Common Defenses in
Breach of Contract Cases
There are many different defenses to a breach of contract action – reasons why you were not able to do what you were supposed to do under the contract, or why there never was a contract in the first place. It is common to argue all the defenses that are available to you, which might include one or more of the following reasons:
Some contracts, including those involving real property, are required to be in writing. This is called the “statute of frauds.” If the contract is supposed to be in writing, but is not, a court may find that the contract is not enforceable against you – that is, you are not legally required to do what the other party says you were supposed to do.
All the essential terms of a contract must be clear ― that is, the contract must be “definite” ― or the contract may not be enforceable. If you believe that one or more essential terms of the contract are not clear, you may try to argue that the contract is too indefinite to be enforceable.
For example, a painter and restaurant owner may agree that the painter will paint the restaurant in the next 6 months, but they do not agree on a price. In this case, an essential element of the contract ― payment ― is missing. If the restaurant owner tries to sue the painter for failing to perform the contract, the painter can argue that the contract was too indefinite to be enforceable.
A contract requires Mutual Assent, or a “meeting of the minds,” on all the essential terms, to be enforceable. If you and the other party made a mistake regarding a basic assumption on which the contract is based, you may be entitled to “rescind” the contract, meaning it will not be enforceable.
For example, if you agree to buy an original drawing signed by Picasso, but both you and the seller later find out that the signature was a forgery, you may be entitled to “rescind” the contract and get your money back. Also, if you and the other party actually did agree on all the essential terms of the contract, but made a mistake it writing down one or more of the essential terms, you may be able to have to written contract changed to correct the mistake back to what you actually agreed. This is called “reformation.”
Lack of Capacity
Both parties must have the legal ability ― called “capacity” ― to agree to the terms of the contract. If you were not legally able to agree to the contract, you might argue that you lacked capacity.
For example, if a fast-talking salesman got you to agree to buy a home exercise machine, but you are a minor, you can argue that the contract is not enforceable against you because you lacked capacity. Or, if you were just home from the hospital, recovering from a serious car accident, and on so much pain medication that you were not able to think clearly, you might argue that you lacked capacity to enter into a contract when you answered a phone call from a salesman, offering to sell a home exercise machine “payable in just 12 easy installments of $199.99” – and you said “Yes,” because you thought he asked you whether you liked to exercise.
Parties must truly intend to agree to each essential term of a contract. If the other party deceived you regarding an essential term of the contract, you can argue that you never intended to enter into the contract because you would not have agreed to it had you known the true facts ― that is, you were “fraudulently induced” to enter into the contract.
For example, if a car salesman tells you the car you agree to buy is new, but later you find out that the car was used when you bought it, you can argue that the contract is not enforceable because you were induced to enter into it by the salesman’s fraud.
A contract may not be enforced if you were unfairly pressured into agreeing to it and its terms are grossly unfair. In that case, you might try to argue that the contract is “unconscionable.” That is, the other party, who had a greater bargaining power, took advantage of you.
For example, your refrigerator breaks down, your food will spoil if you do not get a new one today, and your kids will not have anything to eat. You only have $300 to pay for a new refrigerator, including installation. A salesman says you can have a refrigerator in the store that usually costs $250, with delivery that day, but only if you pay the $300 you have and also agree to pay another $100 every month for the next 15 months. You can argue that you do not have to pay the full contract amount because you were under pressure to get a new refrigerator and the salesman took advantage of your need to set a grossly inflated price.
A contract must be entered into for a legal purpose. If the purpose of the contract is not legal, you can argue the contract should not be enforced. For example, if someone offers to pay you to tell them when the police are coming to break up an illegal drug deal, you would not be able to enforce the contract.
Both parties must willingly agree to enter into a contract. If you were not really free to make an agreement, you might argue that you entered into the contract because you were under “duress.” This usually happens when you feel that you have no other choice.
For example, if you are paying for a family member’s medical bills and you miscalculated and now have very little money to pay for this month’s rent (which is due in two days), you may argue that, under duress, you agreed to your landlord’s offer to take your car in exchange for one month’s rent, when in reality the car was worth much more than that.
Both parties must willingly enter into the contract. If you believe you did not willingly enter into the contract, you might argue that the other party, or a third party, used excessive pressure to get you to enter into the contract.
For example, if you are elderly and cannot leave your house, and your caregiver nephew threatens to stop taking care of you unless you sign a deed giving him the house, you might argue that your nephew exerted undue influence over you to get you to agree to give him the house.
You might argue that it would be impossible to carry out the terms of the contract. For example, if you are a mobile home park owner, and the park is flooded by water, you might argue that it is impossible for you to provide a space for a seasonal tenant who just showed up to park his mobile home for the spring and summer, as required by the agreement you signed last fall.
You might argue that the other party gave up the right to sue you for breach of contract. Knowingly giving up rights is sometimes referred to as a “waiver.” For example, imagine you are a baker and the other party ordered a giant chocolate cake for 60 people, but when you went to the supply room you saw you did not have enough chocolate for the whole cake, but only for the frosting. You called the other party, told her about the problem, and she said: “Mmm. Sounds good.” So, you made a vanilla cake with chocolate frosting instead. She comes and picks up the cake, pays for it, and then calls you a month later demanding her money back. You might argue that she waived her right to sue you for not providing a chocolate cake because she approved the vanilla cake over the phone (and ate it!).
Legal Editor: Robert A. Sternbach, November 2014
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.