Patterson v. Meyerhofer

New York Court of Appeals · 1912 · Contracts

97 N.E. 472 (N.Y. 1912)

Updated July 26, 2026

Contractsprevention doctrineimplied promisebreach of contracthindrance of performancedamagesvendor-vendee

Facts

The plaintiff and defendant entered a written contract under which the plaintiff would sell and the defendant would buy four parcels for $23,000, and the defendant knew the plaintiff did not yet own them but intended to acquire them at an upcoming foreclosure sale. Before the sale, the defendant told the plaintiff she would not perform the contract and instead would buy the properties for her own account. At the foreclosure sale, the plaintiff was ready, willing, and able to buy, but each time he bid, the defendant bid higher and bought all four parcels herself for a total $620 less than the contract price. The complaint also sought relief regarding a fifth house, but that property was not part of the written contract.

Issue

When a buyer contracts to purchase property from a seller knowing the seller must first acquire it at a foreclosure sale, does the buyer breach the contract by bidding against the seller at that sale and thereby preventing the seller from performing? If so, may the seller recover as damages the profit lost under the contract?

Rule

In every contract there is an implied undertaking by each party that he will not intentionally and purposely do anything to prevent the other party from carrying out the agreement. Where a party contracts with another knowing that the other's performance depends on acquiring property at a sale, the contracting party impliedly promises not to hinder or obstruct that acquisition; breach of that implied promise makes the breaching party liable for the loss caused.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Cleveland, Nora Levin signed a written agreement to buy three townhouses from Eli Mercer for $900,000. Nora knew Eli did not yet own the townhouses and planned to acquire them at a sheriff’s sale the next morning; at the sale, Eli bid on the properties, but Nora repeatedly bid higher and bought all three herself.

If Eli sues Nora for breach of contract, what is the strongest argument in his favor?

Explanation. The majority rule is that every contract carries an implied undertaking that neither party will intentionally and purposely do anything to prevent the other from carrying out the agreement. Because Nora knew Eli had to acquire the properties at the sale in order to convey them, she impliedly promised not to obstruct that acquisition. By outbidding him and buying the properties herself, she breached that implied promise.