Many business lawsuits result from a breach of contract. While some breaches are avoidable with detailed negotiations and well-drafted document, others are not. As a business owner, it is vital to understand the basics of contract law, including the legal elements of a contract breach.
The Existence of a Contract
In its simplest form, a contract is a legally binding promise. While modern contracts are typically complicated written documents, both written and oral contracts are legally enforceable under certain circumstances. A valid contract consists of an:
- Acceptance of the Offer, and
- Consideration (both parties must give and receive something of benefit).
However, poorly-drafted documents and oral contracts frequently lead to disputes. It is always in your best interest to draft clear and comprehensive written contracts.
If you are a New York business owner, consider working with a skilled contract lawyer at the beginning of every business deal. A lawyer can ensure that your interests are fully protected by a well-written, enforceable contract. A lawyer can also evaluate your existing contracts and determine whether they are enforceable under New York law.
Breach of Contract Elements in NY
In New York, “The elements of a cause of action for breach of contract are (1) formation of a contract between plaintiff and defendant, (2) performance by plaintiff, (3) defendant’s failure to perform, [and] (4) resulting damage.” 2 Leon C. Lazer, et al., New York Pattern Jury Instructions – Civil § 4.1, at 594 (2d ed. 2006); see JP Morgan Chase v. J.H. Elec. of N.Y., Inc., 69 A.D.3d 802, 803, 893 N.Y.S.2d 237 (2d Dep’t 2010); Furia v. Furia, 116 A.D.2d 694, 498 N.Y.S.2d 12, 13 (2d Dep’t 1986).
Breach by the Defendant
Breach of contract occurs when a party does not perform its contractual obligations. Disputes occur when a party:
- Fails to provide goods or services,
- Fails to issue prompt payments,
- Does not meet deadlines or other terms, or
- Misinterprets the contract’s terms and conditions.
Sometimes, performance is conditional upon the completion of other obligations. (For example, payment may not be contractually required until goods or services are delivered.) If you have met your obligations—but the other party has not—there has been a breach.
However, you cannot recover damages unless the breach is “material.” A material breach is so substantial that it defeats the purpose of the contract.
Example: You enter into a contract with a construction company for a building remodel. The contract does not include specific deadlines, but promises that the job will be completed within a “reasonable time.” Due to permitting difficulties, the remodel takes a little longer than expected. However, the job is fully completed once the correct permits are in place. This may not be a material breach.
Example: You enter into a contract with a consulting company. The consultants promise to audit your HR policies within three months. The contract clearly states that time is of the essence and prompt delivery is expected. When the consultants ignore the deadline, they are in material breach of the contract.
If your business has suffered because of a breach of contract, call a New York business lawyer immediately. A lawyer will evaluate your claim and review your contract, as well as ensure that your interests are protected. However, there are strict filing deadlines in New York breach of contract claims. If you do not meet these deadlines, the courts will automatically dismiss your claim.
Damages in a New York Breach of Contract Claim
In New York, courts award a variety of damages for a material breach of contract, including:
- Direct damages (for example, the difference in the value of the promised goods compared to what was provided), and
- Consequential damages (such as lost profits, loss of goodwill, and costs associated with correcting the breach).
In many cases, expert witnesses can aid you and your lawyer in computing damages for a New York breach of contract claim. A skilled lawyer can help you maximize your recovery and ensure you fully protect your business interests.
Contact an Experienced New York Breach of Contract Lawyer
The Law Offices of David S. Rich, LLC represents businesses in breach of contract disputes. We have more than twenty years of experience, and we distinguish ourselves by diligently and tenaciously representing our clients. Contact us today for a consultation.