As any business owner knows, contracts are an essential part of the successful operation of a company. With contracts, parties can attempt to erase any ambiguity associated with doing business together.
In most cases, the terms of a contract are clear, it is agreed upon by all parties and everything goes as planned. However, when the unexpected occurs, a business can find itself on the receiving end of a breach of contract claim. In these situations, having a solid defense strategy can drastically affect the outcome of any legal action.
Although there are numerous breach of contract defenses that may apply, depending on your particular situation, below is a list of some of the most common.
- Contract was not in writing – State law requires certain types of contracts to be in writing, which means an oral agreement would not be valid.
- Contract is indefinite – Essential terms to the contract were never agreed upon, such as specifications or duration, so the deal was never finalized.
- A party lacked capacity to contract – If an individual lacked capacity to enter into the contract, or didn’t understand fully what they were doing, the contract may be voidable. This is often used with minors and those with a mental incapacity.
- Contract is unconscionable – A contract is grossly unfair, often because of imbalanced bargaining power during contract negotiations.
- A party was induced to contract – A contract will be found invalid if a party was induced to agree under duress, through lies or by another person’s undue influence.
- Contract has a mistake – A mutual mistake was made to an essential element of the contract, such as the value or authenticity of an object.
- Contract is illegal – The thing bargained for in the contract is illegal, making the contract unenforceable.
- Future agreements change contract terms (Estoppel) – If one party makes a statement that excuses the performance or timelines of the contract, it may no longer be a breach.
In many situations, a combination of defenses may be used in a breach of contract case. And it remains the burden of the plaintiffs to prove a breach actually occurred. To obtain the best possible outcome as a defendant, it is important to obtain skilled representation from a business law attorney.