You create a contract when you go into business with a client, vendor, or another business. Contracts are a crucial part of any business relationship.
However, you may face a situation where someone you have a contract with claims you breached the terms of the contract and owe them damages. In this situation, you may wonder what defenses are available.
Breach of contract defined
A breach of contract occurs if someone who has signed a valid contract fails to fulfill the duties outlined in the contract. A breach is either material or minor.
A minor breach occurs if the breaching party does not fulfill a part of the contract, but the other party gets what they were promised. In these situations, the non-breaching party must still fulfill the duties outlined in the contract but can still seek compensation for the damages they sustained due to the breach.
Material breaches occur if the breaching party does not fulfill a part of the contract and the other party receives something different than what was agreed to. For material breaches, the non-breaching party does not have to fulfill their obligations and can seek compensation for damages caused by the breach.
Defending against a breach of contract claim
You have a few defense arguments if someone accuses you of breaching a contract. One would be that enforcing the terms of the contract would violate public policy or that the contract is not enforceable. If the purpose of your contract is impossible, it may make it unenforceable. Or, if the contract terms are for illegal products or activities, they would be unenforceable.
When facing a breach of contract claim, it can be stressful. However, you have legal options to protect yourself, your business and your reputation.