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Gladstone v. Martucci

A-424-02T1 (N.J. Super. App. Div. 2003) (Unpublished)

CONTRACTS; ENFORCEMENT—Even though a settlement agreement may call for strict compliance, where the violation is slight, the consequence is great, and the party seeking enforcement had failed to complain about similar lapses, only substantial compliance will be required.

A borrower and a lender entered into a stipulation of settlement substantially reducing the amount of money owed. Even though the lender received the full settlement amount, it contended that the borrower was obligated to pay the balance due on the original indebtedness because the borrower had failed to timely pay a $250 administrative fee associated with the borrower’s third payment. The lower court rejected that argument and enforced the original settlement. On appeal, the borrower argued that the lower court “ignored the plain language of the settlement stipulation mandating strict compliance and timely payments.” It further argued that the lower court “incorrectly utilized the substantial performance doctrine to alter an unambiguous settlement agreement.” The Appellate Division reviewed the record and found that the borrower did not pay two other $250 fees that were technically required. On the other hand, the lender never sought payment of those fees. Further, even though the situation required payments by certified or bank checks, the lender accepted payments by wire transfer and by an uncertified check. Even though the borrower did not pay the $250 fee with the first two payments, the lender only argued that its failure to pay the third $250 fee was a violation of the agreement. With all of that in mind, the Appellate Division agreed with the lower court that failure to pay the administrative fee was a technical violation and de minimis at that.


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