Contracts are the backbone of nearly every business relationship. Whether you are hiring vendors, working with subcontractors, providing services, or entering strategic partnerships, a breach of contract can create serious financial and operational consequences. Florida courts recognize several different types of contract breaches and provide a range of remedies designed to compensate the injured business.
Three Florida appellate cases — Douglass Fertilizers & Chemical, Inc. v. McClung Landscaping, Inc., Ocean Communications, Inc. v. Bubeck, and Capitol Environmental Services, Inc. v. Earth Tech, Inc. — provide valuable guidance for business owners on the types of damages courts will and will not award.
Types of Breach of Contract
Florida law generally recognizes two major categories of breach: material breaches and minor breaches.
A material breach occurs when one party fails to perform an essential obligation under the agreement, substantially defeating the purpose of the contract. A material breach often allows the non-breaching party to terminate the agreement and seek damages.
In Ocean Communications v. Bubeck, the court found that the defendant materially breached the contract by continuing to pursue prohibited personal business activities while receiving compensation under the agreement. Because the breach went to the core purpose of the relationship, the employer was entitled to terminate the contract and pursue restitution.
A minor breach, by contrast, involves partial or technical nonperformance that does not destroy the overall value of the contract. Minor breaches may still justify monetary damages, but they usually do not excuse the other party from continuing performance.
Business owners should understand that courts closely examine whether the breach substantially impaired the benefit of the bargain. Documentation, contract language, and communications between the parties often become critical evidence in determining whether a breach is material.
Direct Damages: The Primary Remedy
The most common remedy in breach of contract cases is compensatory damages, sometimes called direct damages. The goal is to place the injured party in the position it would have occupied had the contract been properly performed.
Florida courts repeatedly emphasize this principle. In Capitol Environmental Services v. Earth Tech, the court explained that the injured party is entitled to recover monetary damages that place it “in the same position it would have been had the other party not breached the contract.”
For example, if a supplier fails to deliver contracted goods, a business may recover the additional costs incurred to obtain substitute goods elsewhere. Similarly, if a contractor fails to complete agreed-upon work, the business owner may recover the reasonable costs necessary to complete or repair the project.
Courts also permit recovery for losses that naturally flow from the breach and were reasonably foreseeable when the contract was formed. This concept becomes particularly important when businesses seek consequential or lost-profit damages.
Lost Profits: Recoverable but Difficult to Prove
Many business owners assume that if a contract breach harms future business opportunities, those projected losses are automatically recoverable. Florida law, however, imposes strict standards on lost-profit claims.
In Douglass Fertilizers v. McClung Landscaping, a landscaping company sought over $200,000 in lost profits after damaged sod caused a customer to stop doing business with the company. The appellate court reversed the lost-profit award because the future business relationship was not guaranteed and the claimed profits were considered too remote and speculative.
The court explained that lost profits are recoverable only when:
- The damages can be proven with reasonable certainty;
- The losses were caused by the breach; and
- The damages were within the contemplation of the parties when the contract was made.
For business owners, this means courts require more than optimistic projections or assumptions about future customers. Businesses seeking lost profits should be prepared to present:
- Historical financial records;
- Existing contracts or purchase commitments;
- Reliable profit calculations; and
- Evidence directly linking the breach to the loss.
Without concrete evidence, courts are likely to reject lost-profit claims as speculative.
Restitution: Recovering What Was Paid
Another important remedy available in Florida is restitution. Unlike compensatory damages, which seek to enforce the benefit of the bargain, restitution focuses on returning benefits unfairly retained by the breaching party.
In Ocean Communications, the employer sought restitution of compensation paid to an executive who materially breached his agreement by engaging in prohibited competitive conduct. The trial court initially denied restitution because an express contract existed between the parties. However, the appellate court reversed, explaining that restitution remains an available remedy following a material breach of contract.
The court clarified an important distinction: while a party generally cannot pursue an unjust enrichment claim where an express contract exists, restitution may still be awarded as a remedy for breach of that contract.
For business owners, restitution can be especially valuable when:
- An employee or contractor is paid for services not properly performed;
- A vendor materially breaches after receiving advance payments; or
- A party receives benefits through misconduct or nonperformance.
Restitution essentially attempts to unwind the transaction and restore the injured party to its pre-contract position.
Incidental and Consequential Damages
Florida courts may also award incidental and consequential damages when they naturally flow from the breach and are reasonably foreseeable.
In Capitol Environmental Services, a subcontractor failed to obtain insurance coverage naming the contractor as an additional insured, despite contractual requirements to do so. When the contractor was later sued by a third party, the contractor incurred substantial legal fees defending itself, paying a negotiated settlement, and pursuing insurance coverage. The court held that those attorney’s fees and related litigation expenses were recoverable because they were a foreseeable consequence of the breach.
This case demonstrates that damages are not limited solely to the face value of the contract. Businesses may recover additional losses that arise as a predictable result of the breach, including:
- Investigation expenses;
- Mitigation costs;
- Third-party litigation judgments, settlements, and expenses; and
- Related legal fees treated as damages.
However, foreseeability remains essential. Courts will not award damages considered remote, speculative, or unrelated to the actual breach.
Prejudgment Interest
Another important remedy often overlooked by business owners is prejudgment interest. Florida law allows prevailing parties to recover interest on liquidated damages from the date the loss occurred.
In Capitol Environmental Services, the appellate court held that prejudgment interest should apply not only to settlement payments but also to attorney’s fees and costs awarded as elements of damages.
Prejudgment interest can significantly increase the value of a claim, particularly in complex commercial disputes that take years to resolve.
Practical Lessons for Business Owners
These cases offer several practical takeaways for Florida businesses:
- Clearly define contractual obligations and performance standards;
- Document damages thoroughly and maintain accurate financial records;
- Avoid relying on speculative future profits when evaluating claims;
- Include insurance and indemnity provisions in commercial agreements;
- Act quickly when a material breach occurs; and
- Consult counsel early to preserve evidence and maximize recoverable damages.
A well-drafted contract can reduce uncertainty and improve your ability to recover losses if disputes arise.
At Eko-Law, we help businesses evaluate contract disputes, enforce agreements, and pursue strategic remedies tailored to their commercial objectives. Understanding the available remedies under Florida law can help business owners make informed decisions when a contract relationship breaks down.