Question

3. Right to Cure.                                            

FACTS: Metro-North Commuter Railroad Co. decided to install a fall-protection system for elevated walkways, roof areas, and interior catwalks in Grand Central Terminal, in New York City. The system was needed to ensure the safety of Metro-North employees when they worked at great heights on the interior and exterior of the terminal. Sinco, Inc., proposed a system called “Sayflida,” which involved a harness worn by the worker, a network of cables, and metal clips or sleeves called “Sayflinks” that connected the harness to the cables. Metro-North agreed to pay $197,325 for the installation of this system by June 26, 1999. Because the system’s reliability was crucial, the contract required certain quality control processes. During a training session for Metro-North employees on June 29, the Sayflink sleeves fell apart. Within two days, Sinco manufactured and delivered two different types of replacement clips without subjecting them to the contract’s quality control process, but Metro-North rejected them. Sinco suggested other possible solutions, which Metro-North did not accept. In September, Metro-North terminated its contract with Sinco and awarded the work to Surety, Inc., at a price of about $348,000. Sinco filed a suit in a federal district court, alleging breach of contract. Metro-North counterclaimed for its cost of cover.

ISSUE: In whose favor should the court rule, and why?

RESOLUTION: [Sinco, Inc. v. Metro-North Commuter Railroad Co., 133 F.Supp.2d 308 (S.D.N.Y. 2001)] How did the court answer the questions? What did the court decide?

EXPLANATION-Do you agree with the court? Why or why not? Can you change any facts to give a different result?

Answer 1

Given the Right to cure available to a party to a contract upon commitment of breach of contract especially in cases when the breach of contract cannot be considered as being so material and fundamental as to defeat the purpose of the contract, the court should rule in favour of Sinco Inc. as it was denied the Right to cure by Metro North Commuter Railroad Co. in spite of repeated attempts from Sinco Inc to rectify it's mistake and replace the sleeves with high quality ones put through quality check by independent checking agencies.

The court ruled in favour of Metro North Commuter Railroad Co. as the company put up iron clad reasons for its refusal to provide a right of cure to Sinco Inc. According to Metro North Commuter Railroad Co.the quality issue was a sensitive one given that low product quality could injure or cause death of employees undertaking repair work. This quality clause was clearly mentioned in their contract that quality checks and assurance were mandatory. In spite of this Sinco Inc. was inconsiderate and in breach of contract provided sub standard material on the day of testing and 4 sleeves broke in the hands of labour. This created a fallout with the labour for the management of Metro North Commuter Railroad Co. due to provision of low quality safety equipment. Hence, this became a serious breach for Metro North Commuter Railroad Co. as purchase from the same vendor would have eroded the faith of the labour in the management and could have created a labour crisis also within the organisation of rebellion. Therefore, Metro North Commuter Railroad Co. was completely justified when it used the "loss of confidence" theory to justify termination of it's contract with Sinco Inc. and demanded damages equal to the difference in contract value in the contracts of Sinco Inc. and the one currently given to Surety Inc. The court decided in favour of Metro North Commuter Railroad Co..

Yes after being aware of all the facts and the defence provided by Metro North Commuter Railroad Co. I agree wholly with the decision of the court. Right to cure should be available to a party to a contract however, at certain times a party is negligent of the sensitive terms of a contract which are the major factors not to be ignored or breached as they can lead to serious repurcussions. Sinco Inc. made a huge blunder by neglecting the safety aspect of safety equipment and ignoring the highlighting of this requirement by Metro North Commuter Railroad Co. in the contract. The result could have been different and not gone so clearly in favour of Metro North Commuter Railroad Co. if the quality check and assurance clause had not been so clearly outlined by them in the contract. Also had the negligence on the part of Sinco inc. not been of such sensitive nature as to endanger labour force and fail to check safety of safety equipment, this is a moral and social obligation along with contractual obligation. No company or individual has the right to be negligent when they are responsible for another's life and limb. The court made a stellar ruling and departed true justice.