Contracts are an inevitable part of life for most people, and business owners, in particular. Contracts also take many different forms, from express written commitments such as a signed lease to unwritten but enforceable oral contracts. Examples of oral contracts include when you call a plumber to fix a problem in your home, and he or she does, but you do not have this in writing. You cannot, in such a case, refuse to pay because the contract was not in writing. Whether a contract is in writing or oral, if you fail to perform as agreed, you can be sued for breach of contract.
Breach of Contract in New York
For someone to sue you in New York for breach of contract, he or she must show that you committed a “material breach” of the contract terms. A material breach is generally deemed to be doing or not doing something that significantly frustrates or altogether defeats the purpose of the contract. In addition to the breach, the person suing you must show that he or she suffered a monetary loss as a result of the breach.
For example, assume you are a window replacement contractor, and you are hired to replace ten windows in someone’s home at a price of $1,000 per window. The homeowner paid you $5,000 before you did any work, and you sent your workers to start the project. However, due to unavoidable circumstances, you discover that your team will not be able to complete all ten windows. At the time you realize this, your workers have only been able to replace only two windows.
Such a situation would be considered abandonment and therefore a substantial failure to perform the contract you entered with the homeowner. By virtue of you not completing the work, the homeowner can show that he or she has suffered a financial loss of $3,000, which he or she is entitled to recover.
When a Breach of Contract Cannot Be Avoided
Although people enter into contracts intending to perform the contract as agreed, there are, however, circumstances where breaching the contract may be unavoidable. Continuing with the example above, you may have underestimated how long it would take to complete a prior job, or the job in question is taking longer than expected due to unforeseeable circumstances. In this situation, you may want to do a cost-benefit analysis to determine the best way forward. In either case, you are going to be technically in breach of a contract: either the prior job where the work was in progress but delayed or the new job where you have just started.
In this example, once you realize that you are unable to continue work on replacing the homeowner’s windows, you may wish to renegotiate the terms of the contract with the homeowner to allow you more time to complete the job. You may also wish to explore the possibility of subcontracting the work—if the current allows it. Whichever option you choose, your goal should be to make the homeowner as whole as he or she would be if you had completed the job as agreed. If you propose something that makes the homeowner whole, he or she may accept the solution forgo the option of suing you for breach of contract.
A Manhattan Contract Litigation Lawyer Can Help
At JOEY JACKSON LAW, PLLC, we have more than 25 years of experience handling a variety of issues, including advising clients on contract law. If you are contracted to provide a service that you are not able to provide anymore, or if you have already stopped doing the work you were contracted to do, contact an experienced New York City contracts attorney to discuss your available options. We will evaluate your case and help you decide how best to proceed. Call 1-833-JOEYJACKSON or 1-833-563-9522 for an appointment.
Sources:
https://www.nysenate.gov/legislation/laws/GOB
https://www.nysenate.gov/legislation/laws/CVP/5003