1. A Broken Promise Does Not Always Justify Ending the Contract
A contractual failure may support damages without justifying termination. The distinction depends on whether the breach substantially undermines the agreement's purpose.
Materiality Depends on the Purpose of the Agreement
A material breach deprives the injured party of a substantial part of the expected bargain. Courts consider the importance of the unfulfilled obligation, performance already received, and the seriousness of the default.
In Hadden v. Consolidated Edison Co., 34 N.Y.2d 88 (1974), the Court of Appeals examined factors relevant to substantial performance. A minor breach may still support damages without permitting termination.
Continuing Performance May Affect Termination Rights
After discovering a material breach, an injured party may have to choose between terminating the agreement and continuing performance.
In Parlux Fragrances, LLC v. S. Carter Enterprises, LLC, 204 A.D.3d 72 (1st Dep't 2022), the court identified factual disputes about contractual affirmation and waiver. Continued dealings do not automatically establish waiver. Review the applicable commercial contract terms before withholding payment or terminating performance.
2. A Viable Claim Requires Evidence of Each Contractual Element
A plaintiff generally must establish an enforceable agreement, performance or a legal excuse, the defendant's breach, and resulting damages. Each element should be supported by evidence connecting the alleged failure to a contractual obligation.
The Alleged Breach Must Concern an Enforceable Duty
Identify the specific contractual obligation and when performance became due. Review the agreement, amendments, and incorporated documents rather than relying solely on commercial expectations.
An express condition precedent may need to occur or be legally excused before the corresponding duty arises. In Parlux, the court distinguished contractual promises from express conditions requiring clear conditional language.
The Evidence Must Address Likely Defenses
A defendant may dispute the obligation, claim that the plaintiff breached first, or challenge the alleged loss. Organize evidence around these issues.
| Legal Issue | Relevant Evidence | Potential Defense |
|---|---|---|
| Contractual duty | Agreement, amendments, purchase orders | No enforceable obligation |
| Plaintiff's performance | Payment records, delivery receipts | Prior breach or unmet condition |
| Defendant's breach | Default notices, correspondence | Performance was timely or excused |
| Resulting damages | Invoices, financial records | Unrelated or speculative losses |
Contractual duty
- Relevant EvidenceAgreement, amendments, purchase orders
- Potential DefenseNo enforceable obligation
Plaintiff's performance
- Relevant EvidencePayment records, delivery receipts
- Potential DefensePrior breach or unmet condition
Defendant's breach
- Relevant EvidenceDefault notices, correspondence
- Potential DefensePerformance was timely or excused
Resulting damages
- Relevant EvidenceInvoices, financial records
- Potential DefenseUnrelated or speculative losses
Preserve original records and relevant timestamps. The broader process of suing for breach of contract involves additional procedural requirements, but claim viability begins with evidence supporting these elements.
3. Contractual Preconditions Can Restrict Termination or Litigation
Even an established breach may not permit immediate termination or litigation. Notice-and-cure provisions and dispute-resolution clauses can determine which steps must occur first.
Notice-and-Cure Clauses Require Careful Interpretation
Some agreements require written notice and a specified opportunity to correct a default before termination.
Check the required notice content, delivery method, and cure period. These conditions may restrict termination without necessarily barring damages for an earlier breach. Failure to satisfy an applicable termination condition may expose the terminating party to a separate breach claim.
Arbitration and Governing-Law Clauses Affect Where Claims Proceed
An enforceable arbitration clause may require arbitration rather than court litigation. The Federal Arbitration Act, including 9 U.S.C. § 2, may govern agreements involving commerce.
A choice-of-law clause addresses applicable substantive law but does not independently establish court jurisdiction. Review the contract's forum-selection and dispute-resolution requirements before proceeding. The commercial arbitration process may impose additional procedural obligations.
4. Filing Deadlines and Damage Limitations Affect Claim Viability
A plaintiff must establish both a timely claim and legally recoverable losses. Filing deadlines depend on the contractual relationship, while damages require evidence of causation and amount.
Filing Deadlines Depend on the Contract and Applicable Law
CPLR § 213(2) generally provides six years for contract claims, subject to exceptions. UCC § 2-725 generally provides four years for sales-of-goods claims, which an original agreement may shorten to at least one year.
Claims ordinarily accrue upon breach rather than discovery, although certain warranty claims have different rules. CPLR § 202 may require a shorter limitations period for qualifying claims accruing outside the state.
Consequential Damages Require Foreseeability and Reliable Proof
Consequential damages, such as profits lost on a separate transaction, require causation, reasonable certainty, and losses within the parties' contemplation when contracting.
In Island Ordnance Systems, LLC v. Amerimex, Inc., 224 A.D.3d 821 (2d Dep't 2024), the court rejected inadequately pleaded future-profit losses. Lost profits from the breached agreement may instead constitute direct damages. Contractual exclusions and liability caps may also restrict recovery, as discussed in damages for breach of contract.
19 Oct, 2026
