5 common breach of contract defenses

On Behalf of | Oct 20, 2022 | Business, Litigation

Contracts are the lifeblood of any business. They outline such essential details as the scope of work done, the cost of the work, deadlines for delivery, and other things. Disputes over meeting the agreed-upon terms lead companies to file a breach of contract lawsuit.

While a company or business partner may feel that a lawsuit has no legal grounds, speaking with an attorney with experience handling business litigation is always advisable. They can review the contract and the case details and then build a strong defense for their client if necessary.

Every contract is different

The agreement’s details will vary. Nevertheless, certain rules and guidelines make a contract legal and binding. Defenses we commonly see within those guidelines include:

  1. Force majeure/frustration of purpose/impossibility: These terms have slightly different meanings, but their role is to excuse the defendant from the performance of the contract when something unforeseeable or beyond their control occurs. There must be language in the contract’s clauses that reflect this argument.
  2. Statute of limitations: Binding contracts will have a five-year statute of limitation in Kentucky for the plaintiff to file a claim. However, there may be circumstances, such as claims of fraud, that would extend the statute.
  3. Statute of frauds: This requires that certain contracts must be in writing and willingly signed by both parties. It often involves contracts that cannot be completed within one year or the sale or transfer of land.
  4. Failure of consideration: This generally applies to contracts that require something like payment before the contract is enforceable. For example, if the stated requirement of paying half of the total amount upfront is not met, the agreement is unenforceable.
  5. Substantial performance: This implies that the defendant performed their contractual obligations, but the plaintiff still complains about non-performance or cites something that has no economic impact. For example, they may not like the results of the work, but it met the contract’s conditions.

Litigation may be the best option

Contracts are complicated and can have differing interpretations. Ideally, the plaintiff and the defendant can work out an equitable solution on their own, but one side may be unwilling to negotiate. To resolve the dispute, it may be necessary to litigate the matter.