Contracts are only as effective as the extent to which the parties abide by their agreed-upon duties. When a party decides to breach the contract, the non-breaching party may have various legal remedies available. These are important to understand if you conduct business in New York. As you increase the number of contractual relationships your company has, the risk of a breach of contract increases.
At Rosenbaum & Taylor, our seasoned New York business lawyers represent clients on both sides of breach of contract lawsuits. Find out what constitutes a breach and what steps you can take in response.
The Required Elements of a Breach of Contract Lawsuit
A plaintiff in a New York breach of contract claim must prove four specific elements. The burden of proof rests with this party to show that:
- There is a valid contract between the parties.
- The non-breaching party performed its duties under the contract.
- The other party failed to perform its contractual duties.
- The non-breaching party experienced damages as a result of this failure.
What Counts as a Valid Contract in New York?
It is commonly assumed that any violation of a promise can be construed as a breach of contract. But the underlying promise must actually be a contract. A contract is an agreement between two parties that is enforceable by the court system.
One party must make an offer that the other party accepts. This acceptance must be on the terms of the original offer. If the acceptance is conditional on additional or new terms, it is a counteroffer. No contract has been formed yet.
There must also be consideration between the parties. Consideration is the exchange of something of value. Each party receives something valuable by way of the contract terms being carried out.
Lastly, the contract must not be for something illegal or against public policy. This is rarely an issue, but it can be in some cases. Also, certain contracts must be in writing under a requirement known as the statute of frauds. If you are unsure whether you have a valid contract, reach out to a seasoned New York business lawyer.
Different Types of Breaches
Not all breaches are the same, nor do they lead to the same outcomes. Here are some examples of different types of breaches.
Minor
A minor breach is one that violates part of, but not the entire, contract. To be minor, the breach must not prevent the performance of the other contractual obligations. The non-breaching party must fulfill its promises but can potentially sue for damages.
Material/Total Breach
By contrast, this type of breach prevents the parties from fulfilling their duties. In this case, the non-breaching party can stop performing its obligations and sue the breaching party for damages.
Anticipatory Breach
This takes place when one party notifies the other that it won’t be able to perform under the contract. At this point, the non-breaching party should mitigate its losses. If it fails to do so, it may not be able to claim these additional losses as damages.
What to Do if There’s a Breach
If there has been a breach, the non-breaching party can sue for damages. Damages are generally designed to make up for the losses suffered because of the breach. In some cases, damages are nominal or are specified in the contract (liquidated damages). Parties can also ask a court to force the breaching party to perform its duties. There are also situations in which the contract can be rescinded entirely.
While many parties immediately go to court, this may not be the best choice. Instead of litigating you may wish to mediate the dispute with the other party. This could lead to a settlement agreement, revisions to the contract, and other positive outcomes. Mediation can preserve the business relationship and help avoid major operating disruptions.
Helping You Understand Your Legal Rights and Options
If your contract has been breached, you need to understand the steps to take next. We can represent you whether you are the breaching or non-breaching party. We can also explore whether litigation, mediation, or some other avenue is best for your situation.
Count on the skilled representation of our New York business law attorneys. Give Rosenbaum & Taylor a call.
