A 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.
Plaintiff installed a defective fall-protection system in defendant's railroad terminal. Defendant notified plaintiff of its default and plaintiff attempted to cure its breach of the parties' contract. Dissatisfied with plaintiff's attempted cure, defendant gave plaintiff a second notice. Plaintiff made other offers to cure the defects, but defendant rejected them and "covered" the contract by hiring another business to install its safety system. Plaintiff sued for breach of contract, defendant filed a counterclaim, and the parties filed cross-motions for summary judgment. The court granted summary judgment to defendant on the issue of liability and denied plaintiff's motion for summary judgment.
Did plaintiff’s delivery of the defective components entitle defendant to terminate the contract without providing an opportunity for cure?
Even though plaintiff's default was a material breach and undermined defendant's confidence in plaintiff, it did not eliminate plaintiff's right, under the parties’ contract and under New York common law, to cure its breach.