The pandemic changed the way that many do business, and sometimes it made it hard, if not impossible, to meet the conditions of contracts drafted before the world changed. Despite the challenges, which now also include supply chain issues, a business may face a lawsuit for not honoring the terms of that contract.
- Force majeure: Also known as an act of God, this clause excuses the contracting party from performing the agreed-upon task because of something foreseen or that is beyond the control of the business.
- Statute of limitations: Binding contracts typically have a statute of limitation that sets parameters on the length of the legal liability. Once the time runs out, the business is not obligated to fulfill the terms of the contract. Florida has a five-year statute of limitation for breach of a written contract and four years for breach of an oral contract.
- Statute of frauds: Handshakes are an excellent way to seal a deal, but binding agreements are generally drafted and then signed by the parties. Without a signed contract, many verbal agreements involving land sales or sales of goods or services are not binding (click here for a comprehensive list). Oral agreements that are not to be performed within one year of the making are unenforceable unless in writing. Oral agreements are not binding unless there is an offer, acceptance, and consideration. Verbal contracts are enforceable but they are more difficult to prove than a written contract.
- Failure of consideration: Contracts often ask for something at the beginning, such as a down payment or partial payment upfront. If they did not pay, it is likely that the lawsuit will not be successful.
- Substantial performance: This means that one party has essentially met their end of the bargain, such as providing goods or services. The lawsuit is less likely to succeed if they complain about payment but have not met their obligation of substantial performance.
- Mutual mistake of fact: This involves both parties making assumptions about specific conditions and facts, which they later found out were untrue. The mistake must be a material part of the contract.
Legal guidance is often useful
The details of each case are unique and complicated, so attorneys may use other possible defenses. Those with questions or concerns about facing a lawsuit can discuss the matter with an attorney who handles business litigation.