## Facts

- Sam Swartz entered into a written contract with the War Memorial Commission of Rochester (Commission) giving him the exclusive right to operate concession services (food and refreshments) at the Rochester War Memorial Building.
- At the time the contract was made, the Commission’s policy prohibited alcohol sales in the building.
- The contract contemplated that the alcohol ban might later be lifted and provided that, if alcohol sales became permitted, the parties’ rights and obligations under the agreement would extend to those alcohol sales.
- The agreement required Swartz to obtain and maintain all licenses and permits needed for his concession operations under the contract.
- Swartz’s compensation arrangement included payments to the Commission tied to concession revenues (a percentage of gross receipts).
- On November 15, 1965, the Commission lifted its prohibition on alcohol sales at the building.
- After the ban was lifted, Swartz refused to apply for the license needed to sell alcohol and declined to sell alcohol at the facility.
- On November 30, 1965, the Commission notified Swartz that if he did not apply for the license within 30 days, his contract would be terminated.
- Swartz filed an action seeking a declaratory judgment that he could keep the exclusive concession rights while choosing not to sell alcohol.
- The trial court dismissed Swartz’s claim as lacking merit, and Swartz appealed.

## Issues

1. Whether an exclusive concession contract that extends to alcohol sales if permitted, and requires the concessionaire to hold required licenses, imposes an implied obligation on the concessionaire to seek the liquor license and sell alcohol once the ban is lifted.

## Decision

- The appellate court affirmed the trial court’s dismissal of Swartz’s action for declaratory relief.
- The court concluded that, once alcohol sales became authorized and were brought within the contract’s scope, Swartz could not keep the benefits of exclusivity while refusing to take reasonable steps to carry out the alcohol-sales portion of the agreement.
- The court treated the contract as imposing an implied duty on Swartz to use reasonable efforts to obtain the required liquor license and to proceed with alcohol sales as contemplated by the contract, rather than allowing Swartz to opt out unilaterally while maintaining exclusivity.

## Legal Principles

- Courts read contracts as a whole and may recognize implied obligations when necessary to give effect to the agreement’s purpose and the arrangement the parties set out in writing.
- In an exclusive dealing or exclusive concession relationship, where the grantor’s compensation depends on the concessionaire’s sales, the contract may imply a duty on the concessionaire to use reasonable efforts to generate the sales that make the bargain work.
- When a contract expressly anticipates that certain sales will occur if a legal or policy restriction is removed, and assigns responsibility to the concessionaire to hold needed licenses, the concessionaire may be required to make a good-faith, reasonable effort to obtain the license once the restriction is removed.
- A party may not retain an exclusive contractual position while refusing to perform a material, revenue-related component that the contract contemplates will arise upon the occurrence of a specified event (such as authorization of alcohol sales).

## Conclusion

Swartz v. War Memorial Commission of Rochester holds that an exclusive concessionaire who agreed to hold necessary licenses, and whose contract expressly extended to alcohol sales if later permitted, could not keep exclusive rights while refusing to apply for the liquor license and sell alcohol after the ban was lifted; the court enforced an implied reasonable-efforts obligation consistent with the contract’s structure and revenue-sharing purpose.


Swartz v. War Memorial Commission of Rochester, 267 N.Y.S.2d 253 (1966)