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Our litigation lawyers successfully defended their client against alleged contractual breach

05.02.19

Recently (January 19, 2019), James Murphy and James Delaney successfully defended a client from a $1.6 million claim for alleged breaches of the duty of honest contractual performance and alleged failures to pay an earn-out. The claim was dismissed in its entirety in a summary dismissal application, saving our clients the time and expense of a trial.

The Plaintiff's claims arose in the context of a corporate acquisition. In its Statement of Claim, the Plaintiff alleged that our client breached the duty of honest performance by, among other things, failing to give the Plaintiff the level of control it had expected prior to the acquisition.

The Court dismissed their claims on the basis that the duty of honest performance is not a standalone cause of action, rather it must be grounded in the contract. This duty cannot be used to insert subjective expectations into a contract, override the clear written words of the contract, or allow the court to re-write the contract in a way the court or the parties consider "fair." Accordingly, this claim was dismissed largely on the basis of the contracts themselves, requiring little extrinsic evidence despite the nature of the claim.