Defenses Based on Contract Formation in New York

Defendants who face breach of contract claims can assert several defenses to the formation of the contract when answering a lawsuit’s complaint. This article will discuss some available defenses.

Ambiguity

The first such defense is ambiguity. If an essential term of the contract is ambiguous, then a defendant can argue that the parties never formed an enforceable contract because their different interpretations prevented a meeting of the minds. For example, say the timing for delivery of a specific product was an essential element of the contract. Where the time zone was not specified in the contract, a court may find that there was no meeting of the minds and, therefore, an enforceable contract did not exist.

Duress

Duress is another defense which a defendant may assert. Duress provides that the defendant entered into the contract involuntarily, and not by his or her own free will, due to the plaintiff’s improper conduct. This is oftentimes an issue when an individual is coerced into adding another as sole beneficiary in a will of an elderly individual. Economic duress is also available where the coercion caused the defendant financial distress.

Performance of a Condition

A defendant may also be able to assert that plaintiff failed to perform a condition precedent to the defendant’s performance. Where a plaintiff was required to perform on a contract, and that performance was a trigger for the defendant's performance, and the plaintiff failed to perform, the defendant may be able to avoid damages.

Mutual Mistake

Finally, mutual mistake is an available defense to contract formation. Mutual mistake occurs where the parties were mistaken about a specific term of the contract and the defendant did not bear the risk of the mistake. For example, there is a famous old English case that first year law students study on the issue of mutual mistake. In this case, the plaintiff was a cotton supplier and defendant was a cotton purchaser. They entered into a contract for 125 bales of cotton at fair market price. The contract specified that the cotton would be arriving in Liverpool on a ship called Peerless, from Bombay. It so happened that there were two British ships named Peerless arriving in Liverpool from Bombay, one arriving in October and another departing in December. The defendant believed that the contract was for cotton on the October ship while the plaintiff believed the contract was for cotton arriving on the December ship. When the December ship arrived, plaintiff tried to deliver it, but the defendant rejected it saying their contract was for cotton on the October ship. The court ultimately held that because it could not be determined from the contract which ship the contracted-for cotton was on, there was no meeting of the minds, and therefore no enforceable contract.

If you have questions about breach of contract defenses, or need help with your particular commercial dispute matter, KI Legal’s knowledgeable litigation attorneys are here to help. Schedule a free consultation by calling (212) 404-8644 or emailing info@kilegal.com.

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