Defenses To Breach Of Contract
Below is a non-exhaustive list of potential defenses to a breach of contract claim.
If you have been sued for breach of contract, contact the breach of contract lawyers at Lindquist Wood Edwards LLP today to discuss whether any of these defenses or others may be available to you.
If one party to a contract has repudiated the contract, the other party may be able to raise that repudiation as a defense to any claim of breach by the repudiating party. Repudiation occurs if, without a just excuse, a party to a contract indicates by unconditional words or actions that it will not perform its contractual obligations. The party’s conduct must have shown a fixed intention to abandon, renounce and refuse to perform obligations under the contract.
If you are unsure about whether a party has repudiated it obligations under a contract, contact the business contract lawyers at Lindquist Wood Edwards LLP today.
If a contracting party has revoked an offer prior to the offer being accepted, the revoking party may be able to assert revocation as a defense to any breach claim asserted against it. To be valid and effective, the revocation must have been communicated to the other side. Formal notice (such as a letter) is not necessarily required.
If you have a question about whether or not you or another party successfully revoked an offer before it was accepted, contact the business contract lawyers at Lindquist Wood Edwards LLP today.
Lack Of Capacity
Lack of capacity is another potential defense to a claim for breach of contract. A lack of capacity can occur in many different ways, including the following:
A contract made with an unmarried minor may be voidable at the minor’s election.
- Who is a minor? A minor is a person under 18 whose “disability” has not been removed. This “disability” can be removed by marriage or judicial order.
- Does timing make a difference? Yes. If a minor wants to void a contract, he or she must do so within a reasonable time after reaching the age of majority. What constitutes a reasonable time is usually a question of fact to be determined based on the circumstances.
- Are there exceptions to this rule? Yes. The following are exceptions to the general rule that contracts are voidable by minors:
- Fraud: If a minor obtains a contract by fraudulently misrepresenting his or her age to induce the other party to believe he or she was at least 18 years old, then the contract generally cannot be voided.
- Necessaries: Generally, a contract for necessaries cannot be voided by a minor. Necessaries include items such as food, lodging, clothes, medicine, medical care, education and legal services. Based upon the circumstances, other items may be considered necessaries as well.
- Ratification: Generally, if the person lacking capacity has ratified a contract since reaching the age of majority, the contract cannot be voided. Ratification means that a party, knowing the contract was not binding because of his/her minority at the time the contract was made, decided to waive that defect and adopt the contract.
A contract made with a person who lacks mental capacity also is generally voidable. Some examples of mental incapacity include:
- A person who is insane
- A person who is so intoxicated that he or she is incapable of exercising judgment
- A person under guardianship after adjudication of mental illness
- A person who did not appreciate the effect of what he or she was doing, did not understand the nature and consequences of his or her acts, and who did not understand the business he or she was transacting
- A person who suffers from a mental disease or disorder, such as manic depression
If you have a question about whether or not you or someone you know lacked the capacity to enter into a contract, contact the business contract lawyers at Lindquist Wood Edwards LLP today.
An illegal contract is generally void and unenforceable. A contract is illegal if the parties either:
- Undertake to do an act that is forbidden by law in the place where the act is to occur
- Make the contract with an intent to violate foreign law even if the act does not violate the laws of the place where the contract is made
Examples of illegal contracts are:
- A contract to import feed into Mexico when neither party has the permits required to import large amounts of feed
- A contract with a felon to hold the felon’s financial interest in his business in trust and conceal that interest from various authorities
- A referral contract between an ambulance company and an attorney
Are there exceptions to the illegality rules? Yes. If a contracting party can show that — after a change in the law occurred which removed the illegality of the original agreement — both parties ratified the contract, then the contract may be enforceable.
Failure Of Consideration
Failure of consideration occurs when, because of a supervening cause, one party does not perform a condition precedent to another party’s duty to perform. Only a substantial failure of consideration discharges another party’s duty to perform. A partial failure does not necessarily invalidate the contract; it generally allows the injured party to sue for damages. It is important to know that the availability of this defense varies based upon the circumstances.
If you have a question about whether your contract is unenforceable for a failure of consideration, contact the Lindquist Wood Edwards LLP today.
Lack Of Consideration
Lack of consideration occurs when the contract, at the time of its formation, does not impose obligations on both parties. A contract that lacks consideration may be unenforceable.
Duress occurs when one party is compelled to enter into a contract against its will or judgment, such as by threat. To prove duress, a party must establish that:
- The other party made a threat to do something it had no legal right to do
- The threat was of such character as to destroy the first party’s “free agency”
- The restraint caused by the threat was imminent
- The restraint left the first party with no means of protection
A claim of duress must be based on a party’s acts or conduct, and cannot be based upon a fear of what that party might do. Furthermore, the threat must be unlawful, improper or unjust. A threat to do only what a party has the legal right to do is an insufficient ground for duress.
A threat to file a civil suit or the actual filing of a civil suit for the purpose of enforcing a legal right generally does not constitute duress. However, the threat of a criminal prosecution may constitute duress, if the threat caused a party to act contrary to its own free will.
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