Breach of Contract Enforceability and Defenses

When entering into an agreement, people often require the contract to be in writing before they agree to anything, so that they can have proof in the event that the other party fails to fulfill their end of the bargain. While putting a contract in writing does not guarantee that the contract is enforceable, it usually helps. The Statute of Frauds, as adopted by most states, requires certain types of agreements, including contracts for the sale of goods and land, to be in writing in order for the contract to be legally enforceable. 

A breach of contract is where one party fails to fulfill his or her contractual promise or obligation. However, if a contract is not properly drafted, it could be held unenforceable, and a breaching party would not be liable to the other party even if he or she fails to fulfill their obligation. In order to prevent this from happening, our Chicago breach of contract lawyers advise our clients to make sure that they write a contract which

1. Contains an agreement and is written in such a manner that it can be clearly understood - if a party claims that there was a misunderstanding which resulted in the breach of contract, and the court agrees that the contract is not clear, then the court will not hold the party who breached the contract liable for the breach;
2. Contains mutual obligation - each party must bear some responsibility to the other. For example, in an agreement to sell a car, one party bears the obligation of providing the car, while the other party bears the obligation of providing the amount of money which was agreed upon for the vehicle;
3. Legality - In order to be legally binding, a contract cannot require either party to do something illegal. Any contract involving prostitution or the selling of illegal drugs, for example, would not be enforceable in a court of law.

Once the enforceability of the contract is determined, there are still instances in which a party cannot be held responsible for breach of contract. Firstly, the party that did not breach the contract must have maintained some sort of material damage as a result of the breach of contract. In that case, the party that suffered material damages can sue the other party to recover those material damages, in addition to the costs of bringing the lawsuit. Our breach of contract attorneys can assist Chicago clients with bringing these claims.

There are also degrees to which a contract can be breached. If a party performed most of their obligations under the contract, with some minor flaws or omissions, this is known as substantial performance. If a court determines that a party substantially performed their obligation as required by the contract, and the breach only involves minor deviations from the agreement, then the court would not hold the party liable for breach of contract.

In the event that all parties agree that a contract was substantially breached, there are defenses which can be used by the party that breached the contract to avoid liability. These defenses include:

• Lack of Capacity: Certain people, such as minors and the mentally ill, lack the capacity to enter into a legal contract. This means that, if someone were to sue a teenager for failing to fulfill her obligation under a contract, the teenager would be able to escape liability by using the argument that she lacked the capacity to sign the contract in the first place, due to her status as a minor.
• Fraud: If one party of a contract uses false statements or threats to coerce the other party into entering into the contract, then the contract would not be considered enforceable under the law.
• The contract is unconscionable: A contract which is grossly unfair to one party is considered unconscionable. This happens when one party has much more bargaining power than the other and uses that power to force unfair conditions, clauses, or waivers onto the other party.
• Estoppel: This is when one party makes a statement which excuses the performance of the agreement, and the other party relies on that statement. For example, a bank telling a homeowner that they will not foreclose for six months in order to give the owner a chance to sell her home. The bank cannot then sue the homeowner in that given time for breach of contract since she relied upon their promise not to foreclose.

Lubin Austermuehle, P.C.’s Chicago breach of contract attorneys have decades of experience litigating commercial litigation breach of contract disputes. With offices conveniently located in Oak Brook and Chicago, Illinois, we represent businesses and business owners all over DuPage, Cook, Lake, and Kane counties as well as in Indiana, Iowa, and Wisconsin. To consult with a breach of contract lawyer in the Chicago area today, you can contact us online or give us a call at 630-333-0333.