| BREACH OF CONTRACT (cont'd)
What Are Valid Defenses
Against a Breach of Contract Claim?
The most common defenses to enforcement of a contract or liability for
damages are:
• Enforcement
of the contract would violate public policy.
Example: A contract to lease part
of a liquor license will not be enforced because splitting a liquor
license between two parties and two locations violates the public policy
of the state. See Digesu v. Weingardt, 91 N.M. 441, 575 P.2d 950 (1978).
• Performance
of the contract has become impossible or the purpose of the contract
has become frustrated.
this is the correct answer spelled out
Example: Dan
hires Tom to paint his house, but the house burns down before the
contract can be performed.
• The contract
is illegal.
Example: The
contract is for commission of murder.
• The contract
lacks consideration.
Example: Tom
promises to give $20 to Dan, but Dan does not have to do or give
anything in return.
• The contract
was obtained by fraud.
Example: Blue
Company refuses to sell to Red Company, so Red Company sends Pink
Company to buy goods from Blue Company and turn them over to Red Company.
• The contract
limits the amount of damages that can be recovered.
Example: The
contract states that in the event of a minor breach, the damages
will be $100 regardless of the actual loss.
• The contract
contains a mutual mistake, stating something different from what either
party intended.
Example: Both
parties intended a delivery date of March 15, but the contract
says April 15.
• The contract
contains a unilateral mistake that was material to the agreement and
the other party knew or should have known of the mistake.
Example: Maria
paid Tom a lot of money for a painting signed “Picasso.” Tom
knew that Maria thought Pablo Picasso painted it, when really Arnold
Picasso was the painter, but Tom did not correct the misunderstanding.
• The parties
have accepted the contract performance, or a substitution for the performance,
as adequate. This is called accord
and satisfaction.
Example: Tim
owes Frank $100 on a contract debt. Frank agrees to accept a
radio worth $50 in exchange for discharging the debt. When Frank changes
his mind and sues for the additional $50.00, the Court will not
enforce the original contract because Frank has accepted the radio
as performance of the contract.
• One (or both)
of the parties lacked capacity to make the contract.
Example: A party to the contract is 16 years old
or is mentally incompetent.
Proceed to Exercise
4 > |
