Contracts are what keep your business running. Your contractual relationships are obligations that should be taken seriously.
You may find yourself facing a breach of contract lawsuit and wonder if there are any defenses available to you. Knowing some common defenses can help you defend yourself if you are in this situation.
A breach of contract means that one party to the contract did not fulfil one or more of the agreed upon terms. A breach can be minor, such as a late payment, or major, such as not finishing a project.
Statute of limitations
Before researching any other defenses, check and see if the breach of contract lawsuit was filed within the statute of limitations period. The statute of limitations in Texas for a breach of contract lawsuit is four years. If the alleged breach was more than four years ago, you can use the statute of limitations as your defense.
If the lawsuit was filed within the statute of limitations, some other defenses to consider are fraud, impossibility, mutual mistake or unclean hands.
Other common defenses
Fraud means that you were lied to about the terms of the contract and as a result, you signed a contract that was not in your best interest. You must prove the other party intentionally deceived you about the contract terms.
Situations change throughout the life of a contract, and sometimes an unexpected event can make it impossible for you to meet your contractual obligations. Examples of these events include property damage due to weather or a sudden illness.
Mutual mistake means that both you and the other party were mistaken about the terms of the contract. The mistake must concern one of the main pieces of the contract.
You can potentially use an unclean hands defense if the other party did something wrong. If they did not fulfil their own obligations under the contract or committed some type of crime, you could argue they should not receive compensation for your alleged breach.
Helping you protect your business
These are just some of the most common defenses to a breach of contract claim. Defending yourself on your own can be challenging, especially if you have not done it before, so having help can protect you and your business.