Breach of Contract Equitable Defenses
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What Are Equitable Remedies for Breaches of Contract?
Equitable remedies are issued when legal remedies such as monetary damages cannot properly resolve the breach. Instead of providing monetary compensation, equitable relief usually involves the parties taking certain actions which will serve to remedy the breach. The most commonly employed equitable remedies for a breach of contract are:
- Specific performance- requiring the breaching party to fulfill their portion of the bargain
- Contract rescission- canceling the previous contract and replacing it with a new one
- Contract reformation- rewriting or revising the existing contract in order to more clearly meet the parties’ demands
A court has much discretion when issuing equitable remedies, and they will use a variety of factors to determine whether equitable relief is appropriate.
Are there any Defenses to Equitable Remedies?
Yes- equitable relief is not available if the party in violation has a valid defense to the breach of contract. These are known as “equitable defenses” and prevent a non-breaching party from obtaining equitable relief. Equitable defenses can include:
- Laches: The non-breaching intentionally delayed in bringing forth a lawsuit for the breach of contract. The delay must result in prejudice to the breaching party
- “Unclean Hands”: The non-breaching party had committed the same type of breach that the breaching party committed. Under equitable principles, the party claiming relief should not violate the contract terms
- Hardship: equitable remedies are not issued if they would result in undue hardships to the breaching party
- Unconscionable contract: Recovery is not available if the contract is “unconscionable”. Unconscionable means that the agreement is so one-sided that it is unfair for one of the parties
- Illegal contract: Illegal contracts cannot be enforced either under legal or equitable principles. These include contracts for gambling, prostitution, drug distribution, or other illegal acts
- Mistakes: Sometimes mistakes in the contract terms can prevent a party from recovering. Recovery may be limited based on whether the mistake is mutual or if only one party was mistaken as to the contract provision
- Misrepresentation: The contract may not be enforceable if it was made under conditions of misrepresentation, such as those agreements made through fraud, deceit, or lying
- Undue Influence: Equitable relief may not be available if there has been any instance of undue influence, such as in cases where one party has used their position of authority to take advantage of the other party
- Duress: This is similar to undue influence, except that it usually involves threat of physical harm to one’s self or loved ones
Thus, equitable defenses can sometimes prevent a party from obtaining equitable relief. The most common equitable defenses are laches and unclean hands. Thus, a party who wishes to obtain an equitable remedy must make sure that they themselves have not committed any violations of law. Finally, you should understand that the area of equitable defenses is very complex and sometimes requires the expertise of a lawyer to determine when a defense is available. For example, the defenses to specific performance may be different from the defenses for contract rescission.
Do I Need a Lawyer for issues with Equitable Defenses?
If you are involved in a breach of contract dispute, you should contact a contracts lawyer immediately. Your attorney will be able to advise you on the different remedies available in a contract setting, including both legal and equitable remedies. Also, an experienced contract attorney can explain to you how equitable defenses work and whether they apply to your situation.
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Last Modified: 08-04-2014 03:16 PM PDT
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