Can a breach of contract ever be defended?

If a person breaks a contract, he or she must have a good reason, like fraud, duress or undue influence, or there could be serious consequences.

For New Jersey businesses, contracts are a part of everyday life. Some companies make legal agreements with vendors, freelance employees and customers to ensure all parties get what they want. According to the U.S. Small Business Administration, the two most important factors that make a contract binding is an agreement is reached and an exchange of goods or assets is made.

Whenever a legally binding contract is entered, any of the parties could get into serious trouble for breaking the agreement. However, there are certain circumstances that make a breach of contract an okay thing to do or at least something that can be defended.

When fraud was used

If business A lied about an asset it owned to make business B more interested in signing a contract, business B may be able to break the contract without legal repercussions because of the fraudulent activity. However, it is important to note that the lie or deceit that makes up the fraud must have been done deliberately by the other party. Otherwise, it is not really fraud. This means a landlord who was unaware of bad plumbing in a building would not be guilty of fraud because the Landlord was oblivious to the situation that could have negatively impacted the contract.

When intimidation was used

All parties must enter into a contract of their own free will to make it legally binding. When this is not the case, the contract might not actually be valid. In some situations, there is a power difference between the parties entering a contract. Perhaps one of the companies is larger than the other or one of the individuals has a lot of money.

If the more influential party uses power to encourage the other to sign the contract, it could be said there was undue force used to get the agreement made. Intimidation can include blackmail or bribery.

When force was used

Force, like intimidation, can also lead to a person signing an agreement he or she did not want to sign. Force usually involves physical threats and violence, unlike intimidation which usually only involves threats to reputation. If someone is ever under duress when signing a business contract, the contract may not be legally binding when everything is said and done.

In most situations, legal contracts in New Jersey cannot be backed out of without consequences; however, there are some extenuating circumstances that could prove a contract was never legally binding. No matter what a person’s involvement with a breach of contract, it can be helpful to work with an attorney who is familiar with this type of litigation.