Breach of Contract in New Mexico in NM — Business Law… | CGMIMM
Business Law · NM
Breach of Contract in New Mexico
New Mexico breach-of-contract claims require valid contract + breach + damages — but most cases turn on what damages can be proved, not whether breach occurred.
Published May 8, 2026
## Breach of contract in New Mexico
Contract disputes are the most common type of business litigation. New Mexico contract law follows common-law principles supplemented by the Uniform Commercial Code (UCC) for goods.
## Elements of breach-of-contract claim
**Plaintiff must prove:**
1. **Valid contract** existed
2. **Plaintiff performed** (or excused from performance)
3. **Defendant breached** the contract
4. **Damages** resulted
## Element 1 — valid contract
**Required elements:**
- **Offer + acceptance** — meeting of minds
- **Consideration** — both sides give something
- **Mutual assent** — agreement on essential terms
- **Capacity** — parties legally able to contract
- **Lawful purpose** — not for illegal goal
**Form requirements (Statute of Frauds):**
- Real-estate contracts (sale of land)
- Contracts that can't be performed within 1 year
- Marriage-related contracts
- Sale of goods $500+ (UCC)
- Suretyship / guaranty
- ${s.name}-specific provisions
**Often need writing — but not always.**
## Types of contracts
**Express contracts:**
- Specific terms agreed
- Written or oral
- Most common
**Implied-in-fact:**
- Conduct shows agreement
- Course of dealing
- No explicit terms
**Implied-in-law (quasi-contract):**
- Not really contract
- Equity remedy
- Unjust enrichment
- When other party benefits without paying
## Element 2 — performance / excuse
**Plaintiff must show:**
- Substantially performed obligations
- Or had legitimate reason to not perform
- Conditions precedent satisfied
- Material breach by other side excusing performance
- Frustration of purpose / impossibility
- Force majeure (if contract provides)
## Element 3 — breach
**Types of breach:**
**Material breach:**
- Goes to essence of contract
- Significantly impairs purpose
- Other party may withhold performance
- Other party may sue + recover
**Minor (immaterial) breach:**
- Doesn't go to essence
- Other party must continue performance
- May recover damages from breach
**Anticipatory repudiation:**
- Clear statement / action of intent not to perform
- Before performance due
- Allows immediate suit
- Can wait until performance time + then sue
**Substantial vs total performance:**
- Substantial = good-faith with minor variations
- Total = exact performance
- Most contracts only require substantial
## Element 4 — damages
**Most contract cases turn on damages.**
**Compensatory damages:**
**1. Expectation damages** (most common):
- Put non-breaching party in position as if performed
- Lost profits + benefits
- Cost of replacement / cover
- Most lucrative recovery typically
**2. Reliance damages:**
- Costs incurred in reliance
- Used when expectation hard to prove
- Lower recovery typically
**3. Restitution:**
- Return what's been transferred
- Disgorgement of unjust benefit
- Used when cancellation appropriate
**Consequential / special damages:**
- Foreseeable losses beyond direct damages
- Hadley v. Baxendale rule
- Must be reasonably foreseeable at contract time
- Often limited / disclaimed in contract
**Liquidated damages:**
- Pre-agreed in contract
- Reasonable estimate of likely damages
- Not penalty (reasonable amount)
- Saves proof problems
**Punitive damages:**
- Generally NOT available for breach
- Available if breach involves tort (fraud, etc.)
