If you or your business have been sued for breaching a contract, it's important that you meet with an attorney to consider your options in how to respond to the lawsuit. Dealing with a breach of contract is a common way that businesses will interact with the judicial system. Whether you are the one who is bringing the lawsuit or you are the one who is being sued by someone else, the breach of contract lawsuit is one of the most common legal proceedings you are likely to encounter. Most businesses do what they can to avoid being involved in breach of contract lawsuits. They are expensive, they take time and they are an annoyance if you are the one who hasn't done anything wrong.
Ultimately, if you get involved in this type of lawsuit, your goal is either to win the lawsuit or minimize the amount of money you have to pay if you are the party who has breached the contract. If you are the party who is defending against the lawsuit, it's important that you understand the various defenses that are available to you. A "defense" in a lawsuit is a reason for the court to consider why you aren't liable for the breach of the contract. They can come in the form of Affirmative Defenses, which are contained in your Answer as a separate part of your document, and general defenses, which are defenses that can be raised and don't necessarily need to be in your Answer.
Breach of Contract Defenses
One of the most important reasons you should consult with an attorney if you've been sued is because they can spend some time analyzing the complaint and determining if there are defenses that you may have. There are some types of cases that always have the same basic defenses that every Defendant raises, but oftentimes, there may be other defenses that you may not have considered or know about and these defenses could form the foundation of your lawsuit strategy. Here are some common defenses that I have encountered in Breach of Contract lawsuits:
- Fraud - many people like to claim that there was some type of fraud involved with them entering into the contract.
- Duress - this often goes with fraud and it is based on one party being pressured to sign the contract. The pressure can be a physical threat or it can be a financial threat or some other type of threat that causes a party to sign the contract.
- Incapacity - if one of the parties was unable to understand the contract or the party was underage when they signed the contract, it may be that the contract is not enforceable against that party.
- Illegality - if the contract requires you to perform an illegal act, you should be sure to plead the defense of illegality - the contract is not enforceable.
- Impossibility - if it is impossible for one party to perform their obligations under a contract, that can also be a defense against a breach of contract action.
- Mistake - sometimes, the parties entered into a contract based upon a mistake in an important term of the contract. In that case, a court can actually cancel the entire contract or maybe just a portion of the contract that relates to the mistake.
- Laches - this is a common defense that people who aren't lawyers are confused about when they see the word in the paperwork. Laches occurs when one party has waited too long to file their lawsuit and the delay has harmed the defendant's ability to defend themself against the complaint.
- Undue Influence - it's similar to duress, but in this case, it's a person taking advantage of the trust of another person to induce them into signing the contract.
- Lack of Consideration - one of the elements of a contract is that there must be an exchange of money or a promise, the legal term is consideration. If there was no consideration, then you may not have even had a legally formed contract.
- Unconscionability - if the contract is a completely one-sided contract, the party who is stuck in the unenviable position may be able to claim this as a defense.
- Statute of Frauds - this is a special defense against contracts that need to be in writing. These contracts can't be oral and it often includes contracts like real estate contracts and contracts that take more than 1 year to perform.
This list is by no means exhaustive - there can be other defenses that are unique to your lawsuit. But these can give you a starting point when you are analyzing the complaint that has been filed against you. Whenever a client brings me a lawsuit against them, I usually run the complaint through this list to see which defenses immediately stand out as potential defenses.
If you or your business has been sued and you'd like to consider possible defenses to the action, let's set up a Legal Strategy Session to discuss the next steps for you in your lawsuit.