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Breach of Contract

Business Law-Breach of Contract

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What is a Breach of Contract?

A Breach of Contract occurs when Party A (the Defendant) has failed to perform any written or oral term in a contract made with Party B (the Plaintiff). The contract has been breached because Party A has failed to perform without a valid legal excuse or justification.

Examples of Breach of Contract

For instance, a breach of contract may occur when a homebuilder leaves a jobsite without installing an air conditioning unit, a custom countertop, or without using a specific material promised for the construction of the flooring or roofing.

Often, a homebuilder will substitute the granite countertops requested with a substandard, inferior material to cut costs. Or perhaps a builder has unilaterally (on his own terms, and without the consent of the other party) changed the pricing agreement on a take it or leave it basis.

Defenses to a Breach of Contract Claim

Breach of Contract is one of the most frequently occurring law suits. There are many remedies for a Breach of Contract plaintiff including suing for damages (restitution), voiding the contract, or what is known as specific performance. Specific performance means the Plaintiff wants the Defendant to finish the job as contracted for using the materials contracted and paid for.

In a contract dispute over a Breach of Contract, a defendant should raise as many legal defenses as possible, including so-called “affirmative defenses.” A simple denial of any legal wrongdoing is not a sufficient defense and it may be regarded as too general, or lacking specificity.

A Defendant should respond with every plausible argument that justifies his or her position, because a failure to raise defenses at the outset may preclude a Defendant from raising them later. A failure to raise defenses early may act in essence as a waiver or an admission of culpability.

Affirmatives Defense to a Breach of Contract Claim

Most defenses to a breach of contract claim are referred to as “affirmative defenses.” As a judicial matter, the Defendant raising an affirmative defense bears the burden of proving its truthfulness.

The purpose of an affirmative defense is not to dispute the claims or the alleged facts, but rather to assert what are known as mitigating factors to diminish the strength of the claim, or to render the breach claim invalid or void altogether. In civil procedure terms, this is the equivalent of the Defendant admitting to the facts but stating that the Plaintiff has not asserted a claim upon which relief (damages or specific performance) can be granted.

Common Defenses for a Breach of Contract Claim

  1. Under the Infancy Doctrine, a person has the power to void a contract if the person was younger than 18 years of age when entering into the contract. A minor is generally not required to pay back the value of what was provided. There are two circumstances under which a minor may be required to compensate the adult with whom they have contracted. The first instance occurs when the goods or services contracted for were necessities, and the second instance occurs if the minor has ratified the contract. Ratification occurs expressly or impliedly and would take place after the minor has turned 18, or the age of majority in a given jurisdiction.
  2. In cases of Mental Infirmity, a person has the power to void a contract if, when entering into the contract, the person had a mental infirmity making it impossible for them to reasonably understand the nature and consequences of their actions. It is important to keep in mind that if a person has not been declared mentally infirm, they may be required to prove that they were incapable of understanding the contract at the time of contract formation.
  3. The defense of Intoxication allows a person to void a contract if, when entering into the contract, he was under the influence of alcohol rendering him unable to understand the consequences of the transaction and the other party was aware of his intoxication.
  4. A defense that relates to public policy considerations is that of Unconscionability. The Doctrine of Unconscionability may be used as a defense if a party proves that a contract or term therein is unconscionable at the time that the contract is made. If this is proven, the court may refuse to enforce the contract; enforce the contract without the specific unconscionable term(s); reduce the impact of the unconscionable term to avoid an unfair or unjust result. Both procedural and substantive unconscionability must be proven.
  5. The Doctrine of Misrepresentation allows a party to void a contract when the other party had made a fraudulent or material misrepresentation to the party that has induced the party’s assent to the contract; and a court may determine the party is justified in relying on the representation. The misrepresentation does not have to be fraudulent, it must be an assertion that is not in accord with the facts.
  6. The Statute of Frauds is one of the most popular contract defenses. Under the Statute of Frauds, an oral contract that is ordinarily enforceable is rendered unenforceable if it fits into one of the Statute’s six written requirements. The common statutory categories under which the contracts must be in writing are for the sale of land, suretyship agreements, the sale of goods over $500, and contracts that cannot be completed within a period of one year. A court will interpret most written documents as satisfying the Statute of Frauds.
  7. The Doctrine of Mutual Mistake may be employed when both parties have made a mistake regarding a part of the contract that is material (vitally important) to the agreed exchange, and as a matter of law, a court will likely not force the party to bear the risk of their mistake.

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