Formation issues, lack of capacity, illegality of subject matter, impossibility, duress, unconscionability, undue influence, violation of the Statute of Frauds requirement that certain types of contracts be in writing to be enforceable against the defendant, and exceeding the statute of limitations are among the defenses. In addition, a number of courts have held that damages are an available defense where no breach of contract has been shown.
The formation issue is most commonly raised by a party who has entered into a contract but who claims that he or she did not intend to be bound until there was a signed written agreement. The issue of intent can be resolved by looking at such factors as whether there was direct contact between the parties regarding the alleged contract, whether there was an opportunity for negotiation or amendment, how long were the negotiations ongoing, what was the conduct of the parties after negotiations ended, etc. If you believe that there was never any intention to be bound until there was a signed written contract, then you should be able to raise this issue with the other party or parties to the contract.
The capacity issue arises when one of the parties to the contract is not actually capable of contracting. For example, if a corporation fails to make a required filing with the Secretary of State to confirm that it has the legal authority to enter into contracts, then it cannot enforce those contracts. The issue of incapacity can be resolved by showing that the failure was not intentional, or was corrected before any damage occurred.
Mutual or unilateral error, duress or undue persuasion, unconscionability, deception or fraud, impossibility or impracticability, and frustration of purpose are some other potential defenses to contract enforcement. In order for an error, duress, or any other factor to void a contract, it must go to the heart of the agreement between the parties.
An error in description or quantity may be raised as a defense by a party to a contract if he does not discover the mistake until after he has performed his half of the bargain. For example, if A contracts with B to sell him 100 barrels at $10 per barrel, but actually sells him 110 barrels, A can raise this defense. The contract is voidable by A, but not void, because of the error.
Duress is a threat to do something that will make a person unable to act in an ordinary business manner. If one party to a contract threatens to sue another party or take other action that would cause the other party to lose money or face other serious consequences if they did not sign the contract, this could constitute duress and allow the party being pressured to void the contract. However, if the party signing the contract had the ability to leave or decline the offer before it was made, then they cannot use duress as a defense to the contract.
Strict Liability Defenses The assumption of risk, the statute of limitations, the statute of repose, and federal preemption are all common defenses to strict liability cases.
Strict liability defenses apply equally to manufacturers, distributors, and sellers of products that they should have known were defective. A defendant can argue that the plaintiff assumed the risk, that the claim was not brought within the applicable statute of limitations, or that the product was exempt from regulation under federal law.
In addition to these common-law defenses, defendants can raise affirmative defenses under certain conditions. For example, defendants can argue that the plaintiff's injuries resulted from an act of God, a public enemy, or the plaintiff himself. Alternatively, defendants can argue that the injury is immune from liability because it occurs on government property or at a military base. Defendants also may be able to argue that another person is responsible for the injury sustained by the plaintiff, such as a child who swallows a bottle cap.
Defendants in strict liability cases can obtain summary judgment by showing that one of the above defenses applies.
Void contracts, fraudulent execution, immaturity, material modifications, forged signatures, and duress are examples of universal defenses that can be raised against all holders in due course. In addition, certain holders can avoid liability by establishing an affirmative defense to payment.
An example of an affirmative defense is payment. To prove payment, a holder must show that it has been given consideration for the note (or some equivalent form of value). If the note is payable to the bearer, then anyone who takes it from the borrower becomes the holder and can enforce the obligation against him or her. If, however, the note is payable only to a specific person or entity, then it cannot be enforced by any outsider. The only people who can enforce these obligations are the original lenders or their successors. Successors can be found using standard collection procedures. They may be banks or other lending institutions, but they can also be individuals or entities who have received the loan documents from the original lender.
In a court of law, there are several types of defenses.
A law that requires some contracts to be written down and signed by the contract's parties. The goal is to avoid fraud and other harms. The statute of frauds prevents a party from claiming fraud or other harm if they try to enforce an oral agreement after the putative contract has been terminated.
It does this by requiring any contract for sale over $10,000 that is not to be performed within a year from the date of signing to be in writing. Most states have adopted a version of the Uniform Commercial Code's (UCC) statute of frauds, which includes similar requirements for contracts over $5,000. Non-UCC jurisdictions may have similar laws on their books. However'these days are gone; most large businesses have binding agreements with no signature requirement.
In fact, in California, one study found that almost all contracts over $50,000 require some form of written signature. Even small business owners should consider this law when planning their business strategies. If one party tries to back out of a deal later, they could argue that there was never a real contract in the first place and thus no duty to perform.
The best way to avoid this problem is to ensure that your contracts are in writing. This means anything from simple letters sent via email to complete software programs.