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September 5, 2023 | BusinessContract DraftingGeneralLitigation

Breach of Contract: What Makes a Case Worth Pursuing?

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Danielle Yurkew

Associate Attorney

In the world of business transactions and legal agreements, contracts serve as an essential foundation, outlining the rights and obligations of the parties involved.  However, despite the best intentions and carefully drafted terms, one party could fail to fulfill their end of the bargain, leading to a breach of contract.

How can a contract be breached?

There are three types of contract breaches that should considered when determining the appropriate legal action to pursue: a minor breach, a material breach and an anticipatory breach.  A minor breach occurs when some parts of the contract are fulfilled while others are not, and it does not stop the rest of the agreement from proceeding.  A material breach occurs when the unfulfilled obligation is so significant that both parties cannot continue with the arrangement.  An anticipatory breach happens when one party informs the other that they won’t be able to fulfill their contractual obligations in the future.  In this case, the non-breaching party should avoid incurring additional losses or expenses that arise from the breach, as they may not be able to recover these damages later.

What are the types of damages for breach of contract?

Generally, there are two types of damages that can be awarded in a breach of contract case: compensatory and consequential damages.

Compensatory damages (sometimes called actual damages) are meant to put the non-breaching party in the same financial position it would have been had the breach not occurred.  Meanwhile, consequential damages (sometimes called special damages) take into account various monetary elements that a company may have lost as a result of the contract breach.  For example, if a business lost sales due to a breach, compensatory damages may include the cost of lost sales, while consequential damages may include the cost of lost business opportunities.

Other types of damages include nominal damages, which are symbolic monetary awards (e.g., $1 or $10) when no harm is caused, and liquidated damages, which represent an amount agreed upon by the parties in advance of a breach.

Should you pursue legal action if a contract is breached?

When a contract is violated, legal action to recoup damages may be an option to consider.  However, it is important to understand the time and cost implications, as well as the probability of obtaining damages before initiating legal proceedings.

In New York, a breach of contract is established when there is (1) a valid and binding contract, (2) one party has fulfilled their obligations, (3) the other party has failed to do so and (4) damages result from this non-performance.

In a standout breach of contract case, Macy’s department store sued Martha Stewart Living and J.C. Penney, claiming that Stewart Living, which had an exclusive contract with Macy’s, breached the terms of their agreement by offering select items through J.C. Penney.  Macy’s and Stewart Living settled out of court.  Meanwhile, J.C. Penney, accused of improperly interfering with the exclusive deal, was ordered to pay approximately $3.5 million in damages to Macy’s.  J.C. Penney appealed the decision, and the case was ultimately resolved via an undisclosed agreement.


Before deciding to pursue legal action for breach of contract, it is critical to weigh the various factors involved.  Engage qualified legal counsel to assess the viability of the case, damages and your chances of success.  Contact the team at Romano Law today.


Photo by Faruk Tokluoğlu on Unsplash
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