Contracts are the foundation of countless agreements, big and small. A breach of contract transpires when a party fails to uphold its obligations as indicated in the contract. This can lead to frustration and financial loss.

If you find yourself facing a breach of contract, here’s a summary of what you can expect:

Establishing a breach

The first step is determining if an actual breach has taken place. Not every missed deadline or minor oversight constitutes a breach. A breach is considered “material” if it defeats the purpose of the contract. It’s also applicable if it prevents the other party from receiving the core benefit they bargained for.

What can you do?

Once a material breach is established, the non-breaching party can pursue various remedies:

• Sue for damages: This is the most common course of action. You can sue to recover the financial losses you incurred due to the breach. This may include lost profits, repair costs, or any other expenses caused by the other party’s failure to perform.
• Specific Performance: In some cases, you may prefer the breaching party to fulfill their obligations as initially agreed. If the contract indicates a unique item or service, a court may order specific performance to ensure you receive what you bargained for.
• Rescission: If the breach is severe and renders the contract pointless, you may seek to cancel the contract entirely. The original owner will get back any payments made or property exchanged.

Liquidated damages

Some contracts include provisions for liquidated damages, a predetermined amount one party agrees to pay if they breach the contract. This can simplify the process, but courts will only uphold clauses if the amount is reasonable and reflects the potential losses.

Mitigating damages

The law encourages non-breaching parties to take reasonable steps to minimize losses after a breach. For example, if you hire a contractor to remodel your house and they walk off the job halfway through, you should hire another contractor to complete the work. This prevents further damage and demonstrates your efforts to limit the financial impact.

Understanding your options in a breach of contract situation empowers you to make informed decisions. Breach-of-contract cases can involve complex legal nuances. Consulting with a legal professional familiar with New York contract law may help protect your rights and navigate the legal process effectively.