Defenses to Breach of Contract
I’ve Been Accused of Breaching a Contract, What Can I Do?
A breach of contract can be excused when the contract is found to be void. There are many grounds for voiding a contract, and you should consult an attorney to determine if any of them are applicable to your case.
What If the Agreement Is Not a Valid Contract?
In order to form a contract, there must be:
- An offer – a party must offer to make an agreement
- Acceptance of the offer – Usually the acceptance must be express, but implied acceptance may be found in certain cases
- Intent – If one party did not intend to make an exchange, the transaction may be treated as a gift
- Consideration – Exchange of valued goods or services
If one of these elements are lacking, then there is no enforceable contract because there is no contract.
What If a Contract Is Not In Writing?
Most contracts can be made orally, but there are certain agreements which must be in writing. The statute of frauds, the law which requires contracts be in writing, states that the following contracts must be in writing. If the contract deals with one of these areas and is not in writing, then it is legally unenforceable:
- Contracts involving the sale or transfer of land
- Promises to pay someone’s debt obligations
- Contracts that cannot be completed within one year of their making, according to the terms of the contract
- Contracts involving the sale of goods for more than $500
- Contracts that will go beyond the lifetime of the one performing the contract
What If the Contract is Not the Agreement I Consented To?
In a few situations, the contract may not reflect the true intentions of the parties. In those situations, a party may show that other agreements were made outside the contract, agreements which change the nature of the agreement and thus puts the defendant within the terms intended by the parties.
This defense will work well if the contract does not contain a merger clause.
Can a Contract Be Voided where One Party Was a Minor?
In general, minors cannot enter into contracts. In most states, someone is a minor if he or she is under 18, though there may be variations. Therefore, if a minor signs a contract but later wants to get out of it, he or she can usually do so. For this reason, it is a good idea to have the minor’s parents sign the agreement if you don’t want it voided in the future.
Can a Contract Be Voided where One Party Lacked Mental Capacity?
A contract can be unenforceable if a person lacked mental capacity entering into it. Determination of mental capacity will vary from state to state. Sometimes, courts will look at whether or not the person understood what he or she was doing at the time of contract creation. Other courts will look at whether or not the person had control over their actions at the time of contract creation.
What Does it Mean to Be Under Duress or Undue Influence to Sign a Contract?
Duress occurs when a person is influenced to sign a contract under pressure. Undue Influence occurs when a dominant party exerts excessive pressure on a weaker party to sign a contract.
What Does it Mean when Somebody Commits a Fraud or Misrepresentation in Creating the Contract?
In general, a party engages in fraud when he or she misrepresents a material fact to induce another party to act or refrain from acting towards formation of a contract. Persons charging other with fraud must prove that the person making the representation knew or should have known that it was false, that he or she intended for the other party to rely on it, and that the party did in fact rely on it, resulting in damages.
What Is a Material Fact in the Fraud Context?
A material fact is one that affects the judgment of the party upon signing the contract.
Can Failure to Disclose Facts Be a Deemed Fraud or Misrepresentation?
Sometimes, a party’s failure to disclose information can be deemed fraudulent.
What Happens when There Is a Mistake in Creating the Contract?
A mistake occurs when parties have a mistaken belief about a fact upon entering into a contract. If only one party is mistaken, it is a unilateral mistake, and generally contract performance is not excused. In a bilateral mistake situation, both parties are mistaken, and the contract will generally be void.
The unilateral mistake rule does not apply if one party misleads the other party. Unilateral mistakes can also void a contract if one side fails to disclose information which is only known to that party and which a reasonable person could not discover on their own.
What Happens when a Contract Has an Illegal Purpose, or Violates Public Policy?
If the terms of the contract run counter to public policy or existing law, the contract will be unenforceable. For example, a court will not enforce a contract for the sale of illegal firearms
Is a Contract Void if it Is Unconscionable?
A contract is void if it is unconscionable. "Unconscionable" means that the contract is very obviously one-sided, so one-sided that no reasonable person would agree to such terms. Therefore, the court will assume that one part was pressured into signing the contract since no reasonable person would otherwise.
What Happens when Circumstances Change or there Are Important Overriding Events that Occur?
When something happens that makes it impossible to perform the duties of the contract, parties may be excused from performance. Just because the event rendered performance more difficult, however, does not mean that it is impossible. A party may also be able to excuse performance when an important overriding event has frustrated the purpose of the contract.
Do I Need a Lawyer for my Breach of Contract Issue?
Contract law can be quite complicated, and defenses to a breach of contract may vary between states. An attorney can help determine whether there is an appropriate defense when you are accused of breaching a contract.
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Last Modified: 04-05-2013 03:36 PM PDT