Breach of Contract & Quasi Contract

Breach of Contract

Contract law is at the heart of business and commercial litigation. Under New York law, the elements of a breach of contract claim are: 1) the existence of a binding contract, 2) one or more parties materially breach the contract, and 3) damages that result from that breach. Each of these elements raises complicated questions of law and fact.

First, what is a contract? A contract is an agreement supported by an offer, acceptance, and consideration. The existence of a contract requires a party to make an offer, which another party accepts. Consideration exists when parties exchange something of value, which induces them to enter into agreement for mutual performances.

There are different types of contracts. A unilateral contract is an exchange of services for payment. A bilateral contract exists when a promise is exchanged for another promise.

Second, what is a breach of contract? A breach of contract is simply a failure by one side to perform its obligations under the terms of the contract. Litigation often raises the fundamental question of whether the breach is significant to give rise to a breach of contract. Many times disputes arise over the meaning of the contract terms. Ambiguous terminology is the most common cause of breach of contract claims. Retaining competent counsel and thoroughly reviewing the terms of the contract will help ensure that litigation does not ensue.

Third, what damages are recoverable under a breach of contract claim? The law permits recovery of direct damages. For example, if a buyer does not pay for certain goods, a seller can recover direct damages resulting from the buyer’s breach. In some circumstances, the law in New York also permits recovery of indirect damages, sometimes referred to as consequential damages, if those damages are reasonably foreseeable. Additionally, under New York law, if a plaintiff recovers for breach of contract, the defendant may also be liable for statutory interest before and after a judgment is rendered.

Quasi-Contract

When a contract does not exist, but a party has performed services for another party, alternative remedies exist to compensate the injured party. Quasi-contracts, otherwise known as implied-in-law contracts or constructive contracts, are not actual contracts, but rather, legal substitutes created by courts for equitable relief. The concept of quasi-contract is that even in the absence of an actual contract, an injured party should still be compensated to prevent an injustice. Conceptually, quasi-contracts are based on the concept that a contract should exist even though it had not been formed. Examples of quasi-contracts include promissory estoppel, unjust enrichment, and quantum meruit.

All facets of contracts and quasi-contracts as well as potential liability should be examined early in the legal process. The attorneys at Gana LLP can help clients evaluate their breach of contract and quasi-contract claims or defenses to determine the best course of legal action.

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