Defenses To Breach Of Contract: Everything You Need to Know
Defenses to breach of contract are legal excuses or reasons given by a sued party, accused of breaching a contract, stating why the suing party shouldn't win the lawsuit.3 min read
Defenses to breach of contract are legal excuses or reasons given by a sued party, accused of breaching a contract, stating why the suing party shouldn't win the lawsuit.
If one party argues for enforcement of an oral contract against another party, the sued party can defend themselves by calling attention to a state law referred to as the “Statute of Frauds,” which requires the kind of agreement entered into by the parties, for instance, a real estate contract, to also appear in writing. If a party states that carrying out a term of a contract is excusable, and the other party relies on that statement, the first entity can no longer alter that statement and sue for a breach based on it. This is what legal practitioners call the “doctrine of equitable estoppel.”
For instance, if a buyer clearly notices defects on some delivered goods, decides to keep them despite their nonconformity, and tells the seller who delivered them that they are acceptable, the buyer loses the legal right to later alter that information and demand correction of wrong delivery. For another instance, if a service company is known to regularly accept late payments from their clients, the company can't cancel the services they render to any given client when the client fails to pay early, because the company's clients would have been reasonably led to believe it's OK not to pay early.
Defense of Unenforceability
A contract is not enforceable if it's clearly imbalanced. Such contracts are usually formed when one party possesses greater bargaining powers than the other, which leads to one party taking unfair advantages of the other. If one party wrongly influences another party to enter into a binding agreement, or if the conditions are unacceptably imbalanced against one party, the contract is not enforceable.
If the major conditions of a contract were never clearly defined and agreed on, one can put up a defense against a lawsuit by stating that the agreement was vague. That means one party or the other didn't think the deal was final, or that the court couldn't figure out the important elements of the contract, even by implication. An example is the failure to define how long a contract is valid.
A contract is not enforceable if its purpose is not lawful. For instance, a contract that sponsors prostitutes in a country where prostitution is illegal, doesn't obey tax laws, or operates by destroying records isn't enforceable.
Defense of Lack of Consideration
A contract lacks consideration if one party gets tricked into it. It is not valid if built on falsehood, achieved by duress, or created by the manipulations of a trusted, respected person (for example, your doctor strongly recommends an expensive supplement so they can get an affiliate commission).
A contract also lacks consideration if it contains a mutual mistake, which is defining a condition that both parties misunderstood to mean two different things. A mutual mistake in a contract provides good reason to doubt if the contracting parties truly had an understanding of the terms of their binding agreement.
Use of Various Defenses
If you're facing a breach of contract lawsuit, you're allowed by the law to claim any of the various options of defense as you deem fit. For instance, you can put up arguments such as the contract isn't valid or is unenforceable. You can also claim that you performed your contractual obligations, or that your inability to carry out your contractual duties was justifiable by the other person's actions. For your attorney to effectively defend you, you need to let them in on the background facts that led to the lawsuit of breaching the contract.
Required Evidence for a Breach of Contract Lawsuit
The suing party must provide the following types of evidence for a breach of contract lawsuit:
- Contract creation between the parties.
- The obligations satisfied by the party suing.
- The failure of the accused party to satisfy obligations.
- The quantifiable loss(es) incurred by the suing party.
In defense, you can argue that even if you breached the contract, it was an insignificant breach and doesn't have a substantial impact on the contract.
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