Contracts are the foundation of every business relationship — and when a breach occurs, it can cause significant disruption to your company. Critically, a breach of contract is one of the most common disputes business owners on Long Island can face. If you’re an entrepreneur, it’s important to know the basics about breach of contract matters, the potential remedies, and what you can do to avoid these issues.
There are Different Types of Breaches of Contract
Breaches of contract arise when one party fails to uphold their end of a bargain under the agreement. They can take various forms, such as non-performance, non-payment, defective performance, and delayed performance. The three main breaches of contract categories include the following:
- Material breach — This is a major breach that makes it impossible to satisfy the terms of the contract. For instance, a vendor’s failure to deliver goods by a certain date when there was a specific reason they were needed at that time constitutes a material breach.
- Minor breach — A minor breach occurs when a party fails to perform part of the contract but still fulfills its primary purpose.
- Anticipatory breach — An anticipatory breach occurs when a party to the contract states in advance that they will not be fulfilling their obligations under the contract.
While some types of breaches are more serious than others, any breach of contract can cause substantial financial and reputational harm to a business.
The Law Provides Several Remedies for a Breach of Contract
When a contract is breached, a Long Island business can suffer from loss of profits, reputational damage, lost opportunities, and operational disruption. Notably, there are several remedies available under New York law for breach of contract matters.
A business may recover its monetary losses in the form of compensatory damages and consequential damages. Compensatory damages are meant to cover the direct losses and costs incurred due to the breach — and put the non-breaching party in the same position they would have been if the contract had not been broken. Consequential damages compensate for the indirect losses caused by the breach, such as loss of anticipated profits and the company’s good will.
A court may also award equitable remedies for a breach of contract matter, including specific performance, rescission, or reformation of the contract. In many cases, the contract itself will outline the types of damages available in the event of a breach.
A Breach of Contract Matter Doesn’t Always Need to Be Litigated
A breach of contract matter can often be resolved without the time and expense of litigation. There are various methods of alternative dispute resolution (ADR) that can be used to settle these cases, including negotiation, mediation, and arbitration. Often, a contract will specify the form of ADR that should be attempted to resolve the matter before a lawsuit is filed in court. This can help ensure that the parties remain in control of the outcome and find tailored solutions that meet their needs, while preserving the business relationship.
You Can Take Steps to Prevent a Breach of Contract in Advance
Although the risk of breaches cannot be entirely eliminated, there are still several ways business owners can reduce their likelihood. Importantly, a well-drafted and thorough agreement with clearly defined terms can help prevent ambiguities that may lead to a party’s breach. It’s also essential to conduct due diligence on all parties to the contract, monitor performance, and maintain open communication throughout the course of the contractual relationship.
Contact an Experienced Long Island Breach of Contract Attorney
If you are a Long Island business owner involved in a breach of contract dispute, a skillful business attorney can best advise you regarding your legal rights and remedies. The legal team at Barnes & Barnes, P.C. handles a wide range of business matters, including those involving breaches of contract. Contact us at (516) 673-0674 to schedule a consultation.
