A contract is a legally binding. This means if one of the parties breaches their duties under the contract, and suffer damages as a result, the other party can hold them liable for those damages in court. With those legal consequences hanging over their heads, businesses take their duties under a contract very seriously, but sometimes despite their best efforts they fall short. As a result, the other party suffers damages and files a breach of contract lawsuit.
Validity of the contract
If you are in the unfortunate position of having to defend your company against such a claim, it’s important to know there are defenses available. Many of the common defense strategies focus on undercutting the validity of the contract itself.
For instance, a court will not enforce a contract if it finds the contract was for an illegal act, violated public policy, or was obtained by fraud. For instance, if Business X hires Business Y to manufacture illegal weapons, and Business Y fails to deliver, the court will not hold Business Y liable for breach of contract.
Likewise, a court can rule a contract is invalid if one or both of the parties lacked capacity. A person under the age of 15 or a mentally incapacitated adult is considered to lack the legal capacity to enter a contract.
A contract can also be ruled invalid if it lacked consideration. This refers to the “this for that” exchange inherent in contracts. If one party promised to do something for the other, and the other didn’t have to do anything in return, this is not a contract. It’s just a promise.
There are several other categories of defense strategies which can apply to a wide range of situations. Still, every case is different, and the trick lies in apply the law to a unique set of facts.