Contracts are promises. Promises are supposed to be kept. Sometimes though you don't have to keep your promise, or perform a contract. The law gives several reasons why you're allowed to break a contract. These are called defenses. Sometimes they arise when the contract's created. Sometimes they result from things happening after the contract is made.
Defenses Arising When a Contract is Made
A contract made under certain circumstances can be avoided later on. Something is wrong with the contract when it's created. These contracts can be void from the get-go, meaning they can't be enforced.
Contracts made under duress can be voided. Duress is used to obtain a person's consent against their will. Consent, freely given, is a necessary part of any contract. Without consent, a contract's not valid. Duress can take many forms. It can be a threat of force or some other harm. For example, if a person holds a gun to your head to get you to sign a contract, the contract is not enforceable.
Fraud and misrepresentation are defenses to a contract. Misrepresentation is a false statement about a material fact relied on by a party to the contract. In the case of a misrepresentation, the injured party may rescind the contract.A misrepresentation is interpreted as an innocent misstatement of a fact whereas a fraud is a deliberate misstatement of a fact.
In the case of fraud, the defrauded party may rescind the contract and sue the wrongdoer for damages. For example, let's say an antique dealer gets you to buy a table by saying it was made around 1800. If the dealer knows it was really made in 1950, that's fraud. You may rescind the contract. That is, you can return the table and get your money back. You may also be able to sue for other damages resulting from the transaction. You may also have other remedies under the law of consumer fraud.
Mistake occurs where one or both parties to the contract believe a fact to be true when it is not true. If one party makes a mistake, the error is called a unilateral mistake. Generally, this type of mistake does not invalidate the contract. The law does not excuse negligence or inadvertence. For example, if you sell somebody a table that you think is an ordinary table made in 1950 for a few dollars, and it turns out to be a valuable antique made in the year 1800, the law will not ordinarily invalidate that contract. However, if the buyer induced the mistake, then you may rescind the contract.
If both parties to a contract make a mistake, the error is called a bilateral mistake. This type of mistake generally voids the contract because there was no meeting of the minds or consent.
Lack of consideration is a defense to a contract. Consideration is what each side gives to the other in a contract. Consideration makes a contract different from a plain promise. For example, a promise to make a gift is ordinarily not enforceable as a contract.
Things may change though if you promise to do something and the other person relies on your promise. For example, let's say you promise to donate a million dollars to your college to build a library. The college starts to build the library in the belief you'll honor your promise. You are required to make the gift. The law assumes that the building of the library in reliance on your promise serves as the consideration for the promise to make the gift. Additionally, in some states, a promise to make a gift to a charitable organization is an enforceable promise even if there is no consideration.
The Statute of Frauds may be a defense to some kinds of contracts. The Statute of Frauds requires some contracts to be in writing. Usually these are contracts for the sale of land, and contracts over a certain amount in value. If these kinds of contracts aren't in writing they aren't enforceable. However, the Statute of Frauds may not be a defense to an unwritten contract if one of the parties has relied on the contract to his detriment.
Defenses Arising after a Contract is Made
Let's say your contract is valid when it's made. You may still lawfully refuse to honor it if certain things happen afterwards.
If the other side fails to perform his part of the contract, you don't have to perform yours. Let's say you contracted to buy a ton of Granny Smith apples for $100. The seller delivers a ton of Red Delicious apples. Well, that's not what you bargained for and you don't have to buy them.
Your performance also may be excused if it becomes impossible to do. For example, you agree to deliver 100 pounds of medical marijuana to a dispensary in three months for $50,000. One month later lawmakers pass a bill making medical marijuana illegal. Your contract is now impossible to perform legally, and you are excused from delivering the marijuana.
Questions for Your Attorney
- I bought a cheap framed painting for $2 at a yard sale. Turns out the back side of the canvas, which was hidden, is a painting by Van Gogh. The buyer's suing to get it back. Can I keep it?
- I agreed to sell my car to a used car dealer at a lowball price because I was being blackmailed by another person and needed the money. Can I get my car back because I acted under duress?
- I bought an artwork from a dealer who said it was by a famous artist. It was signed with the artist's name but it turned out to be a forgery. Can I get my money back?