A recent ruling in the Suffolk County Commercial Division highlights the risk a party faces when agreeing to, and later attempting to, enforce an oral modification to a written.
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Can the purchasers of promissory notes containing non-New York forum-selection clauses enforce the notes in the Commercial Division? Not without an extraordinary showing as to why the clauses should be set aside, according to Commercial Division Justice Elizabeth Emerson’s recent decision in
Stein v. United Wind, Inc.[1] In
Stein, Justice Emerson granted a motion to dismiss an action to enforce promissory notes where the notes designated Delaware as the exclusive forum for any disputes arising in connection with the notes.
Background
The dispute in
Stein arose from defendant United Wind’s efforts to raise additional funds for its wind-energy development and leasing operations. In 2017, plaintiffs Howard and Cathy Stein (the “Steins”), and Jeremy Tark (“Tark”) entered into subscription agreements and purchased convertible promissory notes. The Steins invested $75,000 and Tark invested $100,000.