- Sometimes available in special circumstances
- ${s.name} may have specific rules
## Limitations on damages
**Mitigation requirement:**
- Non-breaching party must minimize losses
- Reasonable efforts required
- Failure to mitigate = reduced recovery
- Different standards in different contexts
**Foreseeability:**
- Damages reasonably foreseeable at contracting
- Special damages need notice
- Hadley rule applies
**Certainty:**
- Damages provable with reasonable certainty
- Speculative damages not recoverable
- Lost profits often hardest to prove
**Causation:**
- Damages caused by breach
- Not other causes
- Proximate cause analysis
## Equitable remedies (when damages inadequate)
**Specific performance:**
- Court orders actual performance
- Used when damages inadequate
- Real estate (always unique)
- Unique goods
- Limited to feasible / appropriate cases
**Injunction:**
- Stop breach / further harm
- Mandatory + prohibitory injunctions
- Preliminary + permanent
- Discretionary remedy
**Reformation:**
- Court rewrites contract
- For mutual mistake
- Or fraud
- Limited circumstances
**Rescission:**
- Cancel contract
- Restore parties to pre-contract position
- Material breach / fraud
## Defenses to breach claims
**Contract validity defenses:**
- **Mistake** (mutual / unilateral)
- **Fraud** (in inducement / in execution)
- **Duress** (physical / economic)
- **Undue influence**
- **Capacity** (minor / mental)
- **Statute of frauds** (no writing)
- **Public policy** / illegality
- **Unconscionability**
**Performance defenses:**
- **Substantial performance** (you did enough)
- **Impossibility** of performance
- **Impracticability** of performance
- **Frustration of purpose**
- **Force majeure** (if contract provides)
- **Conditions** not satisfied
- **Waiver** by other party
- **Estoppel**
**Damages defenses:**
- **Failure to mitigate**
- **Speculative damages**
- **Causation** (other causes)
- **Liquidated damages clause** (limited remedies)
- **Limitation of liability** (contract provision)
**Procedural defenses:**
- **Statute of limitations**
- **Laches** (delay)
- **Standing**
- **Improper venue** / jurisdiction
## Statute of limitations
**${s.name}-specific:**
- Written contracts: typically 4-15 years
- Oral contracts: typically 2-6 years
- UCC sales of goods: 4 years (UCC § 2-725)
- Open accounts: typically 3-6 years
- ${s.name} has specific deadlines
**Triggers:**
- Date of breach (usually)
- Sometimes discovery rule
- Continuing breaches reset clock
## UCC contracts (sale of goods)
**UCC Article 2** governs sale of goods:
- Different rules than common law
- More flexible ("battle of forms")
- Implied warranties
- Specific remedy structure
- 4-year statute of limitations
**Implied warranties:**
- **Merchantability** (fit for ordinary purpose)
- **Fitness for particular purpose** (when seller knows buyer's purpose)
- **Title** (good title transferred)
**Can be disclaimed** with specific language.
## Practical considerations
**Pre-litigation:**
- Demand letter (often resolves)
- Settlement negotiation
- Mediation (some contracts require)
- Cost-benefit analysis
**Cost considerations:**
- Litigation expensive ($25K-$500K+)
- Time-consuming (1-3 years)
- Uncertain outcomes
- Discovery costs significant
**Settlement leverage:**
- Strength of case
- Defendant's resources
- Insurance coverage
- Reputation impact
- Future business relationship
## Attorney's fees
**"American Rule":**
- Each side pays own fees
- Default rule
**Exceptions:**
- Contract provides for fees
- Statute provides for fees
- Common-fund cases
- Frivolous litigation
- Bad faith
**Fee provisions critical** — review contracts before signing.
## Choice of law + venue
**Most contracts specify:**
- Governing law (state)
- Forum (where to sue)
- Arbitration (if any)
- Limitation periods
**${s.name} courts generally enforce these provisions** unless unconscionable.
## Common mistakes
- **No written contract** — oral often unenforceable
- **Ambiguous terms** — "reasonable" / "timely" disputes
- **No remedy provisions** — damages limited
- **No attorney's fees provision** — bears own costs
- **Continuing performance after breach** — waiver risk
- **Not preserving evidence** — emails, drafts, communications
- **Missing statute of limitations** — claim barred
- **Settling without release** — multiple claims possible
- **Liquidated damages too high** — unenforceable as penalty
## What you should do
If you're facing breach of contract in New Mexico: gather all contract documents + communications, calculate damages, send demand letter, then consult a business / commercial litigation attorney. Most New Mexico business attorneys handle contract disputes; some specialize. Costs vary widely ($25K-$500K+ for full litigation). Mediation often saves substantial money.
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*This guide is general information about New Mexico law as of mid-2026 and is not legal advice. Contract disputes are highly fact-specific. Talk to a licensed New Mexico business attorney about your specific situation.*
This guide is for general information only and does not constitute legal advice. Laws change and outcomes depend on your specific situation — talk to a licensed attorney before acting on anything you read here.