The Elements of a Breach of Contract Claim.
New York, Element by Element.

The Four Elements at a Glance

The First Department’s formulation in Harris v. Seward Park Housing Corp., 79 A.D.3d 425 (1st Dep’t 2010), tracks how every commercial litigator pleads, defends, and tries a contract claim in New York. The Court of Appeals recited the same four element framework in 2138747 Ontario, Inc. v. Samsung C&T Corp., 31 N.Y.3d 372 (2018). The four elements:

Element 1: A Valid, Enforceable Contract

Offer, acceptance, consideration, and mutual assent to definite material terms. The agreement must be sufficiently definite that a court could fix the parties’ obligations and a remedy for breach. Cobble Hill Nursing Home v. Henry & Warren Corp., 74 N.Y.2d 475 (1989). Open material terms defeat formation; immaterial terms do not.

Element 2: Plaintiff’s Performance or a Recognized Excuse

The plaintiff must allege that it performed its own obligations or that performance was excused. A party that materially breached the contract first cannot maintain an action on it. The complaint must affirmatively plead performance or the excuse, not merely deny breach by the defendant.

Element 3: Breach by the Defendant

Identify the specific contractual obligation the defendant failed to perform and the provision that imposed it. Generic allegations that the defendant “failed to perform under the agreement” are routinely dismissed. Sud v. Sud, 211 A.D.2d 423 (1st Dep’t 1995). The pleading must connect the alleged conduct to the breached term.

Element 4: Damages Caused by the Breach

The plaintiff must allege a recoverable economic loss proximately caused by the breach. Speculative damages will not support the element. Kenford Co. v. County of Erie, 73 N.Y.2d 312 (1989). Where breach is proved but loss is not, nominal damages are recoverable to vindicate the right.

Element 1: The Existence of a Valid, Enforceable Contract

The first element does the most work on a motion to dismiss. The defendant attacks formation. The plaintiff must plead that the four formation requirements were satisfied: offer, acceptance, consideration, and mutual assent to definite terms.

An offer is a manifestation of willingness to enter a bargain on terms so definite that the offeree’s assent will conclude it. Advertisements, invitations to negotiate, and price quotations are presumptively not offers; they invite offers. The party asserting that a communication was an offer carries the burden of showing definiteness and intent to be bound.

An acceptance is unequivocal assent to the terms of the offer. A purported acceptance that varies the terms is a counteroffer, which terminates the original offer and itself becomes an offer susceptible of acceptance. UCC 2-207 modifies this for sale of goods contracts (the “battle of the forms” rule), where additional terms in an acceptance can become part of the contract between merchants unless they materially alter it.

Consideration is a bargained for exchange of value. The court does not weigh the adequacy of consideration. Apfel v. Prudential-Bache Securities, Inc., 81 N.Y.2d 470 (1993). Past consideration is no consideration. A promise to perform a preexisting legal duty is not consideration for a modification, with one important exception: UCC 2-209(1) eliminates the consideration requirement for modifications of contracts for the sale of goods, requiring only good faith.

Mutual assent is determined objectively. The parties must have agreed on the same essential terms. If material terms remain open, there is no contract; there is at most an agreement to agree, which New York generally will not enforce. Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher, 52 N.Y.2d 105 (1981). Missing terms that a court can supply by trade usage, course of dealing, or statutory gap fillers (UCC 2-305 on price, UCC 2-309 on time) will not defeat formation.

Formation is also tested against the Statute of Frauds (GOL 5-701 and UCC 2-201). A contract within a Statute of Frauds category that lacks a sufficient writing is unenforceable, not void. The defense must be pleaded and proved.

Element 2: Plaintiff’s Own Performance or a Legally Recognized Excuse

A plaintiff cannot recover for breach of a contract it broke first. The pleading must allege the plaintiff’s own performance, or one of the recognized excuses for non performance. Filling in the blank with a conclusory phrase such as “plaintiff has fully performed” is sometimes enough to survive a motion to dismiss but rarely enough to survive summary judgment.

