Navigating Breach of Contract Disputes
Business transactions are often complicated matters that require written agreements to memorialize the parties’ intentions. Contracts are fundamental because they help define the scope of the transaction, the intent of the parties, and each party’s obligations.
When one side doesn’t adhere to or comply with the terms of a contract, there may be a breach, and the non-breaching party may be entitled to damages. To successfully pursue a breach of contract, one must show that:
- a contract between the parties exists;
- the non-breaching party performed his or her obligations under the contract; and
- the other side breached the contract.
This is not an easy burden and requires the expertise of a knowledgeable attorney. What follows is a brief checklist to consider in determining whether there was a breach of contract.
- Identify the Contract: Was there a written contract? Was it signed by both parties? Was there a mutual assent, also known as a “meeting of the minds,” that both parties intended to be legally bound by the agreement?
- Choice of Law: Review the contract to determine the law of the state that should be applied to the agreement. Often this is clearly identified in the contract. This is especially important when the contract is between parties that reside in different states. For example, if a New Jersey and New York entity enter into an agreement with one another, you (and your attorney) will need to know what state law will be applied to interpreting the contract. If the contract is between two parties that reside within the same state and the service is conducted in the same state, it is likely that the law of the one state will be applied.
- Choice of Venue/Forum: Contracts between two entities that reside in different states will often have a choice of venue (or forum selection) clause. This is a provision that designates the court and the location where the parties would like to have their legal dispute decided. For example, the clause may say: “in the event of a dispute relating to this Agreement, the parties’ consent to the exclusive jurisdiction and venue of the federal and state courts located in the State of New York.” Clauses likes this are generally enforceable and will require the party interested in bringing the lawsuit to commence the action in New York State, as opposed to New Jersey. Importantly, the location does not dictate the law that will be applied, as discussed in the point above.
- Identify/Assess the Breach: Did the other party fail to comply with a term of the contract? Was the breach material or minor? A material breach is a significant violation that results in substantial harm. An immaterial or minor breach does not prevent fulfillment of the contract’s purpose, as the parties can still complete the contract.
- Does the Contract State What to do When a Breach Occurs: Contracts sometimes include provisions that identify what should happen in the event there is a breach. Does the contract allow for a party time to fix the mistake? Does it require notice to the other party that a breach occurred? Does the contract call for a process to follow before either party can sue? And finally, does the contract call for a method to resolve the dispute, including mediation, arbitration, and/or litigation? In certain situations, mediation may be required before a party can file a lawsuit. Other agreements may require the parties to arbitrate the matter in lieu of litigation.
- What is the Remedy? Determine what damages you incurred. Under contract law, damages may include compensatory damages, consequential damages, incidental damages, and liquidated damages. Equitable relief can also be awarded, including specific performance or recission of the contract. In New York, reimbursement of attorneys’ fees is not permitted unless it is allowed by statute or the contract specifically permits recovery of attorneys’ fees.
If you believe that a party you have contracted with has breached their agreement, it is important to speak with a knowledgeable attorney who can help explain your options and navigate you through the legal process.
This is not intended to be legal advice. You should contact an attorney for advice regarding your specific situation.
Gregory Picciano is Senior Counsel with the firm and practices general, civil, commercial, and construction litigation. Gregory is also a breach of contract lawyer. He can be reached by phone at 845-764-9656 and by email.