The Other Party Broke Its Contract With My Company In New York; What Can My Company Do Now?

by admin on December 1, 2011

In the world of commerce, contracts between companies often are broken, or ‘breached.’  This post discusses remedies that the the New York state courts, and federal courts situated in New York, frequently grant to a business aggrieved by another party’s breach of the contract between them.

See here for the elements of a cause of action for breach of contract in New York.


In New York, an award of money damages is the relief most frequently granted for breach of contract.  That is, the court requires the breaching party to pay money to the non-breaching party.  The categories of money damages for violation of an agreement include the following:

Compensatory damages “place the nonbreaching party in as good a position as it would have been had the contract been performed.”  Brushton-Moira Cent. School Dist. v. Fred H. Thomas Assocs., P.C., 91 N.Y.2d 256, 261, 692 N.E.2d 551, 669 N.Y.S.2d 520 (N.Y. 1998).

Punitive damages are damages on an increased scale, awarded to the injured business over and above what will barely compensate it for its property loss.  In New York, punitive damages may not be recovered for mere breach of contract, even where the breach of contract was intentional.  Rather, punitive damages may be recovered in a breach of contract action only where the breach involves fraudulent behavior “evincing a ‘high degree of moral turpitude’ and . . . ‘such wanton dishonesty as to imply a criminal indifference to civil obligations,’ ” and where “the conduct was ‘aimed at the public generally.’ ”  Rocanova v. Equitable Life Assurance Soc’y, 83 N.Y.2d 603, 613, 634 N.E.2d 940, 612 N.Y.S.2d 339 (1994) (citation omitted).

Nominal damages are a trifling sum awarded to the non-breaching party where there is proof of breach of the contract, but where there is no substantial loss or injury to be compensated.

Liquidated damages are amounts which are fixed or stipulated by the parties in the agreement in the event of breach.  Courts in New York will give effect to a liquidated damages provision if the amount liquidated ” ‘is a reasonable measure of the anticipated probable harm’ ” and the damages flowing from a breach are difficult to ascertain.  See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 396, 712 N.E.2d 1220, 690 N.Y.S.2d 854 (N.Y. 1999) (citation omitted).

Specific Performance

Specific performance is the remedy of requiring exact performance of an agreement in the specific form in which it was made, or according to the precise terms agreed upon.  In New York, specific performance is available “where the amount of damages is difficult to ascertain, based on the unique nature of the subject matter of the contract or agreement or the lack of an established market value.”  JMG Custom Homes, Inc. v. Ryan, 45 A.D.3d 1278, 1281, 844 N.Y.S.2d 817 (4th Dep’t 2007).    By contrast, specific performance generally is not available “when money damages are sufficient to protect the interests” of the injured company.  JMG Custom Homes, Inc., 45 A.D.3d at 1281.

If your company wants to bring, or needs a lawyer to defend it in, business litigation and you are located in the New York City area, call Attorney David S. Rich at (212) 209-3972.

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