Breach of Contract Defenses: Unclean Hands

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 What is a Breach of Contract?

A breach of contract occurs when a party to a valid contract fails to fulfill their obligations under that contract. For example, the terms of a contract are guidelines so the parties are aware of their duties as well as how they will perform those duties under the contract.

If a party does not complete their duties under the contract, the non-breaching party will be permitted to take action, such as filing a lawsuit against them in court. Breaches of contract may occur as partial breaches, or minor breaches, or complete breaches, or material breaches.

A court will determine whether a breach was minor or material. Determining the type of breach will help the court determine the type of damages that the breaching party should be required to pay.

What are Some of the Defenses to a Breach of Contract Dispute?

In the broad body of laws called contract law, there are, in general, four types of defenses which may be used against a claim of a breach of contract, including:

Anticipatory repudiation occurs when the breaching party notifies a non-breaching party to a contract that they will not be holding up their end of the agreement. A defense by waiver occurs when a non-breaching party permits the breach to continue and, therefore, gives up their right to enforce the contract.

Tortious interference occurs when an individual who is not a party to a contract intentionally interferes with the performance of a contract. The unclean hands doctrine is the fourth defense which is typically used against a breach of contract claim and will be discussed below.

What is the Unclean Hands Doctrine?

There are two main categories of remedies which can be awarded in a contract lawsuit, a legal remedy, which may include compensatory damages, also called monetary damages, and an equitable remedy, such as specific performance. Although some of the defenses to breach of contract claims may be used against recovering either category of remedy, the unclean hands doctrine is an equitable defense.

The unclean hands doctrine may also be referred to as the dirty hands doctrine. It is typically used when the individual who is being accused of a breach argues that the non-breaching party should not be entitled to a remedy because they were also responsible for committing a breach.

Pursuant to this doctrine, neither party will be held liable because both parties are deemed to have unclean hands. In other words, because both parties committed a wrong, neither should be entitled to relief.

It is important to note that this doctrine is only available against a claim which includes a request for certain types of relief and which require a court to order a party to perform some form of action in relation to the contract. In other words, this defense will not be available in a case where the only solution is a monetary remedy.

The non-breaching party must be eligible to receive an equitable remedy prior to a defendant being able to assert the unclean hands doctrine as a defense. In addition to being used as an equitable defense, the unclean hands doctrine may be used as an affirmative defense.

Affirmative defenses are used when a defendant alleges that the plaintiff has engaged in conduct which disqualifies them from being able to obtain relief. Therefore, a defendant has the burden of raising the defense as well as proving it in court.

When Can You Use the Defense of Unclean Hands?

The doctrine of unclean hands may be used by both a plaintiff and a defendant in a contract claim. In numerous contract lawsuits, plaintiffs may request that the court provide one of many equitable forms of relief, so long as the proper requirements are met.

In response, a defendant may raise the unclean hands defense against a claim and argue that the plaintiff is not entitled to the relief because they also did something wrong related to the contract. For example, if a defendant appears to have breached the contract and the plaintiff decides to sue them for damages but, in reality, the plaintiff also made certain mistakes.

Examples of scenarios where a plaintiff may also be considered to be in the wrong may include:

  • Intentionally providing the defendant with inaccurate information in the hopes that they make a mistake based on that information;
  • Purposely and knowingly not responding to correspondence from the other party within a reasonable time; or
  • Assuming the defendant will not fulfill their obligations under the contract, so the plaintiff breaks the contract.

Essentially, any action which is made by a plaintiff that demonstrates that they were also in the wrong may potentially help the defense succeed. Even if a plaintiff can determine based on the defendant’s situation or actions that a contract may never be fulfilled, the plaintiff will still need to uphold their obligations under the contract.

Any actions which demonstrate that a plaintiff was not going to fulfill their contractual obligations or that they intended that the contract fail for their benefit, will provide the defendant with an option to use the defense of unclean hands. In the alternative, a plaintiff may also argue that a defendant is not entitled to use the unclean hands doctrine because they too have unclean hands.

What is Needed to Prove the Defense of Unclean Hands?

The requirements to prove the defense of unclean hands tends to be very broad in their application and may vary from state to state. Generally, it is usually not necessary that a plaintiff commit the same wrongdoing as a defendant in order to use the defense of unclean hands.

An action or conduct may constitute grounds for unclean hands if it violates good faith or conscience, which bare both equitable standards which are commonly used to evaluate a party’s conduct. An individual who is raising the unclean hands defense is required to have evidence that the wrongdoing is directly related to the contract in order to prove unclean hands.

A plaintiff may have unclean hands even if their actions are unrelated to the defendant’s alleged violation. Examples of conduct which may establish unclean hands include:

  • Failing to fulfill their own terms of the agreement;
  • Acting in a manner which constitutes fraud and pertains to the contract;
  • Committing a crime in connection with the contract; or
  • Acting in a way that demonstrates violence, coercion, or duress in regard to the contract formation stage or the contract itself.

One common scenario which occurs is when a plaintiff accuses a defendant of breaching an agreement but has also acted in bad faith, such as committing fraud when entering into the contract. The defendant in this example would then be able to assert the unclean hands doctrine as a defense to the plaintiff’s breach of contract claim.

Do I Need to Hire a Lawyer for Help with an Unclean Hands Defense?

Yes, it is essential to have the assistance of a contract attorney for any issues, questions, or concerns regarding the unclean hands defense. This doctrine may be a complicated defense to raise because both the plaintiff and the defendant are entitled to raise it during a lawsuit.

Your lawyer can review your case and determine if there is enough evidence for you to raise the unclean hands doctrine as a defense. Your lawyer can also advise you whether there are other defenses which may be available to you as well as what potential remedies may be awarded by the court.

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