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Handling a breach of contract in New York

On Behalf of | Oct 19, 2021 | Corporate Litigation

Breach of contract can be difficult to navigate even for an experienced business owner. Notably, how you handle a breach of contract can have long-lasting business consequences, so it is important to take the time to understand all legal considerations.

Compensatory damages

Firstly, as the non-breaching party, you need to show proof that the business owner breached a contract, and that the breach harmed you or your business financially or in some way.

In most cases where there is a breach of contract, compensatory damages are usually awarded as financial compensation for the harm caused by the business owner breaching his or her contractual obligations.

Liquidated damages

Liquidated damages are a pre-determined amount of money that one business owner agrees to pay the other business owner as compensation for a breach. Liquidated damages are typically stipulated in an agreement where it is difficult to determine financial harm caused by a breach. For example, if you were leasing space from another business and your lease stated that either party had to provide six months’ notice before canceling the lease, you would both agree on a specific sum as liquidated damages.

Where business owners have agreed to liquidated damages in advance and one business owner breaches his or her obligations under that contract, he/she must pay the other business owner those pre-agreed upon amounts as compensation for the breach.

In business law, liquidated damages are sometimes used to avoid the costs of litigation if a business owner breaches his or her contractual obligations.

Court injunction

An injunction is a legal order that requires the business owner who breached his or her contractual obligations to take some action that will remedy the situation and prevent further harm until the matter goes before a judge at trial.
For example, if business A breached the contract by not providing business B with widgets, business B could apply for an injunction that would require business A to provide business B with widgets until the matter gets resolved in court.

Business law can feel complicated, especially when it comes to breach of contract. However, understanding the steps to take to handle these situations is the first step business owners must take in order to resolve this issue.