Updated November 5, 2020:

Cause of action breach of contract occurs when one party to a contract breaches the contract so severely that the non-breaching party is justified in suing the breaching party for money, property, or the enforcement of an action.

What Is a Contract?

Contracts are lawfully executed and enforceable agreements, such as a service or job rendered, or the purchase of a product. If one of the parties to the contract doesn't hold up to their end of the bargain, then the other party may be able to sue for breach of contract.

To be enforceable, a contract must have these three attributes:

  1. A valid contract must exist: Proof must exist that someone made a proposition and that it was accepted by another party. Additionally, some sort of consideration must be exchanged between the two parties.
  2. The terms for a breach of contract: A lawsuit may be filed in situations where a breach of contract causes the non-breaching party a loss or subtraction in value. Typically, small breaches of contract are not filed because they most likely wouldn't hold up in court. On the other hand, larger breaches are much more severe and may result in a lawsuit.
  3. Damages resulted from the breach of contract: Once the non-breaching party is able to prove that the breaching party caused a loss to them, the court will most likely award damages to the non-breaching party in order to cover any lost time, lost money, and other expenses. In serious cases, punitive damages and/or restitution may be granted to the non-breaching party in order to punish the breaching party.

In legal terms, a breach of contract amounts to a broken agreement or promise to take or not take action. Breaches of contract may stem from one specific act, numerous acts, or continuing acts of neglect. A civil lawsuit may be filed against the breaching party in order to bring the non-breaching party to the position they were in, prior to the breach.

A contract as a document often refers to a written or verbal agreement that is legally enforceable. In specific situations, it is highly recommended for parties in an agreement to have a written contract in order to appease the Statute of Frauds. According to the statute, certain matters must be written in order to be ruled as evidence.

Defenses to Breach of Contract

In order to avoid liability, defense lawyers use a number of strategies, including:

  1. The contract is not written: The Statute of Frauds insists that certain agreements must be written. In other words, oral agreements are not acceptable forms of evidence. The agreements below indicate circumstances where a written contract must be created:
    • Sale of goods exceeding $500
    • Sale of real estate
    • Agreements that exceed a person's life
    • Agreements that will not be completed in less than one year
    • Obligations to pay another person's debt
  2. The contract created was not the intended agreement: If the contract evolves into a format that is not how the original contract was originally intended, defense lawyers may argue that outside arrangements agreed to by the non-breaching party changed the intention of the original contract.
  3. A minor carried a leading role in the contract: If a defense lawyer can prove that the non-breaching party was a minor when the contract was negotiated, then a breach of contract can occur without holding the breaching party liable.
  4. Mental capacity: Generally, parties that enter into a contract that is intoxicated, minors, or lack the ability to control or understand their behaviors are considered as inadmissible parties to form a legal contract.
  5. Undue influence or duress: Undue influence or duress generally stems from at least one of the parties in a contract being under intimidation or extreme pressure. In this circumstance, the court may side with the breaching party. If both parties enter into a contract, and both parties bilaterally created the contract in error, it may be void. If only one of the parties was mistaken, then liability is still possible.
  6. The contract is deemed unconscionable: If an agreement is allegedly made between two parties that appear to be so obviously skewed and unfair that no reasonable person would enter into it, the courts will most likely state that the contract is unconscionable.

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