Haines v. City of New York
Citation and Court
Haines v. City of New York, 41 N.Y.2d 769 (N.Y. 1977)
Facts
In the late nineteenth century, the City of New York entered into a contract with several upstate towns under which the towns agreed to build and maintain a sewer system, and the city agreed to pay for its construction and maintenance. The contract had no explicit termination provision. After the city performed its obligations, it sought to terminate the ongoing maintenance obligation, arguing the contract was at-will or had ended.
Issue
Whether a contract with no express durational limit may be terminated at will by a party that has already received the full benefit of the other party’s performance.
Holding
The New York Court of Appeals held that the contract obligated the city to maintain the sewer system indefinitely and could not be terminated at will, because the towns had fully performed their obligations in reliance on the city’s promise and it would be unjust to allow the city to escape its continuing obligations.
Rule / Doctrine
Where one party has fully performed under a contract with no express term of duration, the court will imply an obligation for the other party to continue performing for a reasonable time or for as long as the purpose of the contract requires, rather than permitting termination at will, to avoid forfeiture.
Significance
Demonstrates how courts use good faith and implied obligations to prevent a party that has received full performance from later claiming the right to terminate. Relevant to issues of contract duration, implied terms, and the obligation to deal fairly with fully performed contracts.