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Breach of Contract Liability & Oral Modifications

Breach of Contract Liability & Oral Modifications

New York Court Finds Breach of Contract Despite Verbal Agreement

Businesses that regularly enter commercial contracts with one another often rely on past practices and verbally agree to minor modifications despite the existence of a “no oral modification” provision. Most contracts include this standard of provision, which requires all changes to the agreement to be made in writing. The New York law enforcing such provisions can be viewed here .

Businesses may be held liable for breach of contract when they rely on oral agreements regardless of past practice between the contracting parties. Recently, a New York Appellate Court found a buyer liable for breaching a commercial real estate contract when they failed to appear for closing on the date specified in an amendment to the agreement. The buyer relied on the parties’ past practice of changing the closing date via verbal agreement.

In Nassau Beekman, LLC v. Ann/Nassau Realty, LLC , the parties entered into a contract stating that closing would occur on August 30, 2007, with the buyer having the right to extend closing until October 10, 2007. The parties verbally agreed to delay the closing date on several occasions, entering written amendments thereafter. The final written amendment provided that the parties would meet for closing on September 25, 2008. The buyer failed to appear and the parties entered discussions to settle a new date for closing. However, a written agreement specifying a new closing date was never executed. The seller sought to terminate the contract and both parties filed claims for breach of contract.

The buyer was found liable for breaching the commercial contract because they did not appear for closing on the date specified in the most recent written amendment. The New York Appellate Court reasoned that the buyer could not reasonably assume that the contracting parties would reach a written agreement because they had done so in the past.

In New York, Breach of Contract Lawsuits Arising from Oral Modifications Occur Frequently

According to the New York Appellate Court decision, breach of contract lawsuits stemming from the mistaken belief of one party that an oral modification is sufficient are commonly brought before the courts. Businesses must take steps to ensure that their contractual rights and obligations are delineated in binding contracts as opposed to verbal agreements that are unenforceable under the law, regardless of the relationship that exist between the contracting parties.

A New York breach of contract attorney can help protect businesses from legal liability and help enforce contractual rights by: representing businesses during contract negotiations; drafting written agreements with clear and understandable contractual provisions; ensuring that businesses are aware of their contractual rights and obligations; drafting subsequent written amendments to existing contracts; enforcing the contractual rights of businesses through negotiations, arbitration, and court proceedings; and defending businesses against breach of contract claims.

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