A contract is a legally binding agreement between parties. In order to create a valid contract, an offer is made by one party, the offer is accepted by the other party, and there is an exchange of consideration between the two parties. Should one party to the contract fail to fulfill its obligations to the other party under the contract, there is said to have been a breach of contract.
Elements of a Breach of Contract Claim
In order to successfully bring a breach of contract claim in New York, certain elements must be proven. These elements include:
- A contract between the parties existed
- What material performance of the contractual obligations would have looked like
- The failure of the other part to materially perform the commitments established pursuant to the contract
- What damages resulted from the other party failing to materially perform obligations under the contract
To prove that a contract existed between the two parties, there must be proof of a legally binding promise which is what a contract is at its essence. In order to be valid and enforceable, the contract formation must have involved the basics including an offer, acceptance, and consideration. Consideration means that both parties must have both given and received something of benefit for the contract to be valid. The contract must also be properly drafted. This is a good idea anyway as poorly drafted contracts and oral contracts as well can all too often lead to disputes.
In order to bring a breach of contract action, the plaintiff bringing the action must have upheld his or her obligations under the contract or have a valid excuse for not performing them. In some instances, for example, a plaintiff’s performance of the contract may have been conditioned on the defendant’s performance. In the event that the defendant did not perform, the plaintiff would have been excused. In this type of situation, the plaintiff will need to allege the facts that justify being excused from contract performance.
For a breach of contract action to succeed, the breach by the defendant must have been a material breach. This means that the breach goes to the heart of the agreement. It cannot be something trivial. The breach must be so significant in nature that it essentially defeats the purpose that was served by the parties contracting with each other in the first place. In contracts that specifically state that time is of the essence, failure to meet the deadlines of the contract will constitute a material breach.
Last, but not least, there are the damages to consider in a breach of contract action. The intent of damages in breach of contract claims is to put the injured party in the same position as would be occupied had the contract never been breached. This means that the law allows a plaintiff to recover both direct and consequential damages. Direct damages are those that flow naturally and foreseeably from a breach of contract. Consequential damages include those damages that would likely have been considered by the parties when they entered into the contract in the first place. Consequential damages, for instance, would include things like lost profits and incidental losses.
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