Breach of contract and contract disputes are typically unwelcome, however, sometimes the circumstances of a business or company can change. While it is certainly important to know how to properly and effectively negotiate, draft, execute and enforce a contract, it can also be helpful to be aware of how to defend against a breach of contract claim.
There are a number of possible defenses, depending on the circumstances, to a contract enforcement or liability for contract damages claim. A valid defense to a breach of contract claim can be that performance of the contract has become impossible or the purpose of the contract has become frustrated. Another defense to a breach of contract claim may exist when the contract contains a mutual mistake that is different than what both parties intended. Similarly, if the contract contains a unilateral mistake that is material to the contract that the other party knew about, or should have known about, a defense to a breach of contract claim may effectively be made.
Additional defenses to a breach of contract claim can include in circumstances when one or both parties lacked capacity to enter into the contract; the contract lacks sufficient consideration between the parties; the subject matter of the contract is illegal; the contract violates public policy; the contract formation involved fraud; or the contract improperly limits the amount of damages the non-breaching party can recover for a breach of contract.
When entering into any contract there are important formation considerations to be aware of that can impact performance of the contract down the road. For any contracting party, it is helpful to understand how to enter a contract, how to enforce a contract and how to defend against a breach of contract claim when circumstances call for it.
Source: University of New Mexico Judicial Education Center, “DEFENSES TO BREACH OF CONTRACT,” Accessed Oct. 17, 2015