A breach of contract occurs when one party to an agreement fails to fulfill their contract obligation without a legal excuse. There are many potential defenses to breach of contract claims, which typically involve showing that the contract was invalid, that there was no breach, or that the breach was excusable.
If you believe someone has breached a contract with you or if you have been accused of breaching a contract, the best breach of contract lawyer at Massingill can help you understand which defenses may apply.
No Contract Exists
The most straightforward defense to breach of contract is that no valid contract existed between the parties. If all elements of a valid contract are not met, then no breach of contract can occur.
In Texas, a binding contract exists only when five elements are met. These elements are:
- An offer,
- Acceptance,
- A meeting of the minds,
- Consideration (giving something in exchange for something else), and
- Execution and delivery of the contract with the intent that it become binding.
To simplify, a contract is formed when one party makes an offer that is accepted by the other party in which they exchange something of value, agree on the terms, and have a plan of execution.
If any of the five elements of a contract are missing, there is no contract or claim for breach.
There Was No Breach
Under Texas law, a plaintiff must prove four elements to demonstrate that a contract has been breached. These four elements are:
- A valid contract exists,
- The plaintiff performed their obligations under the contract,
- The defendant breached the contract through failure to perform, and
- The plaintiff was damaged as a result of the defendant’s breach.
If a plaintiff can prove all these elements, they will be entitled to recover damages caused by the breach. But if the defendant can present evidence demonstrating that no breach occurred, then the plaintiff’s claim will not succeed.
The Breach Was Immaterial
There are instances where a breach is immaterial. An immaterial breach is a breach that does not undermine the purpose of the contract. If the defendant can prove the breach was immaterial, the plaintiff cannot prevail on their breach of contract claim.
For example, an office placed an order to restock paper supplies used in their normal course of business. The order terms stated delivery should be on the 15th of the month. Due to a postal delay, the paper supplies were not delivered until the 16th.
Since the restocked supplies weren’t needed for a particular day, the delay in delivery does not prevent the office from using the supplies for their intended purpose. The 24-hour delay in delivery is not a substantial enough breach to have qualified as a failure to perform.
Affirmative Defenses to Breach of Contract
Affirmative defenses to breach of contract are reasons given by a defendant why they cannot be held liable for their breach. The Texas Rules of Civil Procedure list potential applicable affirmative defenses. To assert an affirmative defense, a defendant must raise the defense in their answer to the court at the beginning of their case. Some of the five most common breach of contract defenses are listed below.
1. Accord and Satisfaction
Accord and satisfaction can be the right affirmative defense when a plaintiff and defendant disagree about a contract and the plaintiff already accepted a smaller sum of money to satisfy the contract terms. For example, Phil agreed to paint Dan’s house for $1,500 if Dan was happy with the quality of the work.
After Phil finished painting, Dan was unhappy about the quality. Due to Dan’s quality concern, he offered Phil $1,200 for completing the work even though it was not to his satisfaction. Phil accepted the money and later tried to sue Dan for the remaining $300. Since Phil accepted the lower sum of money, the contract terms were satisfied.
2. Duress
Duress is when the plaintiff forces the defendant to sign a contract against their will. For this to be a successful affirmative defense, the defendant will need to show:
- The plaintiff acted in a threatening manner,
- The plaintiff’s threat forced the defendant to act differently than they usually would,
- The behavioral change was temporally close to the threat made, and
- The defendant could not protect themself from the threat.
If you cannot show the four elements of duress, it is inapplicable as an affirmative defense. For example, your landlord, Patty, states your rent is going from $2,000 to $4,000 beginning next week with no warning. Patty tells you that if you do not sign the new lease for increased rent, you will be on the street.
You tell Patty you cannot afford the increased rent, but she affirms you will be evicted immediately if you do not sign. Patty then sues you for unpaid rent. You might be able to use duress as a defense because you signed the new lease after being threatened with homelessness.
3. Failure of Consideration
Failure of consideration can apply when one party does not hold up their end of the bargain. Consideration is something of value or an action one party takes in exchange for the other party’s action or promise of action.
For example, Pat and Debbie have agreed to open a pottery studio. Pat is responsible for all the studio’s finances, securing the studio space, and setting up the necessary utilities. Debbie is responsible for running the studio and teaching classes. Pat leaves on vacation without setting up electricity and water accounts for the studio.
When Pat returns, Debbie has not begun teaching pottery classes and earning money within the studio, so Pat sues for lost profits. Debbie might be able to use failure of consideration as a defense because Pat did not fully set up the studio space before leaving for vacation.
4. Fraud
Fraud is only available as an affirmative defense when the defendant can prove that the plaintiff recklessly or knowingly made a false representation with the expectation the defendant would act on it.
For example, Donna is a law student studying for the bar. Donna has been looking for a tutor to create a study program that will cover the next six weeks before the exam. Every tutor Donna talks to charges $5,000 for their study program and cannot provide prior student testimony about passing the test.
Parker presents a study plan to Donna, a fake law degree, and fake student testimonies about how they passed the bar. Donna hires Parker for the study plan, fails the bar exam, and refuses to pay Parker. Parker is now suing Donna in court. It is likely that Donna can use fraud as an affirmative defense since Parker lied about their credentials and the student’s testimony regarding passing the test.
5. Statute of Limitations
The statute of limitations describes how long a plaintiff has to file a lawsuit against the defendant. Depending on the cause of action, the filing deadlines can be different. If the plaintiff has waited too long to file their lawsuit, the defendant might be able to use the statute of limitations as a defense.
For example, Paula has a written contract with Dennis for roof repair since her roof leaks during every rainstorm. Dennis completes work on the roof, and Paula pays him. During the next storm, Paula’s roof is still leaking, so she contacts Dennis, who then ignores her.
Shortly after, there is a spell of dry weather, so Paula forgets about the leak. When it occasionally rains over the next few years, Paula’s roof leaks but she is too busy to contact Dennis again. After five years, Paula files a lawsuit for the leaky roof. Dennis might be able to assert the statute of limitations because, in this case, the deadline to file a lawsuit is four years from when Paula should have known of the damage.
Contact Trusted Business Litigation Attorneys at Massingill
If you think you have a claim for breach of contract or have been accused of breaching a contract and aren’t sure how to proceed, let a law firm with a collaborative spirit, extensive experience, and a 5-star rating on Google answer your contract questions.
Because of our extensive experience with small businesses, Massingill can assist with business formation, transactions, disputes, and contracts, including breach of contract defenses. Call today for your free consultation to help with your contract dispute or other business needs.
Where to find our Austin office:
Where to find our Abilene office:
Joshua Massingill
Joshua Massingill is an attorney practicing in Austin, Texas. He serves on the Texas State Bar’s Law Practice Management Committee, the Leander Educational Excellence Foundation (LEEF) Board of Directors, and the Success-Werx Board of Advisors. He mentors young entrepreneurs in Leander ISD’s INCubatorEDU program and is active in his church.
Rate this Post
Loading...