Option Unenforceable Due to Unreasonable Delay in Exercising It

On December 12, 2018, the Second Department issued a decision in Breslin v. Frankel, 2018 NY Slip Op. 08456, holding that an option was unenforceable because of an unreasonable delay in exercising it, explaining:

An option contract is an agreement, in exchange for consideration, to hold an offer open, thereby conferring upon the optionee the right to purchase at a later date. Where, as in this case, an agreement sets no explicit time limit for performance, the law will imply a reasonable time. In determining what constitutes a reasonable time, the court should consider the nature and object of the agreement, the previous conduct of the parties, the presence or absence of good faith, the experience of the parties and the possibility of prejudice or hardship to either party, and the number of days provided for performance, if specified.

We agree with the Supreme Court's determination that the defendants were entitled to a declaration in their favor. The nature of the agreement, the potential prejudice to the defendants, and Kenneth's questionable conduct in attempting to exercise the option while failing to perform his managerial obligations to wind down Weary's affairs following one or more events triggering its dissolution, establish that Kenneth's 19-year delay in attempting to exercise the option was unreasonable as a matter of law. Accordingly, upon renewal and reargument, the court correctly adhered to its prior determination granting the defendants' motion pursuant to CPLR 3211(a) to the extent of determining that the defendants were entitled to a judgment declaring that the option to purchase is no longer enforceable, and denying the plaintiffs' cross motion for a declaration in their favor.

(Internal citations omitted).

In New York, contracts generally are enforced according to their terms. However, courts have developed rules, like the rule here, that supply terms that are missing from a contract. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.