This case illiustrates the importance of the properly terminating a construction contract.

Although this opinion has next to no facts, it is pretty clear that the contractor had defaulted and the owner had sued for breach of contract. The owner’s attempt to move for summary judgement was blocked by the contractor’s argument that the owner had terminated the contract without following the termination procedure set forth in the contract.

Agreeing with the contractor the court stated:

“Where a contract provides that a party must fulfill specific conditions precedent before it can terminate the agreement, those conditions are enforced as written and the party must comply with them…. Here there were factual issues as to whether the contract was properly terminated pursuant to section 19.2.2, …..”

Perhaps even more importantly, it should noted that an owner who terminates a poorly performing contractor without precisely followiing the termination steps set forth in the contract may be found to be the breaching party and held liable to the contractor for substantial damages.

Look out when a court uses the words “condition precedent.” Those are requriements which, if not met, will cause the non-complying party to lose its rights. Also, even though strict enforcement of contract terms may cause a harsh result, courts in NY will enforce contacts as written,