Being accused of breaching a contract can have serious consequences for your business and its bottom line. While these types of disputes can be complex and stressful, it’s important to be aware that allegations of a breach can be contested. Significantly, a wide range of defenses are available under New York law that can allow you to challenge the plaintiff’s claim. Depending on the facts of your case, some common defenses that can be asserted may include the following:
No Breach Occurred
The primary defense in a breach of contract claim is demonstrating that no breach occurred. If a plaintiff cannot meet their burden of proof, their claim will fail. Specifically, to prove a breach of contract occurred under New York law, a plaintiff is required to establish four elements:
- A valid and enforceable contract existed between the parties;
- The non-breaching party performed their duties under the contract;
- The defendant failed to perform their contractual duties; and
- The non-breaching party suffered damages due to the defendant’s breach.
Each of the above elements must be proven by a preponderance of the evidence. This means the plaintiff must show it is more likely than not that a breach occurred.
Lack of a Valid Contract
One of the most powerful defenses available in a breach of contract case is showing that no valid contract existed. Under New York law, a valid contract requires:
- Mutual assent: A definite offer must have been made and the other party must have accepted that same offer.
- Consideration: A valid contract must involve a bargained-for exchange in which each party gives something of value.
- Legal capacity: The parties entering into the contract must be of sound mind and over the age of 18. They must also be free from duress, coercion, and undue influence.
- Legal purpose: If the contract involves illegality, it is automatically void.
If an agreement contains ambiguous terms, lacks consideration, involves illegality, or a party lacked capacity, a court may find the contract to be void or unenforceable.
Impossibility and Frustration of Purpose
External events, such as natural disasters, supply chain disruptions, and government orders, may render it impossible to fulfill the terms of the contract. When events beyond a party’s control would prevent performance of the contract, the obligation may be excused due to impossibility. Similarly, if unforeseen circumstances substantially destroy the fundamental purpose of the contract, a court may excuse performance under the doctrine of frustration of purpose.
Fraudulent Inducement and Misrepresentation
A defendant may avoid liability for a breach of contract by proving that the contract was never validly formed due to fraud or misrepresentation. If a defendant can show that the contract was entered into under deceptive circumstances, a plaintiff may be barred from recovering for an alleged breach.
Expiration of the Statute of Limitations
New York imposes a strict statute of limitations to commence a breach of contract lawsuit. Generally, a claim must be filed within six years from the date of the breach — or four years if the contract involves the sale of goods. If a plaintiff fails to take action within the applicable time frame, their claim may be barred. Additionally, the equitable defense of “laches” may apply if the plaintiff unreasonably delayed pursuing a claim, resulting in prejudice to the defendant.
Waiver or Estoppel
Waiver and estoppel are two closely related affirmative defenses that focus on the parties’ post-contract conduct. Specifically, waiver involves foregoing a known contract right through statements or conduct. Estoppel can prevent a plaintiff from enforcing the terms of a contract when their statements or conduct reasonably led the defendant to rely on them, to their detriment. Both defenses focus on fairness, rather than the actual terms of the contract.
Substantial Performance
Substantial performance can be a powerful defense to a breach of contract claim by reducing a defendant’s potential liability. It can be applied in situations where a defendant fulfilled the main purpose of the contract in good faith, but there may have been minor deviations from the terms of the agreement. In such cases, a court may excuse slightly imperfect performance, although limited damages may still be awarded to the non-breaching party for the deficiencies.
Contact an Experienced Long Island Business Attorney
If you’ve been accused of breaching a contract, there is a lot at stake. It’s essential to have a knowledgeable attorney who can create a solid defense strategy and help you achieve the results you need. At Barnes & Barnes, P.C., we offer high-quality legal services for a wide range of business matters and work diligently to achieve the best possible outcome in every case. Contact us at (516) 673-0674 to schedule a consultation and learn how we can assist you.
