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New York Court of Appeals - 77 N.Y.2d 157
Tags: Contracts, Interpretation, Ambiguity
tl;dr:
The parties entered into a contract with a reciprocal cancellation policy and a merger clause, though Plaintiff insists that the cancellation clause was for their benefit, due to active litigation against Defendant. Defendant used the clause for itself.Video Summary
Case Summary
In the W.W.W. Associates, Inc. v. Giancontieri (1990) contract law case, the New York Court of Appeals considered if a land buyer could use external evidence to prove that a contract's cancellation clause was meant to be a contingency solely for the buyer. W.W.W. Associates (the plaintiff) contracted to purchase land from Frank Giancontieri and others (the defendants) for $750,000. The contract allowed either party to cancel if ongoing litigation against the sellers remained unresolved by June 1, 1987. When the defendants canceled the contract, the plaintiff sued for specific performance, arguing that the cancellation clause was a buyer's contingency they could waive.
The trial court ruled in favor of the plaintiff, accepting external evidence showing both parties' intent for the cancellation clause to only benefit the plaintiff. However, the Court of Appeals reversed this decision, applying the parol evidence rule, which requires unambiguous contracts to stand as written without considering external evidence. The court found the cancellation provision clear and noted that the contract contained a merger clause, stating that no external statements were part of the agreement.
The case demonstrates courts' strict approach to the parol evidence rule and the importance of ambiguity, merger clauses, and specific performance in contract law. This case is often cited and discussed in contract law education as an example of key legal principles.
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The case involves a dispute over the interpretation of a Contract of Sale for real property. The parties added a reciprocal cancellation clause that allows either party to cancel the contract if the closing of title is delayed due to ongoing litigation concerning the property. The plaintiff's argument that the cancellation provision should be read as a contingency clause for their benefit was rejected by the court, which enforced the cancellation provision according to its clear and unambiguous terms. The defendants sought summary judgment dismissing the specific performance action, which was granted by the court of appeals, concluding that the extrinsic evidence is not material and that the plaintiff's reliance on it is not enough to defeat the defendant's summary judgment motion.
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