In the business world, when one party believes the other has failed to meet their contractual obligations, they can file a breach of contract claim against them and seek remedies, including damages, specific performance, and rescission. Facing breach of contract allegations is not something to take lightly. Regardless of whether you are being accused of a material or immaterial breach, a breach of contract claim can have adverse consequences that go beyond financial consequences. Fortunately, there are several defenses defendants can raise to challenge breach of contract claims. If you are facing a breach of contract claim, it is vital that you understand the defenses you can raise in such a claim.
Below are six possible defenses to breach of contract claims;
In U.S. states, including California, there is a law known as the “Statute of Frauds.” This statute requires that certain contracts be in writing for them to be enforceable. If the other party claims that you breached an oral agreement, you can argue that the contract is not enforceable under state law since it is not in writing. California’s Statute of Frauds is codified under California Civil Code Section 1624. Among the contracts that this section states must be in writing are those that, by their terms, are not to be performed within a year of their making and real estate agency or brokerage agreements.
It is a defense if you and the other party were mistaken about an essential fact in the contract. For example, you can raise this defense if you and the other party were mistaken about the authenticity of a product. However, this defense cannot be used if only one party made a mistake in judgment.
All the essential terms must be clear for a contract to be enforceable. If one or more crucial contract terms are unclear, you may argue that the contract is unenforceable. For example, if it is unclear how long an agreement should last, you could argue that the contract is too indefinite and thus unenforceable.
Every state has a statute of limitations, limiting the time a party has to file a lawsuit. According to the California Code of Civil Procedure, Sections 337 and 339, in California, parties have four years to file a breach of contract lawsuit in the case of a written contract and two years in the case of an oral agreement. You can argue that the claimant’s claim is barred because it was filed after the expiry of the statute of limitations.
If you did not have the legal ability or competence to fully understand the nature and consequences of the contract you were entering into or its implications, the contract may be voidable.
If you were unfairly pressured into agreeing to the contract and its grossly unfair terms, you could argue that it is unenforceable.
If you are being accused of breaching a contract, you need an experienced business litigation lawyer. A skilled business litigation attorney at SAC Attorneys LLP can assess your case and help you develop a strong defense strategy. Contact us today to schedule a consultation.