What Happens if My Vendor Breaches the Contract?

June 12th, 2015

A successful business has good relationships with the people or companies that supply products and services. However, there are times when these vendors may not be able to fulfill their end of the bargain. When a party fails to perform their obligations, a breach of contract has occurred. Before resorting to litigation, you may try to resolve the issue between your business and the vendor on your own. However, sometimes these matters cannot be resolved without court intervention. There are three remedies to a breach of contract including specific performance, damages, or restitution.

Common types of Damages:

Compensatory Damages, aka Actual Damages
These damages are intended to put the non-breaching party in the same position they would have been had they enjoyed the benefit of the bargain. The two most common types of compensatory damages are expectation and consequential damages. Expectation damages provide the non-breaching party with the amount they expected to make had the obligation been fulfilled. Consequential damages cover indirect losses (for example, if a machine that was expected to make profits was not delivered).

Punitive Damages
When the breaching party’s conduct is so outrageous, illegal, or tortious, the injured party may be awarded damages that are intended to punish the wrong-doer. In New York, punitive damages may not generally exceed 10 times the amount of actual damages.

Liquidation Damages
This is a number that was agreed upon prior to the signing of the contract by both parties estimating what a fair amount would be in the event of a party’s breach.

Specific Performance If monetary damages will not remedy the injury, a court may order that the breaching party specifically perform its obligation. This is a common remedy in the sale of land or other unique transactions.

Restitution Prevents the breaching party from being unjustly enriched at the expense of the injured party.

If you have been involved in a contract breach, consult with an experienced attorney who is knowledgeable about business matters and can ensure that you and your business are legally protected. Call Bellavia Blatt, PC at (516) 873-3000 or (631) 224-7000.

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