In the case of every contract there is an implied undertaking on the part of each party that he will not intentionally and purposely do anything to prevent the other party from carrying out the agreement on their part. This proposition necessarily follows from the general rule that a party who causes or sanctions the breach of an agreement is thereby precluded from recovering damages for its non-performance or from interposing it as a defense to an action upon the contract. Where a party stipulates that another shall do a certain thing, they thereby impliedly promise that they will themselves do nothing that may hinder or obstruct that other in doing that thing.
Plaintiff vendor sought review of an order of the Appellate Division of the Supreme Court in the Second Judicial Department (New York), which, in an action for breach of contract to purchase and sell several parcels of real estate, entered judgment in favor of the defendant vendee and held that there was no relation of confidence between the parties. The parties entered into an agreement whereby the vendor would purchase four parcels of real estate at a foreclosure auction and would then convey them to the vendee. Instead, the vendee showed up at the auction and out-bid the vendor for each of the properties. The vendor also claimed that he had intended to purchase a fifth property that he was going to keep for himself but that the vendee had out-bid him on that property too.
Was there a relation of trust or confidence between the vendor and vendee?
The court reversed the appellate division's judgment and that of the trial court and granted a new trial. On review, the court agreed with the trial court that no relation of trust could have been spelled out of the transactions between the parties, and there was no finding of any parol agreement with respect to the fifth property. The court found, however, that the vendor was entitled to recover the amount he would have recovered if the contract had been performed because the vendee had impliedly agreed by entering into the contract that she would do nothing to prevent him from acquiring the property, and the vendee violated the agreement. In reversing, the court held that where the vendee stipulated that the vendor would do a certain thing, she thereby impliedly promised that she would not do anything that would hinder or obstruct him in doing that thing.