5 Common Contract Defenses to Breach of Contract
Contract defenses give parties reason to explain away a breach of contract. When you have a breach of contract claim, you must determine every reason that you are not responsible. A plausible argument for your side can do leaps and bounds as you try to fight an accusation of wrongdoing. Your goal is to prove that the breach contract should not be enforced.
This is not something you want to do yourself. You will want to speak with a lawyer to look over the contract and determine your possible defenses to the accusation of breach of contract.
An Affirmative Defense
In legal language, when a party tries to prove that a contract should not be enforced, they argue reasons outside of the accusation. An affirmative defense explains what other facts or circumstances make the contract unenforceable.
5 Common Contract Defenses to Breach of Contract
While many possible defenses exist for arguing that a breach of contract shouldn’t be enforced, a few common defenses tend to show up again and again. Consider your contract and surrounding circumstances. Common defenses for breach of contract include illegality, unconscionability, mental incapacity or incompetence, fraud, duress, undue influence, or mistake.
Your situation could use a few of these common defenses. It always depends on what the surrounding facts are.
1. Capacity to Contract
Not everyone is capable of being legally bound by a contract, which a lawyer will call “capacity to contract.” Generally, the court views certain people as incapable of signing a contract, such as a minor or a mentally impaired individual. Therefore, a contract signed by such a person is considered unenforceable.
A minor who signed a contract right before their 18th birthday still can have a contract canceled if it is voided within a certain period of time. This time period is outlined by state law. If the contract is not canceled within that time, then the contract will become enforceable.
Some might believe that incapacity due to intoxication would be a good reason for the court not to enforce a contract. However, in most cases, the court does not see intoxication as incapacity to contract. On the other hand, if the other party took advantage of the intoxicated person, that could be reason to void the contract.
2. Duress, Undue Influence, Misrepresentation
In some cases, a contract may be signed due to outside factors that make the signer feel as though they’re being pressured into the contract. When proved, this can be reason to void the contract. But first, it must be proved.
Duress occurs when a contract or agreement was signed due to a threat or illegal action. In this case, the signer may feel like they had no other option but to sign.
Undue Influence happens when someone exercises their influence over someone else, making them believe that it’s their best interest to agree to the contract, regardless of whether it is or not.
Misrepresentation is a false statement or information that coerces a party to sign when they should have had full knowledge of that false statement. This concealment is reason to void a contract.
In some situations, a contract might be deemed to have met unconscionability, meaning that the court believes that it was unfair to the weaker party. Some contracts might hand all rights to the larger party, leaving no benefits for the weaker party. This unfairness can cause a court to rule the contract unenforceable.
Another aspect that will be consider in unconscionability is the type of parties in the contract.
- Is one party obviously stronger than the other?
- What is the education level of each party?
- Did each have the opportunity to ask questions?
- Were lawyer consultations allowed?
- Is the price of goods or services excessive?
Depending on how the questions above are answered, the court will try to determine whether or not the contract or bargaining power is imbalanced or not. They will analyze the conditions, waivers, and clauses that might be constraining the weaker party. And if the contract is extremely unfair, the contract will become unenforceable.
Contracts bow to the idea of public appropriateness as well as remaining legal. Which means that a contract that is illegal can be termed as unenforceable. Part of the reason for the law is to protect the public. Therefore, a contract that fails to protect the public in some way can be considered void.
An illegal contract will not be upheld by a court. For example, a contract that encourages prostitution, tax violation, or record destruction is considered illegal. Sometimes, when a contract indirectly supports illegal activity, it still might be enforceable, but the court might decide to remove the indirect support of illegal activity.
Canceling a contract due to a mistake requires that both parties made a wrong assumption that influences the contract. This mistake can not be just a small problem, but it must cause big issues with carrying out the contract.
Failure to read a contract fully may be a mistake, but it will not make a good reason for a court to cancel a contract due to your oversight.
Contract law specifies two different mistake types: mutual mistake and unilateral mistake.
A mutual mistake is what was described above, where both parties made a mistake, begging the question of whether or not the contract even exists.
A unilateral mistake refers to when only one party makes a mistake. While this is usually not enough to void the contract, a couple of situations cause cancellation. If a party realizes that the other party has made a mistake and does nothing to correct the misunderstanding, the court will likely term the contract as unenforceable.
When your contract faces a breach of contract, the natural question is whether or not it is enforceable. If you’re trying to avoid facing the consequences of a minor or material breach, you want to prove that you have good reasons for the court to deem the contract unenforceable.
A contract lawyer understands the ins and outs of the law, recognizing what reasons might be viable to explain why the contract should be canceled.