The recognized excuses:

• Prior material breach by the defendant. A material breach by the defendant excuses the plaintiff’s further performance. The plaintiff must plead the defendant’s breach with the specificity required by element 3.
• Anticipatory repudiation by the defendant. An unequivocal statement or act, before performance is due, that the defendant will not perform. Equivocal expressions of doubt do not suffice. Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458 (1998).
• Failure of an express condition precedent. A condition whose non occurrence discharges the duty of performance. Express conditions are enforced strictly. Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685 (1995).
• Impossibility or impracticability. Narrow in New York. The performance must have been rendered objectively impossible by an unforeseen event not caused by the party claiming impossibility, and the risk must not have been allocated by the contract. Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900 (1987).
• Frustration of purpose. Rarer still. The supervening event must have destroyed the fundamental purpose of the contract as understood by both parties at the time of formation.
• Waiver or estoppel by the defendant. Conduct by the defendant that relieved the plaintiff of the duty to perform.

Economic hardship and adverse market conditions do not support impossibility, impracticability, or frustration. Those risks are allocated by the contract.

One trap that recurs in litigation: a plaintiff that wants to argue prior material breach but is uncertain whether the breach was material can sometimes preserve the position by demanding adequate assurance of performance under UCC 2-609 (for goods) or, in narrower common law circumstances, under Norcon Power Partners. The demand transforms ambiguity into clarity and supports a later termination.

Element 3: Breach by the Defendant

The complaint must identify the specific contractual obligation the defendant failed to perform and the provision that imposed it. Generic allegations that the defendant “failed to perform” or “materially breached the agreement” are dismissed under CPLR 3013 and 3211(a)(7) as conclusory. Sud v. Sud, 211 A.D.2d 423 (1st Dep’t 1995); Caniglia v. Chicago Tribune-New York News Syndicate, Inc., 204 A.D.2d 233 (1st Dep’t 1994).

What the pleading must include:

• The particular contractual obligation, by section or article number where available.
• The specific conduct that constituted non performance, defective performance, late performance, or repudiation.
• If the breach is of an implied covenant, the conduct that deprived the plaintiff of the fruits of the bargain.

Forms of breach:

• Non performance. The defendant did not do what the contract required.
• Defective performance. The defendant performed, but in a manner that deviated from the contract requirements.
• Late performance. Where time is of the essence, late performance is a breach. Where time is not of the essence, late performance is still a breach but may not be material.
• Anticipatory repudiation. Definite and unequivocal statement or action, before performance is due, that the defendant will not perform.
• Breach of the implied covenant of good faith and fair dealing. A party that deprives the other of the fruits of the bargain through conduct not expressly prohibited by the contract may breach the implied covenant. 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144 (2002). The implied covenant cannot be used to add terms inconsistent with the express agreement. Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329 (1987).

One frequent dismissal at the pleading stage: a complaint alleges breach of the implied covenant in addition to breach of express terms based on the same conduct. New York courts dismiss the implied covenant claim as duplicative when both arise from the same operative facts. Logan Advisors, LLC v. Patriarch Partners, LLC, 63 A.D.3d 440 (1st Dep’t 2009).

Element 4: Damages Caused by the Breach

The plaintiff must allege damages proximately caused by the breach, and must allege them with sufficient factual specificity that the court and the defendant can identify the type and approximate magnitude. Conclusory allegations that the plaintiff “has been damaged in an amount to be determined at trial” alone, without identification of the type of loss, are vulnerable to a motion to dismiss in commercial cases.

