Perhaps the most common claim made in business and commercial litigation is an allegation of breach of contract. In such a claim, one of the parties to a purported agreement asserts that the other party has either failed to perform as set forth in the contract, or provided substandard or non-conforming performance.
Typically, when a commercial lawsuit has been filed, the defendant (person being sued) will accept or reject the assertions made by the other party, but may also raise what are known as “affirmative” defense. An affirmative defense differs from a simple response to an allegation because it requires that the defendant prove all the elements of the defense, should the case go to trial.
Here are the most common affirmative defenses in breach of contract lawsuits:
- The contract lacks specificity—If the defendant can show that the contract terms are vague, or that the contract does not allow one or both parties to understand their rights and responsibilities, the contract can be voided.
- The contract violates the statute of frauds—The statute of frauds identifies those agreements that must be in writing to be valid. These types of contracts are defined by state law and typically involve contracts for the sale of land, contracts for marriage and surety agreements, among other types of contracts.
- There was a mutual mistake regarding a material fact—If both parties had the same understanding and that understanding can be proven wrong, the contract can be voided
- One of the parties lacked contractual capacity—As a general rule, this occurs when one of the parties was a minor (though special rules apply), one of the parties was intoxicated, or one of the parties lacked the mental capacity to enter into a contract.
- The contract was not voluntarily entered into—This argument can be made if there was duress, undue influence or fraud/misrepresentation.
- The contract is deemed “unconscionable” by the court—The court will customarily not enforce a contract that is grossly or patently unfair, particularly where the parties lack equal bargaining power.
- The subject matter of the contract is illegal
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