Practice point: Defendants' argument that performance
under the note and loan agreement was frustrated by plaintiff's failure to make
timely reimbursement of certain marketing expenses it submitted in accordance
with the loan agreement's reimbursement provisions raises a defense that lies
outside the making of the note and the obligations thereunder. While defenses might
raise issues outside the note, that does not change its character as one for
the payment of money only. Such a defense, which rests upon an apparent claim
of breach of a loan agreement provision regulating the availability of certain
loan proceeds for marketing purposes, is separate from defendants’ unequivocal
and unconditional obligation to repay the monies it was loaned.
Student note: To the extent that the
breach of contract defense may amount to a viable claim, it may be
asserted in a separate action.
Case: German Am. Capital Corp. v.
Oxley Dev. Co., LLC, NY
Slip Op 00014 (1st Dept. 2013).
Tomorrow’s issue: Pushed around at
a rock concert.
