Every company depends on contract law every day to run their business successfully, whether they are purchasing or selling goods or services. Just about every major business transaction is completed using a contract. New York contract law ensures that the thriving trade in the state from New York City to Buffalo can be carried out in a predictable and fair manner. Every company should have a basic understanding of New York contract law in order to carry out basic day-to-day operations. A New York contract lawyer from the Priori's on-demand marketplace can help.
B2B Contracts in New York
Among the most common types of contracts executed in New York are B2B contracts, generally for the purchase of goods and services. When two businesses sign a contract in New York, they are not generally bound to very many restrictions. So long as there is an offer and acceptance, as well as some type of payment or “consideration,” most contracts between two companies are bound by their own terms set in the contract.
While many businesses use fairly standard and somewhat complex agreements, the courts will usually enforce the parties’ wishes as they are written out, regardless of how common the terms may be. In fact, unless the entire agreement is illegal for some reason, New York courts will enforce as much of a B2B contract as is valid. For this reason, companies generally trust experienced New York contract lawyers to draft such agreements—and avoid unexpected costly consequences later.
New York Consumer Protection Laws and Their Role in Customer Contracts
B2B customer contracts are generally more sophisticated and less bound by consumer protection laws than the average consumer contract. Consumer customer contracts, on the other hand, govern the business relationship between an average user of a good or service and a company, such as a subscription agreement or a utilities contract. Because the average customer has less sophisticated legal knowledge than a corporation and most consumer contracts are offered with non-negotiable terms to those that want to make a purchase, consumer protection laws in New York limit what can be contained in these agreements.
Many consumer protection laws are established by the Federal Trade Commission and apply to every contract in the U.S., but New York consumer protection law has strengthened many of these laws to more strictly protect the interests of consumers. A commonly cited example that companies must be aware of regards the three-day "Cooling-Off" Rule, which gives consumers three days to cancel any purchase over $25 or related contract for a full refund for any reason. In New York, this period does not begin until the seller gives the customer a "Notice of Cancellation" form. If a company does not ever issue such a form and get it signed by the customer, the consumer can cancel the contract indefinitely in New York.
Mistakes in consumer contracts can be costly for companies, especially if they trigger an investigation by the New York State Attorney General, which is why every company should get consumer contracts vetted by a New York contract attorney.
International Contracts Using New York Governing Law
New York law is commonly used for governing contracts with parties in different countries, in large part because New York City is vital to international trade. New York allows such contracts “whether or not such contract, agreement or undertaking bears a reasonable relation with New York.” In New York State, the United Nations Convention on the International Sale of Goods (CISG) forms much of the state law for international contracts, making legal outcomes more easily predictable for parties from many jurisdictions.
Breach of Contract Claims in New York
When both parties don’t live up to contract terms, buyers and sellers are entitled to make claims for breach of contract. To win a breach of contract claim, the claimant must prove four things:
1. The parties have a valid, binding contract.
2. The plaintiff fulfilled full performance of the contract.
3. The defendant committed a material breach of the contract, but failing to perform their duties.
4. The plaintiff experienced damages due to the breach.
If these elements can be proven, the plaintiff may be entitled to damages and specific performance.
“Good Faith” and Fiduciary Duty in New York Contract Law
New York was the first jurisdiction in the U.S. to require “good faith” in contract negotiations and performance. Both parties in a negotiation have a fiduciary duty to be honest in commercial dealings and act in accordance with commercial standards of fair practice in their industry. While an accusation of bad faith may not open you to a lawsuit in and of itself in New York, New York good faith laws open companies to increased damages where judges deem there has been bad faith.
Can I enforce a contract that was never written down in New York?
Yes. Oral contracts are enforceable in New York, as are implied-in-fact contracts, where the conduct of the parties establishes that there must be an implicit contract. If an offer acceptance, consideration, and mutual intent and agreement can be proven, New York courts will enforce performance regardless of the lack of formal written agreement.
Are “auto-renewal” clauses legal in contracts in New York?
Yes, but they are only enforceable under certain circumstances. Under New York’s General Obligations Law, service, maintenance or repair contracts with an auto-renewal clauses are only valid if the vendor provides written notice of an auto-renewal at least 15 days but not more than 30 days before the cancelation deadline, even if this is not required by the contract per se.