The law generally defines a breach of contract as a failure to perform a promise that forms a portion or the entirety of a contract. In order for the party alleging the breach to build a successful case, the other party to the contract must not have a legal excuse for the alleged failure.
What if there is a legal excuse?
There are instances when there is good reason for a party not to meet their end of the contract. These can include the following:
- Impossibility. External factors can make it impossible to fulfill the terms of the contract. A common example is the inability to fulfill a contract to complete work on a home, such as painting the exterior or adding new windows, because the home was destroyed by a fire, tornado, hurricane, or other event.
- Mutual mistake. This type of error speaks to the importance of the words we use to draft these contracts. If the words do not reflect either parties’ intentions, it may be impossible to complete the contract. This could be the use of a wrong date for completion or an error in the address where the work is to occur.
- Performance was already accepted. This covers situations when one party already accepts a substitution or complete performance but then changes their mind.
These are just a few examples of legal reasons for not being able to fulfil a contract. Additional defenses are available and can vary depending on the details of the situation.
What happens external factors impact performance?
We are currently experiencing issues with the supply chain that make it difficult for workers to get the supplies they need to complete certain jobs. Because these supply chains are failing, workers are left with contracts they cannot fulfil because the supplies are not available.
The defense strategy in these situations will depend on the details. Impossibility could be an option, but others may also be available. It is important to carefully review the contract to determine the best way to protect your business interests in these situations.