused from the non-occurrence of that condition, because otherwise it would suffer a disproportionate forfeiture, and the occurrence of the condition was not a material part of the agreed exchange. Defendant does not argue that plaintiff failed to document the costs of the claimed extra work, to provide timely notice of its claims for extra work, or to provide timely notice of its objections to defendant's rejections of and price reductions on the claimed extra work. Nor does it contend other than in conclusory terms that plaintiff's failure to submit verified written statements was prejudicial to it. Moreover, the cases on which defendant relies did not consider whether the failure to strictly comply with a condition precedent should be excused to avoid a disproportionate forfeiture under the circumstances of a case such as this, where the noncompliance is de minimis and defendant has shown no prejudice whatsoever.

(Internal citations omitted) (emphasis added).

The general rule in New York is if a contract contains a pre-suit dispute resolution provision, the failure to comply with that provision likely will bar a claim for breach of the contract. As this decision shows, the courts have created a narrow exception to this rule. Contact Schlam Stone & Dolan partner John Lundin at if you or a client have questions regarding the dispute resolution requirements of a contract.