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Why Speculation Isn't Enough to Win a Breach of Contract Claim in New York

Perhaps one of the greatest challenges facing a person (or business) with a breach of contract claim is that one of the critical elements to the claim is that the plaintiff is required to prove how much damages he suffered as a direct result of the defendant's breach of the agreement. While this certainly sounds simple, as a practical matter, this can pose quite a daunting hurdle, particularly because the damages cannot be speculative; they must be grounded in competent evidence.

 

New York's courts have summarized this rule as follows:

 

"As to damages, the plaintiff bears the "burden of proving the extent of the harm suffered." J. R. Loftus. Inc. v. White, 85 NY2d 874, 877, 626 NYS2d 52 [1995], citing Berley Indus. v. City of New York, 45 NY2d 683, 686, 412 NYS2d 589 [1978]. "Damages are recoverable for losses caused…by the breach only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty." Magnum Holding, Inc. v. Eldan Construction Corp. 2009 WL 5078842 (Nassau Supreme, 2009) citing Haughey v. Belmont Quadrangle Drilling Corporation, 284 NY 136, 29 NE2d 649 [1940].

 

"Certainty 'requires only that damages be capable of measurement based upon known reliable factors without undue speculation.' Ashland Management Inc. v. Janien, 82 NY2d 395, 403, 604 N.Y.S.2d 912 [1993], citing Restatement [Second] of Contracts §352. Under [our] system of adversary litigation, the task of furnishing evidence rests solely upon the parties, neither the judge nor the jury having any obligation or duty in this regard. Fisch on New York Evidence, Second Edition, §1087, Lond Publications 1977/2008."

 

The reason for this rule should be fairly obvious: it would be manifestly unfair to hold a defendant liable for damages that are not solidly grounded in the same evidentiary rules that govern the other aspects of any case.