Sinco, Inc. v. Metro-North Commuter R.R. - 133 F. Supp. 2d 308 (S.D.N.Y. 2001)

Rule:

An injured party's right of termination is limited by the doctrine of cure. Although a material breach justifies the injured party in exercising a right to self-help by suspending performance, it does not necessarily justify the injured party in exercising such a right by terminating the contract. Fairness ordinarily dictates that the party in breach be allowed a period of time--even if only a short one--to cure the breach if it can. If the party in breach does cure within that period, the injured party is not justified in further suspension of its performance and both parties are still bound to complete their performances. 

Facts:

While Sinco, Inc. ("Sinco") was training Metro-North Commuter Railroad Company’s ("Metro-North") employees how to use the newly installed safety system, a component of the system fell apart. Three other samples of that component were also found to be defective. Metro-North notified Sinco of its default and Sinco attempted to cure its breach of the parties' contract. Dissatisfied with Sinco’s attempted cure, Metro-North gave Sinco a second notice. Sinco made other offers to cure the defects, but Metro-North rejected them and "covered" the contract by hiring another business to install its safety system.

Issue:

Was Sinco's breach so egregious as to be total, without potential for cure?

Answer:

No

Conclusion:

The Court concluded that, even though Sinco’s default undermined Metro-North’s confidence in Sinco under the parties' contract and under New York law, Sinco was entitled to cure its breach. However, Sinco’s attempted cure was ineffective, as were Sinco’s offers to cure the default. In light of the importance of the safety system and the seriousness of Sinco’s default, Metro-North was entitled to receive objective evidence of the reliability of Sinco’s product. Further, mere offers of cure, without more, did not preserve Sinco’s right to cure its breach.