FOREIGN PARTIES TO A CONTRACT CAN CHOOSE NEW YORK LAW
PARTIES TO A CONTRACT RELATING TO AN OBLIGATION OF $250,000 OR MORE MAY AGREE TO A NEW YORK CHOICE-OF-LAW PROVISION, REGARDLESS OF WHETHER THE TRANSACTION HAS A REASONABLE RELATIONSHIP TO NEW YORK.
In IRB-Brazil Resseguros, S.A. v. Inepar Investments, S.A., plaintiff bought a civil suit against a Brazilian corporation as a guarantor of a $27 million plus debt. In moving for summary judgment, the plaintiff submitted a guarantee agreement, which included a new York choice-of-law provision and defendant’s express consent to submit to New York state’s jurisdiction. In opposition, the defendant submitted admissible evidence, as well as an expert opinion on Brazilian law, to establish that the two corporate officers who signed the guarantee lacked actual authority to do so.
Order granting plaintiff’s motion for summary judgment in the amount of $27,772,409 plus pre and post judgment interest at the rate of 9.9%, is modified to the extent of reducing the interest rate to the statutory rate of 9%. Parties to a contract relating to an obligation of $250,000 or more may agree to a New York choice-of-law provision, regardless of whether the transaction has a reasonable relation to New York [General Obligation Law Section 5-1401(1)].
The defendant also subjected itself to personal jurisdiction in New York because: (1) the underlying transaction exceeded $1 million; and (2) it consented to jurisdiction pursuant to the agreement’s forum selection clause [GOL Section 5-1402(1)]. On the merits, the Supreme Court properly granted the plaintiff’s motion for summary judgment. Under New York law, an agreement executed without proper authority may be enforceable under the doctrines of apparent authority and ratification. Here, although the plaintiff failed to establish that the defendant’s officers had apparent authority to execute the agreement based upon anything they said or did, the plaintiff did demonstrate as a matter of law that the defendant implicitly ratified the agreement because its subsidiary received $30 million as a result of its guaranteeing the debt. Decided by the New York Court of Appeals First Department on April 26, 2011.
Attorney Sid Garbanzos is a graduate of the City University of New York School of Law and is admitted to practice in New York and Washington, D.C. Practice areas include: Commercial & Civil Litigation, New York Real Estate/Landlord-Tenant, Immigration, and Personal Injury. Please note that this article is written for a gratuitous purpose only and no attorney-client relationship is created in this publication. This article is not, nor intended to be legal advice. The reader should consult with a reputable lawyer based on his or her individual circumstances. Garbanzos Law Firm at (212)217-0670 or (718)725-7324 (Queens)
Tags: Foreign Parties New York Law
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