San Diego Lawyer Defend Breach of Contract

What are the defenses to a breach of contract lawsuit?
AFFIRMATIVE DEFENSE CONTRACT UNILATERAL MISTAKE

As a defense to breach of contract, a defendant may claim that there was no contract because she was mistaken about the facts when entering into the contract.

To prevail on a unilateral mistake claim, the defendant must prove that the plaintiff knew that the defendant was mistaken and that plaintiff used that mistake to take advantage of the defendant: “Defendants contend that a material mistake of fact—namely, the defendants’ belief that they would not be obligated to install a new roof upon the residence—prevented contract formation. A unilateral mistake of fact may be the basis of relief. However, such a unilateral mistake may not invalidate a contract without a showing that the other party to the contract was aware of the mistaken belief and unfairly utilized that mistaken belief in a manner enabling him to take advantage of the other party. [1]

AFFIRMATIVE DEFENSE CONTRACT BILATERAL MISTAKE

A defendant may claim that there was no contract because both parties were mistaken about the facts when entering into the contract. Generally, a mistake of fact occurs when a person understands the facts to be other than they are. When both parties understand the facts other than they are, the mistake necessarily is mutual and thus becomes a basis for rescission. [2]

AFFIRMATIVE DEFENSE CONTRACT DURESS

The defendant to a breach of contract may claim that there was no contract because her consent was given under duress. Duress is found only where fear is intentionally used as a means of procuring consent: “[A]n action for duress and menace cannot be sustained when the voluntary action of the apprehensive party is induced by his speculation upon or anticipation of a future event suggested to him by the defendant but not threatened to induce his conduct. The issue in each instance is whether the defendant intentionally exerted an unlawful pressure on the injured party to deprive him of contractual volition and induce him to act to his own detriment. [3]

AFFIRMATIVE DEFENSE CONTRACT ECONOMIC DURESS

The doctrine of ‘economic duress’ can apply when one party has done a wrongful act which is sufficiently coercive to cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract. The party subjected to the coercive act, and having no reasonable alternative, can then plead ‘economic duress’ to avoid the contract. [4]

As it has evolved to the present day, the economic duress doctrine is not limited by early statutory and judicial expressions requiring an unlawful act in the nature of a tort or a crime. Instead, the doctrine now may come into play upon the doing of a wrongful act which is sufficiently coercive to cause a reasonably prudent person faced with no reasonable alternative to succumb to the perpetrator’s pressure. The assertion of a claim known to be false or a bad faith threat to breach a contract or to withhold a payment may constitute a wrongful act for purposes of the economic duress doctrine. . . . Further, a reasonably prudent person subject to such an act may have no reasonable alternative but to succumb when the only other alternative is bankruptcy or financial ruin. [5]

AFFIRMATIVE DEFENSE CONTRACT UNDUE INFLUENCE

In essence, undue influence consists of the use of excessive pressure by a dominant person over a servient person resulting in the apparent will of the servient person being in fact the will of the dominant person. The undue susceptibility to such over persuasive influence may be the product of physical or emotional exhaustion or anguish which results in one’s inability to act with unencumbered volition. [6]

AFFIRMATIVE DEFENSE TO CONTRACT FRAUD

One who has been induced to enter into a contract by false and fraudulent representations may rescind the contract; or he may affirm it, keeping what he has received under it, and maintain an action to recover damages he has sustained by reason of the fraud; or he may set up such damages as a complete or partial defense if sued on the contract by the other party. [7]

AFFIRMATIVE DEFENSE CONTRACT WAIVER

Waiver is the intentional relinquishment of a known right after knowledge of the facts.[8]When the injured party with knowledge of the breach continues to accept performance from the guilty party, such conduct may constitute a waiver of the breach. [9]

AFFIRMATIVE DEFENSE TO CONTRACT WAIVER

A novation is a substitution, by agreement, of a new obligation for an existing one, with intent to extinguish the latter. A novation is subject to the general rules governing contracts and requires an intent to discharge the old contract, a mutual assent, and a consideration. [10]

[I]n order for there to be a valid novation, it is necessary that the parties intend that the rights and obligations of the new contract be substituted for the terms and conditions of the old contract. [11]

AFFIRMATIVE DEFENSE TO CONTRACT STATUTE OF LIMITATION

On a written contract, the statute of limitation is four years. Code of Civil Procedure section 337(1).

On an oral contract, the statute of limitation is two years. Code of Civil Procedure section 339(1)

A contract cause of action does not accrue until the contract has been breached. [12] The claim accrues when the plaintiff discovers, or could have discovered through reasonable diligence, the injury and its cause. [13]

We have defended many breach of contract lawsuits. If you are sued for breach of contract, we can help defend the lawsuit. Please call us for a free consultation (619) 550-1321.

Legal Reference

[1] Meyer v. Benko (1976) 55 Cal.App.3d 937, 944

[2] Crocker-Anglo Nat’l Bank v. Kuchman (1964) 224 Cal.App.2d 490, 496

[3] Goldstein v. Enoch (1967) 248 Cal.App.2d 891, 894–895

[4] CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 644

[5] Chan v. Lund (2010) 188 Cal.App.4th 1159, 1173–1174

[6] Keithley v. Civil Service Bd. of the City of Oakland (1970) 11 Cal.App.3d 443, 451

[7] Grady v. Easley (1941) 45 Cal.App.2d 632, 642

[8] Roesch v. De Mota (1944) 24 Cal.2d 563, 572

[9] Kern Sunset Oil Co. v. Good Roads Oil Co. (1931) 214 Cal. 435, 440–441

[10] Klepper v. Hoover (1971) 21 Cal.App.3d 460, 463

[11] Wade v. Diamond A Cattle Co. (1975) 44 Cal.App.3d 453, 457

[12] Spear v. Cal. State Automobile Ass’n (1992) 2 Cal.4th 1035, 1042

[13] Angeles Chem. Co. v. Spencer & Jones (1996) 44 Cal.App.4th 112, 119

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