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Perez v. Sunzar

A-4318-08T2 (N.J. Super. App. Div. 2010) (Unpublished)

CONTRACTS — When a party to a contract tenders performance but the other party refuses to cooperate with the tendering party, it is as if the tendering party had actually performed its agreement under the contract.

A neighborhood grocery store borrowed $290,000. The loan was secured by a security agreement covering the store’s equipment and inventory. A promissory note required the owner to make monthly payments for twenty years. One year after the note was executed, the owner sold his ownership interest in the store for $150,000. The buyer began operating the grocery store, but was unaware of the promissory note. Nevertheless, the buyer subsequently acknowledged the owner’s obligation to the lender, and the parties agreed to modify the terms of the note.

In a written agreement executed six years after the original note was signed, an agreement was reached between the buyer and the lender. It gave the buyer an option, exercisable over the following two years, to transfer the business to the lender in exchange for a release from the note. When the buyer exercised its option by surrendering the store, a dispute arose over the exercise of this option, and the lender sued.

The lower court, after a bench trial and as affirmed by the Appellate Division, concluded that the buyer had exercised its option by giving the lender possession of the business in satisfaction of the promissory note. It believed the buyer’s testimony that it had handed over the keys of the store to the lender and had made further efforts with the lender’s attorney to surrender the store as provided for under the agreement. The Court concluded the lender failed to cooperate in this surrender, and so breached the relevant agreement.

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