The Cost of Failing to Reduce Your Agreements to Writing in New York February 1, 2010

I have to believe that the executives at the plaintiff on-line news company are kicking themselves.

In Al-Bawaba.com, Inc. v. Nstein Tech. Corp., a decision that was discussed in last week’s New York Law Journal, a Kings trial court dismissed their lawsuit against a software company that sought more than $1 million in damages for the defendant’s alleged breach of contract to provide software that would translate the news from English to Arabic.  In this case, there were substantial negotiations over price, the manner and time in which the payments would be made for the software license. And although some of these e-mails went so far as to say “we have an agreement in principle,” no further, formal contract was ever executed.

As noted by the Court, “the record in this matter fully supports defendant’s contention that the parties intended to execute a written agreement, foreclosing any argument that an enforceable oral agreement was ever reached, or even intended … [P]laintiff’s statement that before an agreement could be “filed away in the company’s filing cabinets, it has [sic] to be reviewed by a lawyer and signed” convincingly demonstrate that, as far as plaintiff was concerned, additional terms needed to be resolved and reduced to writing prior to entering an enforceable agreement.” In legalese, this claim was barred by New York’s Statute of Frauds.

The worst part of it, from the plaintiff’s perspective is this: they had a full 15-page contract in hand, but never had their lawyers finish reviewing it.

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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