W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157 (1990)
When parties set down their agreement in a clear, complete document, the writing should be enforced according to its terms, and extrinsic evidence is inadmissible to create an ambiguity in an otherwise unambiguous agreement.
Summary
W.W.W. Associates contracted to buy land from the Giancontieris. The contract included a clause allowing either party to cancel if ongoing litigation affecting the property wasn’t resolved by a specific date. W.W.W. argued this clause was solely for their benefit and could be waived. The Giancontieris sought to cancel the contract based on the clause. The Court of Appeals held that because the contract was unambiguous in granting cancellation rights to both parties, extrinsic evidence suggesting the clause was only for W.W.W.’s benefit was inadmissible, thus enforcing the contract as written.
Facts
The Giancontieris owned a two-acre parcel of land. On October 16, 1986, they contracted to sell it to W.W.W. Associates, a real estate developer, for $750,000. The contract included a clause (paragraph 31) stating that either party could cancel if litigation concerning the property was not resolved by June 1, 1987. The contract also contained a standard merger clause (paragraph 19), stating that the written agreement constituted the entire agreement between the parties. W.W.W. was also given the sole right to cancel within 10 days of signing, and the option to cancel if the sellers couldn’t deliver building permits at closing.
Procedural History
When the litigation remained unresolved close to the June 1, 1987 deadline, W.W.W. declared its intention to close and sued for specific performance. The Giancontieris then canceled the contract. The trial court granted summary judgment to the Giancontieris, dismissing the complaint. The Appellate Division reversed, granting summary judgment to W.W.W., ordering specific performance based on extrinsic evidence. The New York Court of Appeals reversed the Appellate Division’s decision, dismissing W.W.W.’s complaint and reinstating the trial court’s order.
Issue(s)
Whether extrinsic evidence should be considered to interpret an unambiguous contract and determine if a reciprocal cancellation provision was intended for the sole benefit of one party.
Holding
No, because when parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms. Extrinsic evidence is inadmissible to create an ambiguity in a written agreement that is complete, clear, and unambiguous on its face.
Court’s Reasoning
The Court of Appeals emphasized the importance of enforcing clear and complete written agreements according to their terms. The court found the cancellation clause in question to be unambiguous, granting a reciprocal right to both parties. The Court reasoned that considering extrinsic evidence to create an ambiguity would undermine the stability of commercial transactions, particularly in real property dealings. The court stated, “When parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms. Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing.” The court also noted that the contract contained a merger clause, further solidifying the intent to integrate all prior understandings into the written agreement. The Court suggested a logical reason for the seller to want the option to cancel: “A seller taking back a purchase-money mortgage for two thirds of the purchase price might well wish to reserve its option to sell the property for cash on an ‘as is’ basis if third-party litigation affecting the property remained unresolved past a certain date.” The Court rejected W.W.W.’s bad faith claim, finding it was not supported by admissible evidence. In summary, the Court prioritized the written contract’s plain meaning over W.W.W.’s claims of a different intent based on outside evidence.