Business Law Case Study Analysis: Clement v. Durban & IDT Corp. (NY)

This document presents a detailed analysis of two significant business law cases: Clement v. Durban (2018) and IDT Corp. v. Tyco Group, S.A.R.L. (2014). The Clement v. Durban case addresses the constitutionality of New York's security for costs provisions, specifically focusing on whether they violate the Privileges and Immunities Clause by treating resident and nonresident litigants differently. The court decided in favor of the defendant and granted a stay on the case until the complainant deposited the security fee of $500. The IDT Corp. case examines whether Tyco International, Ltd. breached a contract requiring good faith negotiation. The court concluded that Tyco International had fulfilled its obligation to negotiate in good faith and that the lack of a final contract did not constitute a breach, as the obligation was limited to negotiation, not contract finalization. The analysis includes the issues, rules, applications, and conclusions of each case, providing a comprehensive overview of the legal principles involved.

BUSINESS LAW
STUDENT ID:
[Pick the date]

BUSINESS L:AW
Case 1: Clement v Durban (2018) NY
Issue
The main issue is to determine if CPLR provisions (particularly 8501 (a) and 8503) lead to
extension of different treatment to non-residents and resident litigants and hence violate the
Privileges and Immunities Clause (PIC).
Rule
The insertion of PIC is to ensure that fundamental privileges are available to both residents
and non-residents alike irrespective of the residence. However, this clause is not absolute and
therefore the state through policy or action must not levy any “unreasonable” burden thus
hampering court access of non-residents. The PIC is not violated owing to state policy
leading to any inherent advantage for the residents in terms of litigation related process. The
state action or policy would violate PIC only if it creates unfair restrictions for court access
with regards to non-residents. With regards to demand security for meeting anticipated costs
if the case is lost, it is noteworthy that this is a standard practice prevalent across all US
states. As per s. 8501(a) CPLR, the only exemption for the security is in cases where poor
people may be involved or the case pertains to habeas corpus. Further, CPLR 8502 indicates
that the complaint may be dismissed if the security payment is not made within 30 days from
the court order (Justia, 2018).
Application
The plaintiff was initially a New York resident when the personal injury action was initiated
but later migrated to Georgia. Hence, demand was made as per CPLR 8503 for depositing a
$500 security fee. The plaintiff rejected this request and instead claimed that CPLR
provisions (i.e. 8501(a), 8502 & 8503) were unconstitutional as it violated PIC. The Supreme
court rejected the claim. The Appellate division pronounced the same decision as it ruled that
CPLR 8501 did not create any obstruction for accessing court for non-residents and hence did
not violate PIC. Further, the provision for security for non-residents was a common practice
practised by all states and is in accordance with PIC (Justia, 2018).
Conclusion
The court decided in favour of the defendant and stay on the case was granted till the time
complainant deposited the security fee of $ 500.
2

BUSINESS L:AW
Case 2: IDT Corp. v Tyco Group, S.A.R.L. 2014 NY
Issue
The main issue is to determine if Tyco International, Ltd breached the contract with IDT
Corp which obliged the parties to negotiate in good faith.
Rule
With regards to preliminary agreements which place obligation on parties to negotiate in goof
faith, the contractual obligations can be discharged by negotiating and it is not necessary that
a final contract is enacted. This has been highlighted in Teachers Ins. and Annuity Assoc. v
Tribune Co. 670 F Supp 491, 505 [SD NY 1987] case. If one of the parties decides not to
negotiate, then there is breach of contract and suitable remedies may be awarded to the
innocent party. However, non-conclusion of a contract through fair negotiation may result
owing to change in business scenario or lack of interest of either parties. This scenario would
not lead to breach of preliminary agreement (Casetext, 2012).
Application
In 1999, a MOU was signed between Tyco International Ltd and IDT Corp for the joint
development of telecommunication system. There was lawsuit filed by IDT Corp in 2000
which led to the enactment of settlement agreement whereby further negotiations would be
carried out in good faith. These negotiations were done during 2001-2004 without any final
contract enactment. A lawsuit was brought by IDT Corp which was decided in 2008 in favour
of Tyco International. Further negotiations during 2009-2010 also did not yield any contract
resulting in present lawsuit. The court highlighted that Tyco International had discharg3ed
the obligation to engage in good faith negotiation. The fact that the contract could not be
signed does not lead to breach of contract as obligation was limited to negotiation and not the
final contract. Also, the negotiation obligation under the settlement agreement cannot
continue indefinitely and thereby the settlement contract was considered as discharged
(Casetext, 2012).
Conclusion
There was no violation of the settlement agreement by Tyco International by not reaching a
contract since the obligation to negotiate in good faith was discharged.
3

BUSINESS L:AW
References
Casetext (2012) IDT Corp.v.Tyco Group, S.A.R.L., Retrieved from
https://casetext.com/case/idt-corp-v-tyco-grp-1
Justia (2018) Clement v. Durban, Retrieved from
https://law.justia.com/cases/new-york/court-of-appeals/2018/118.html
4