Chapter 12 – Contract Defenses, Discharge and

LGS 200 (Lisenby)
Contract Defenses, Discharge and
I. Breach of Contract – the failure, without legal excuse, to perform the
obligations of a contract.
II. Defenses to Contract Enforceability
A. Genuineness of Assent
1. Unilateral Mistake of Fact – mistake of fact by one party –
generally no right to avoid the contract
2. Mutual Mistake of Fact – when both parties are mistaken
about a material fact, either party my rescind the contract
3. Fraudulent Misrepresentation
a. material fact
b. intent to deceive
c. justifiable reliance
4. Innocent Misrepresentation – innocent party can cancel the
contract. Ex: 215 acres of land vs. 250 acres.
5. Undue Influence – where one party can greatly influence
another party. Example: Attorney-Client relationship,
guardian-ward relationship
6. Duress – where one party is forced into the agreement.
B. Statute of Frauds – legal requirement that certain contracts be in
writing. Example: contracts for the sale of land.
1. Collateral promise – to pay the debts of others, a writing is
generally required
2. Contracts made in contemplation of marriage – prenuptial
III. The Parole Evidence Rules
A. Evidence of the parties’ prior negotiations or oral agreements will
generally not be considered if it conflicts with the express written
provisions of the contract.
B. There are exceptions. Example: when certain contractual terms
are ambiguous.
IV. Contract Discharge
A. Discharge by performance – fulfillment of the terms of the
B. Discharge by agreement – Ex: rescission – mutual agreement to
terminate the contract
C. Impossibility of performance
V. Damages for Breach of Contract
A. Compensatory – to compensate for injuries or damages actually
B. Consequential – special damages. Ex: lost profits on good
intended to be resold.
C. Punitive – for punishment – generally not recoverable for breach
of contract.
VI. Equitable Remedies for Breach of Contract
A. Rescission and Restitution – Ex: where the contract was the result
of fraud.
B. Specific Performance – the performance of the act specified by the