The damages categories that satisfy element 4:

• General (direct) damages. The loss flowing directly from the breach. The benefit of the bargain measure.
• Consequential damages. Downstream losses. Recoverable only if reasonably foreseeable to the breaching party at the time of contracting. Hadley v. Baxendale, applied in New York via Kenford Co. v. County of Erie, 73 N.Y.2d 312 (1989). Lost profits must be (a) caused by the breach, (b) provable with reasonable certainty, and (c) within the contemplation of the parties at contract formation.
• Liquidated damages. Where the contract supplies the measure and the clause is not a penalty.
• Nominal damages. Where breach is proved but actual loss is not, the plaintiff may recover nominal damages to vindicate the right. The availability of nominal damages means the absence of actual loss does not by itself defeat element 4. Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90 (1993).

What does not count:

• Speculative damages. Lost profits from a new business, lost future business opportunities lacking a track record, and damages dependent on multiple uncertain contingencies are typically excluded under Kenford.
• Punitive damages. Generally unavailable for pure breach of contract absent independent tortious conduct, moral culpability, and a pattern directed at the public generally. New York University v. Continental Insurance Co., 87 N.Y.2d 308 (1995).
• Attorneys’ fees. Not damages. Recoverable only under a statute or a contractual fee shifting clause that meets the Hooper Associates standard. Hooper Associates, Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487 (1989).

The Pleading Standard: CPLR 3013 and CPLR 3211(a)(7)

CPLR 3013 requires that statements in a pleading be sufficiently particular to give the court and parties notice of the transactions intended to be proved and the material elements of each cause of action. CPLR 3211(a)(7) authorizes dismissal of a cause of action that fails to state a claim. On a 3211(a)(7) motion, the court accepts the facts alleged as true, accords the plaintiff every favorable inference, and asks whether the facts as alleged fit within any cognizable legal theory. Leon v. Martinez, 84 N.Y.2d 83 (1994).

The interaction with the four elements: a complaint that pleads the elements in conclusory terms (“defendant breached the contract and damaged plaintiff”) does not survive 3211(a)(7). A complaint that pleads facts supporting each element does. The First Department applied this rigorously in commercial cases throughout the past decade, dismissing complaints that recited the elements without supporting allegations and sustaining complaints that pleaded the contract, the specific obligation, the specific conduct, and the type of loss.

On summary judgment, each element is again tested. The movant must establish the absence of a triable issue on each element, or on at least one element where movant is the defendant. The non movant must come forward with admissible evidence raising a genuine issue. Alvarez v. Prospect Hospital, 68 N.Y.2d 320 (1986).

How the Elements Interact in Practice

Two practical observations from daily commercial litigation:

Element 2 and element 3 are mirror images. When the defense is “the plaintiff breached first,” the dispute is whether the plaintiff satisfied element 2 (own performance) or whether what the plaintiff calls “defendant’s breach” was actually a justified reaction to the plaintiff’s own non performance. Materiality is often the dispositive question; consult our discussion of material vs. minor breach.

Element 4 is more often the case dispositive issue than element 3. By the time a contract dispute reaches discovery, breach is rarely seriously contested; what is contested is the measure and amount of recoverable loss. Damages experts, mitigation evidence, and contemporaneous business records carry the day on element 4 far more often than text exegesis carries the day on element 3.

For the limitations clock that runs against every breach of contract claim, see our guide to the statute of limitations for contract disputes in New York. For a deeper treatment of what counts as a breach, see What Constitutes Breach of Contract in New York.

Talk to a Breach of Contract Lawyer in New York

The Law Office of Frederic R. Abramson represents plaintiffs and defendants in breach of contract disputes in New York Supreme Court across the five boroughs, Nassau, Suffolk, and Orange counties. Element by element analysis at intake, demand letters, complaints, motion practice, discovery, and resolution. More than 20 years of daily courtroom experience. The Lawyer’s Lawyer.

Related: Breach of Contract Practice Overview  ·  What Constitutes Breach of Contract in New York  ·  Statute of Limitations for Contract Disputes  ·  Common Defenses to a Breach of Contract Claim  ·  Civil Litigation Overview

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