Commercial Division Blog

Posted: June 18, 2021 / Categories Commercial, Contracts

Defendant Liable for Terminating Contract Without Observing Contract's Notice and Cure Provision

On June 3, 2021, the First Department issued a decision in Alloy Advisory, LLC v. 503 W. 33rd St. Assoc., Inc., 2021 NY Slip Op. 03520, holding a defendant liable for terminating a contract without observing the contract's notice and cure provision, explaining:

The primary issue on appeal is whether defendants breached the agreement by wrongful termination for failure to provide written notice and the opportunity to cure, as provided for in Section 1 of the broker's agreement. Defendants' January 12 and 13, 2016 emails to plaintiffs, which effectively terminated the agreement, constituted wrongful termination. There is no evidence that plaintiffs failed to perform under the agreement or that they revealed confidential information.

Furthermore, when one party repudiates a contract, the other party is entitled to claim damages for a total breach by the repudiating party, and any future performance by the nonbreaching party is excused. The measure of damages for breach of a brokerage agreement is the amount of commission the broker would have earned, but for the breach. Supreme Court correctly found that issues of fact existed as to whether plaintiffs would have been able to procure a term sheet within the term of the broker's agreement had they not been prevented from doing so by defendants' wrongful termination, and the issue of damages was correctly submitted to the trier of fact.

(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. Contact Schlam Stone & Dolan partner John Lundin at if you or a client have questions regarding the interpretation of a contract under New York law.