Breach of Contract in Maryland
A contract is, in simplest terms, a way of creating legally binding promises that are beneficial to all parties.
When any party to a contract breaks one of those promises, that’s usually considered a breach. But, like many aspects of law, there’s quite a bit of “gray area,” when it comes to contracts.
Lusk Law, LLC, has helped many business owners and landlords create and enforce contracts, and we have represented clients accused of breaching contracts. If you’re in the midst of a contract dispute, please don’t hesitate to contact us at 1-443-535-9715.
Read on to learn more about breach of contract.
Defenses to Breach of Contract
There’s a reason minors (children under age 18) can’t have their own credit cards: they lack the capacity to contract. The term “capacity to contract” means an individual’s ability to fully understand the terms of an agreement, and potential consequences. So, people who have a cognitive impairment, such as advanced dementia, would also be considered as lacking the capacity to contract.
Any contract entered with someone who lacks capacity is illegal and unenforceable, with some exceptions. Minors can choose to void illegal contracts at will, before the age of 18. But they cannot void contracts related to their food, housing, or other necessities. So, for example, a minor enrolled in a residential preparatory school who signs a code of conduct agreement cannot void that agreement.
Some common defenses to breach of contract include:
- Lack of consideration – This means that the contract doesn’t benefit all parties. For example, a contract specifies that a homeowner is to pay an electrician $1,000, but it fails to specify that the electrician must fix the wiring in the person’s home.For a court to find that a contract includes consideration, the contract must include a promise that is normally not a legal obligation or a promise to not do something that is a legal right. A non-compete clause is an example of the latter – an employee promises not to work for a competitor in the same market, although normally he or she would have a legal right to do so. In exchange, the employer agrees to hire that person.
- Frustration of contract – This means that the contract cannot be executed, except for specific reasons. For example, if a homeowner hires an electrician to perform work on her home, but the home burns down before work can begin, the contract is frustrated and is no longer applicable. But if the homeowner loses her job and can’t afford to pay the electrician, she would still be legally bound by the contract.Other reasons for frustration include a change in the law and third-party interference. If a contract is worded in a way that the parties’ actions would be considered illegal, that also constitutes frustration of contract.
- Mistakes of fact – Mistakes in a contract may be unilateral (unknown to one party) or bilateral, in which both parties agree the contract includes a mistake. A bilateral mistake might be as simple as a typo that changes the meaning of the contract, such as monthly rent amount of $8000 instead of $800. A unilateral mistake can arise out of unclear wording, wherein one party interprets the language to have a different meaning. However, unilateral mistakes may not necessarily result in a contract’s being void.
Landlords may at some point in their careers have tenants who stop paying rent. That’s a breach of contract. But Maryland landlords must follow certain guidelines and ask the District Court to initiate formal eviction proceedings.
Contract disputes between businesses can be more complicated, especially because each party may have other contracts relevant to a matter.
So, for example, a company hires a building contractor to expand its office. That contractor enters a contract with a plumbing company to perform work on the expansion. The plumbing work falls behind schedule, causing the contractor to miss the deadline for completion of the office expansion. In such a situation, it can be a challenge to sort out who is in breach of contract and what the remedies should be.
Avoiding Contract Disputes
The key to avoiding breach of contract disputes is to have an experienced business attorney create or review every contract you sign. Online contract templates are too vague to adequately protect your interests as a business owner.
If you need help with a contract issue, contact the business attorneys at Lusk Law, LLC, – either online or at 1-443-535-9715.
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