Key Takeaways

  • Breach of contract defenses include both legal and equitable grounds such as impossibility, mutual mistake, fraud, and duress.
  • New defenses like impracticability, statute of limitations, anticipatory repudiation, and lack of capacity are essential for comprehensive understanding.
  • Procedural defenses (e.g., unclean hands, laches) and affirmative defenses (e.g., waiver, estoppel) are critical tools in contract disputes.
  • Defendants may also rely on partial performance, prior material breach by the plaintiff, or unconscionability.
  • Legal representation is recommended, as these defenses are complex and context-specific.

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.

Defenses Overview

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.

Additional Common Defenses in Breach of Contract Cases

In addition to equitable estoppel and the Statute of Frauds, defendants may raise a variety of other defenses to contract enforcement. These include:

  • Impossibility or Impracticability: A party may claim that unforeseen circumstances made performance objectively impossible (e.g., natural disasters, legal changes), or commercially impracticable due to extreme hardship or cost.
  • Frustration of Purpose: If the principal purpose of the contract has been substantially frustrated by an unexpected event, a party may be excused from performance.
  • Lack of Capacity: Minors, individuals with mental incapacity, or those under the influence of substances at the time of agreement may void the contract.
  • Duress or Undue Influence: If a party was pressured or manipulated into the agreement, they can assert that the contract was not entered into voluntarily.
  • Unconscionability: Courts may refuse to enforce contracts that are excessively unfair or one-sided, both procedurally and substantively.
  • Illegality: A contract involving illegal subject matter (e.g., committing a crime or violating regulations) is not enforceable.

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.

Procedural Defenses and Affirmative Defenses

Beyond the substantive reasons a contract might be unenforceable, several procedural and affirmative defenses can be raised:

  • Statute of Limitations: Each jurisdiction imposes time limits within which a breach of contract claim must be filed. If the time has expired, the defendant can assert this defense.
  • Laches: If the plaintiff unreasonably delayed taking legal action and that delay prejudiced the defendant, enforcement might be barred.
  • Waiver: A party who knowingly relinquishes a right—such as accepting late performance or nonperformance—may be prevented from enforcing that right later.
  • Unclean Hands: A plaintiff who has acted unethically or in bad faith related to the contract may be barred from equitable relief.
  • Rescission: In cases involving fraud, misrepresentation, or mistake, one party may cancel (rescind) the contract entirely.

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.

Fraud, Misrepresentation, and Mistake

These three doctrines are frequently asserted in breach of contract cases and can justify voiding a contract:

  • Fraud: Occurs when one party knowingly makes false representations to induce the other party to enter into the contract.
  • Misrepresentation: Even if unintentional, misstatements of fact that are relied upon by the other party can invalidate the contract.
  • Mutual Mistake: When both parties are mistaken about a basic assumption on which the contract is based, it may be voidable.
  • Unilateral Mistake: Less commonly successful, but if one party is mistaken and the other knew or should have known, the contract may be voided.

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.

Contract Breach Due to Plaintiff’s Actions

In many breach of contract cases, the actions—or inactions—of the plaintiff can provide a valid defense for the accused party:

  • Anticipatory Repudiation: If the plaintiff indicated they would not fulfill their end of the deal, the defendant may not be obligated to perform.
  • Failure of Condition Precedent: If a required condition for performance was never fulfilled, no breach can be claimed.
  • Prior Material Breach by Plaintiff: If the plaintiff breached the contract first in a significant way, the defendant may be excused from performing.
  • Partial Performance: Courts may consider whether the defendant substantially performed their obligations, in which case only minor remedies might apply.

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.

Importance of Legal Representation in Contract Disputes

Given the nuanced nature of breach of contract defenses—ranging from procedural technicalities to complex factual disputes—legal guidance is critical. An experienced attorney can assess the facts, identify applicable defenses, and build a strategy tailored to your specific case.

If you’re facing a breach of contract lawsuit or considering asserting breach of contract defenses, you can find qualified attorneys through UpCounsel. Lawyers on the platform are highly vetted and experienced in contract litigation.

Frequently Asked Questions

  1. What are the most common defenses to breach of contract?
    Common defenses include lack of capacity, duress, fraud, mutual mistake, impossibility, and the statute of limitations.
  2. Can a contract be unenforceable if it's unfair?
    Yes. If a contract is deemed unconscionable—grossly one-sided or unfair—it may be invalidated by the court.
  3. What if the other party breached the contract first?
    This is known as a prior material breach and can excuse your performance or form the basis for your own legal claim.
  4. How does a statute of limitations defense work in breach of contract?
    It bars claims that are brought after a legally defined time period, typically ranging from 2 to 6 years depending on the jurisdiction.
  5. Can a verbal contract be enforced?
    Verbal contracts can be enforceable, but certain types (like real estate contracts) must be in writing under the Statute of Frauds.

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