Contract Affirmative Defenses: Everything You Need to Know
The factual background of a contract is important to asserting affirmative defenses for an alleged breach.3 min read
The factual background of a contract is important to asserting affirmative defenses for an alleged breach. The facts and events supporting an affirmative defense most likely occurred either during contract formation or the performance of the contract.
When a party files for breach of contract, they set forth both the factual and legal allegations supporting how they were wronged by the defendant(s).
To prove breach, a plaintiff must prove:
- Valid contract formation
- Performance or lack of duty to perform by one party
- The other party’s failure to perform; and
- Harm that resulted in quantifiable loss
The first defense that a defendant can assert is by simply contesting the facts. The burden of proving that a breach occurred is on the party who brought the suit.
A second defense that a defendant can attempt is arguing that even if there was a breach, that it was only minor, and not a material breach. If the breach is minor, it is insufficient to hold the defendant liable for damages.
However, in some situations, it is a better strategy for the defendant to admit that the breach occurred and assert defenses. There are a number of defenses available to argue that a contract should not be enforced:
- Lack of formation
- Lack of capacity
- Lack of consideration
- Lack of meeting of the minds
- Undue influence
- Misrepresentation or fraud
- Impossibility or impracticability
- Illegal purpose
- Statute of frauds error
- No privity
- Absence of condition precedent
- Assumption of the risk
- Comparative or contributory negligence
- Statute of limitations
A defendant should raise as many legal defenses as possible. This includes more than simply denying legal wrongdoing. Respond with every plausible argument that would prevent damages from being paid to the party who sued. Most defenses to breach of contract are "affirmative defenses."
Affirmative defenses are reasons given by the defendant as to why a plaintiff in a case should not win, even if what the plaintiff says is true. To support an affirmative defense, you must assert facts or circumstances that render the breach claim moot. The party who raises an affirmative defense has the burden of proving it. Defendants should bring up affirmative defenses in the early stages lawsuit. You do not want to lose the ability to raise them later.
Meeting of the Minds / Mistake
A contract requires a “meeting of the minds.” Both parties must know and understand all the essential terms of the contract to make it enforceable. If either or both parties made a mistake regarding a term or terms of the contract, the contract may be “rescinded,” meaning not enforceable.
There are two defenses regarding mistakes: mutual mistake and unilateral mistake.
A mutual mistake is when both parties are mistaken regarding the contract and there is generally an issue as to whether the parties actually reached a meeting of the minds.
A unilateral mistake may not be a basis for voiding a contract on its own. However, if the non-mistaken party caused the mistake, or knew the other party was making a mistake and didn’t help correct it, the court will probably not enforce the contract.
If the only mistake made is in writing down a term or terms, a court may allow the mistake to be corrected. This is called “reformation.”
Duress occurs when a party is forced to enter into a contract that he or she would not have otherwise entered into. Threats of injury, lawsuit, or other types of blackmail are examples of duress that may void a contract.
If a party enters into an unfair contract because the terms are unfair to one party, a court will likely find it to be unenforceable. Agreement to unfair terms usually occurs when one party is a company and the other party is an individual. The company is likely in a stronger bargaining position.
The company will also know that the individual is unlikely to be able to protect his interests and a court will likely find the contract to be unconscionable and therefore invalid. Courts will evaluate whether or not the defendant had a meaningful choice in agreeing to the terms. If the terms are so blatantly unfavorable that it would create an undue hardship to enforce it, a court may not enforce it regardless of bargaining power.
Impossibility of performance is exactly what it sounds like. Something happens after contract formation that makes performance impossible or impracticable. This renders the contract unenforceable.
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