Affirmative defenses to breach of contract are facts, which if pleaded and proven by a party, can avoid legal obligation for promises that seem to satisfy the requirements for contact. At times, courts will refuse to enforce contracts because of conditions existing at the time of contracting such as a lack of capacity to contract by one of the parties, defects in the bargaining process resulting from mistake, fraud, duress or unconscionability, or terms in the agreement that make performance illegal or against public policy.
While it is possible to contract around many of the rules of agreement, performance and liability, the rules discussed in this article are for the most part mandatory, in that the contracting parties do not have the freedom to waive these defenses. There are defenses to contract that arise at the time the contract is formed and other defenses that may arise after the contract is formed and can be raised to avoid contractual obligation such as change of circumstances which render performance impracticable.
Generally, in the United States, some of the affirmative defenses to breach of contract include:
• Lack of capacity. One affirmative defense to breach of contract is lack of legal capacity to contract such infancy and mental incompetence. A person must have legal capacity to contract, otherwise he or she cannot be bound by a contract. A natural person has the capacity to contract on the day he or she turns eighteen and thus, becomes an adult in the eyes of the law. Today, a minor is not recognized to possessed full legal capacity to contract. However, once the age of majority is reached, the minor, now an adult, can ratify and affirm the contract.
• Unilateral and mutual mistake. With respect to mistake as an affirmative defense, the Restatement of contracts states that “where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract as made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake. Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake, … and (a) the effect of the mistake is such that performance of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.” Even though excuse for mistake concerns mistaken assumptions about reality at the time of contracting, the mere fortuity that the mistake concerned events occurring after the contract was formed will transform the issues into one of impossibility of performance or frustration of purpose.
• Fraud. Fraud as affirmative defense means that one party to the contract deceived another party into entering into a contract in which the injured party would have not otherwise entered.
• Duress and undue influence. In the case of duress and undue influence, a party was forced to sign a contract against his or her will.
• Impossibility of performance. In this case, one party cannot perform according to the provisions of a contract because of an unforeseen incident such as act of God, death, incapacity, property destruction, and others.
In Florida, under Rule 1.110 (d) of the Florida Rules of Civil Procedure, the following affirmative defenses to breach of contact must be raised when pleading to a preceding pleading: accord and satisfaction, arbitration and award, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, laches, payment release, res judicata, statute of frauds, statute of limitations, waiver and any other matter constituting an avoidance of contracts or affirmative defense.
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