Avoid Liability For Breach of Contract
So, you’ve signed a contract, ready and willing to do all it takes to ensure that you perform your side of the bargain and receive what the other side promised. However, something crops up – the other side now claims that you’ve breached the contract. But you think you have an excuse.
In many cases, even if you’ve technically breached the contract, the law affords you several defences which may allow you to avoid liability (partially or fully) for breaching the contract and reduce your exposure to damages. These defences will enable you to be released from certain conditions in the contract or the whole contract.
The defences include mistake, frustration, misrepresentation, duress, undue influence, unconscionability and illegality.
Mistake
Mistakes may allow you to avoid liability for the contract as a whole or certain terms in the contract. Legally, the term ‘mistake’ refers to when one or both parties entered into the contract under the misapprehension over a critical term.
A common mistake is when both parties made the error. A mutual mistake is when both parties have contradictory understandings of what a term or the contract is about.
A unilateral mistake is when one party has made a mistake, and the other knows or ought to have known about the mistake.
Non est factum is when there is a radical difference between what you thought you signed and what you signed (always keeping in mind that not reading the contract properly will not be recognized by the courts as an excuse to escape liability).
Frustration
Frustration is a legal doctrine that recognizes that in certain circumstances, without the fault of either party, the contract is incapable of being performed because circumstances have changed so drastically that performance of the contract would be radically different from that which was agreed under the contract. The whole contract is then deemed void in law.
This is sometimes provided for in contracts as an express term called a force majeure clause.
Care must also be taken to look into the Frustrated Contracts Act to fully assess the effectiveness of using frustration as a defence.
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Misrepresentation
Misrepresentation is when one party makes a false statement that induces the other party to enter into the contract. The misrepresentation may be express or implied. It may also be made by omission.
If you relied upon the misrepresentation in deciding to enter into the contract, you should be able to void the contract and avoid liability for supposed breaches. You may even be able to claim damages if the misrepresentation was fraudulent or negligent and caused you loss, damage or injury.
Duress, Undue Influence and Unconscionability
A contract may be voided if you are forced into the contract under duress where the other party threatens or harms you, your property or your economic interests.
Undue influence is more subtle, where the other contracting party dominates the other and undermines his or her independence. Certain relationships are presumed to exert undue influence, such as director-company, parent-child, doctor-patient and solicitor-client, keeping in mind that the amount of undue influence deemed to have been exercised will differ from case to case.
A contract may also be voided if it is unconscionable – grossly unfair or inequitable due to the parties’ unequal bargaining power.
Illegality
The law will not recognize or support the performance of a contract that constitutes or involves illegality of some sort or is against public policy. For example, contracts seeking to or involve sexual immorality, fraud, crime, threats to public safety, deception of authorities, interference with the administration of justice, etc., will be void.
How can we help you
Contracts or Agreements may be too technical for you to fully understand alone. We understand that figuring out your rights and obligations may be hard. Worry not, at Lions Chambers LLC, and we have experienced lawyers who are well versed in Singapore’s Contract Law. We will be able to guide you through your contract and clarify any issue for you.
If you are having any concerns on whether you can breach or have potentially breached your contract or agreement, do reach out to us.
Lions Chambers LLC is an established law firm in Singapore. Our team of lawyers specialise in various areas of law and will be able to assist you. Our consultations are free. Please call +65 8777 3677 or click here to WhatsApp us today.