Commercial Division Blog
Prevention Doctrine Bars Defendant's Reliance on its Own Failure to Perform
On December 22, 2020, the First Department issued a decision in Vector Media, LLC v. Golden Touch Transp. of NY, Inc., 2020 NY Slip Op. 07733, holding that the prevention doctrine barred a defendant from relying on the failure of a contract condition it caused, explaining:
If a promisor himself is the cause of the failure of performance of a condition upon which his own liability depends, he cannot take advantage of the failure. Contrary to defendant's assertions, neither agreement provided defendant a unilateral right to terminate the contract. Instead, termination is clearly conditioned on defendant's right to operate being terminated by a third party, not itself, and no language in the contract suggests the unqualified right defendant claims. The prevention doctrine is inapplicable only when the parties contract around it, such as by the inclusion of clear language allowing termination for any reason or at any time. Here, however, no such language appears in the contract. Thus, the court providently granted plaintiff summary judgment on the breach of contract claim associated with the Advertising Agreement.
(Internal citations omitted).
Part of the reason parties to commercial contracts choose to have those contracts governed by New York law is that New York courts typically enforce contracts as written. However, in this decision, the court applied the prevention doctrine, which prevents a defendant from relying on the failure of a contract condition that the defendant itself caused. Contact Schlam Stone & Dolan partner John Lundin at firstname.lastname@example.org if you or a client have questions regarding the interpretation of a contract under New York law.