Florida business owners know how important contracts are to keeping their business running smoothly and profitably. Unfortunately, sometimes contract disputes arise when one party accuses the other of breaching the terms of the contract.
If you are accused of breach of contract, there are potential defenses that may be available to you.
Lack of consideration
Before examining possible defenses, the other party must prove that a valid contract exists. Contracts can be written or verbal, and a valid contract must contain an offer, acceptance and consideration.
Consideration is the benefit that each party expects to get from the contract. For example, if you pay $20 for an item, you expect to get the item, and the person you paid expects to get the $20.
Without consideration by both parties, a contract is not valid. Lack of consideration is a defense to a breach of contract action since no consideration means no contract.
More common defenses to a breach of contract allegation are impossibility, fraud, mutual mistake or unilateral mistake.
Impossibility and fraud
Impossibility is a defense when you are unable to perform your duty under the contract because something has changed that prevents you from doing so. If you are contracted to fix a car, and the car is stolen, it is impossible for you to perform your duty.
A contract that is procured by fraud cannot be enforced. However, if you intend to use fraud as a defense, you must have evidence of the fraud.
Mutual and unilateral mistake
Sometimes one or both parties to the contract misunderstand the contract terms. When a mutual mistake occurs, you and the other party can both agree to end the contract or change the contract terms.
A unilateral mistake is when only one party misunderstood the contract. For a unilateral mistake to be a valid defense to breaching a contract, you must show the mistake involved a part of the contract, and the other party knew or should have known of the mistake.
Breaching a contract can cost your business money and potentially cause damage to your reputation. Breach of contract actions are complex, so having legal representation is important.