Breach of Contract for Not Paying in Full or On Time in New York

What Is Breach of Contract for Not Paying in Full or On Time?

Background

To establish a claim for breach of contract, the plaintiff must show: “(1) the existence of a contract, (2) the plaintiff's performance under the contract, (3) the defendant's breach of the contract, and (4) resulting damages.” (Palmetto Partners, L.P.v. AJW Qualified Partners, LLC, 83 A.D.3d 804, 806 [2d Dept. 2011] (internal citations omitted); Ellington Credit Fund, LTD. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162 (S.D.N.Y 2011).)

To determine whether a breach has occurred, the court must interpret the agreement “in accord with the parties' intent.” (Greenfield v. Philles Records, Inc., 98 NY2d 562, 569 N.Y.S.2d 565 [2002].)

If the contract at issue was for the sale of goods it will be governed by the UCC. (N.Y. U.C.C. Law § 2-102 (” . . . this Article applies to transactions in goods;”).)

Failure to pay pursuant to the contract terms generally constitutes a material breach of a contract. (U.W. Marx, Inc. v. Koko Contracting, Inc., 124 A.D.3d 1121, 1122, 2 N.Y.S.3d 276, 278 [2015] ("Nevertheless, as found by Supreme Court, [defending party] had materially breached the contract by failing to make three successive progress payments that [complaining party] was entitled to receive.").)

How to Structure the Pleading

In the initial pleading, the complaining party should establish all of the elements of a breach of contract and also that it made a demand on the nonpaying party for the same.

If the contract involves the sale of goods, the complaining party may consider filing a motion for summary judgment. “A seller is entitled to summary judgment for the purchase price of goods sold and delivered when. . .the seller establishes that it delivered goods at the contract price . . . and the buyer accepted the goods.” (Maggio Importato, Inc. v. Cimitron, Inc., 189 A.D.2d 654, 592 N.Y.S.2d 325 [1st Dept 1993]; Accent Commercial Furniture, Inc. v. P. Schneider & Assocs., 110 A.D.3d 1415, 974 N.Y.S.2d, 175 [3d Dept 2013]; Sunny Side Up, Inc. v. Brenner, 40 A.D.2d 899, 900, 337 N.Y.S.2d, 567 [3d Dept 1972].)

Response

For contracts concerning goods, once a buyer accepts goods, the UCC mandates that the buyer pay the contract price for the goods even if the buyer has a counterclaim or defense. (See N.Y. U.C.C. §2607(2) (“[t]he buyer must pay at the contract rate for any goods accepted.”).) “Acceptance” of the goods occurs when the buyer expressly accepts goods, fails to reject goods after a reasonable opportunity to inspect the goods, or performs an act inconsistent with the seller’s ownership of the goods. (Maggio Importato, Inc., 189 A.D.2d at 654 ("acceptance of the goods, even if the goods failed to conform to the contract, entitles plaintiff to recover the contract price”); Gem Source Int’l, Ltd. v. Gem Works N.S., 258 A.D.2d 373, 685 N.Y.S.2d 682 [1st Dept 1999].)

After accepting the goods, the only way the defendant can avoid paying the purchase price is if it revoked acceptance of the goods. The defendant bears the burden of establishing revocation of acceptance and establishing "any breach with respect to the goods accepted." (N.Y.U.C.C. § 2607(4).)

Monetary Awards

The prevailing party typically can recover either compensatory damages or liquidated damages if required under the contract. (See Bi-Economy Mkt., Inc. v. Harleysville Inc. Co. of N.Y., 856 N.Y.S.2d 505, 508 [2008]; Carbures Europe, S.A. v. Emerging Mkts. Intrinsic Cayman Ltd., 49 N.Y.S.3d 103, 104 [1st Dept 2017]; Vista Food Exch., Inc. v. BenefitMall, 31 N.Y.S.3d 9, 12 [1st Dept 2016].)

A nonmaterial breach typically results in only nominal damages while damages for a material breach may be much more significant, depending on the facts of the case. (See Taylor Precision Products, Inc. v. Larimer Group, Inc., Not Reported in Fed. Supp. Case 1:15-cv-4428 (S.D.N.Y. Mar. 26, 2018) (applying New York law). Here, failure to pay in agreement with a contract will usually constitute a material breach. (See U.W. Marx, Inc., supra.)

A prevailing party may also recover its attorneys' fees if there is a fee-shifting provision in the contract. (Hooper Assocs. Ltd. v. AGS Computs., Inc., 549 N.Y.S.2d 365, 366-67 [1989].)

A party generally cannot recover punitive damages in ordinary breach of contract actions. (Rocanova v. Equitable Life Assurance Soc'y of U.S., 612 N.Y.S.2d 339, 342-44 [1994].)

Timeline

CPLR § 206(a) provides that “where a demand is necessary to entitle a person to commence an action, the time within which the action must be commenced shall be computed from the time when the right to make the demand is complete.”

“[C]ourts have interpreted the demand is complete language [in CPLR 206] to mean that the Statute of Limitations runs from the time when the party making the demand first becomes entitled to make the demand, and not from the time the actual demand is made.” (Woodlaurel, Inc. v. Wittman, 199 A.D.2d 497 [2d Dept 1993].) Thus, it is the moment that the right to make a demand accrues that determines when the statute of limitations begins to run, and not the time that a demand is actually made. (See, e.g., Hahn Auto. Warehouse, Inc. v. Am. Zurich Ins. Co., 18 N.Y.3d 765 [2012] (“the statute of limitations. . .was triggered when the party that was owed money had the right to demand payment, not when it actually made the demand...any debts for which [the complaining party] had the legal right to demand payment prior to May 2000, i.e., more than six years before the commencement of this action, are time barred. To hold otherwise would allow [the complaining party] to extend the statute of limitations indefinitely by simply failing to make a demand.”); Kelly v. Bremmerman, 23 A.D.2d 346, 350 [4th Dept 1965], aff'd 21 N.Y.2d 195 [1967] (“In as much as this plaintiff could by her own conduct have established the date of the commencement of the period of limitations it was her duty to act with reasonable expedition to avoid unnecessary delay. In such cases, the time within which the action must be commenced is computed from the time when the right to make the demand is complete.”); Elie Intl., Inc. v. Macy's W Inc., 106 A.D.3d 442, 443 [1st Dept 2013].)

Documents for Breach of Contract – Not Paying in Full or On Time in New York

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Howard Kahn, Meg Kahn, Danielle Kahn, Zachary Kahn v. Ms/Wg 1107 Broadway Owner Llc, 10 Madison Square West Condominium, Board Of Managers Of 10 Madison Square West, Douglas Elliman Property Management, Cheolsoon Jang, Christina Jang Commercial - Contract document preview

MEMORANDUM OF LAW IN OPPOSITION (Motion #003) - Un-Redacted per 22 NYCRR §…

28 pages

FILED: NEW YORK COUNTY CLERK 03/22/2024 07:34 PM INDEX NO. 655243/2019 NYSCEF DOC. NO. 196 RECEIVED NYSCEF: 03/22/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X HARVEY W. KAPLAN D.D.S., Index No. 655243/2019 Plaintiff, Against …

Case Name Howard Kahn, Meg Kahn, Danielle Kahn, Zachary Kahn v. Ms/Wg 1107 Broadway …