Affirmative Defenses to Breach of Contract in Illinois

Waiver is the voluntary relinquishment of a known right, arising from a consensual, affirmative act. Waiver is typically applicable as a defense in situations where one party assures the other party to the contract that strict compliance to specific contract terms, duties, and obligations will not be necessary. Application of the waiver doctrine is intended to prevent the waiving party from manipulating the other party into a technical breach of contract after having given assurances that such breach would not be an issue.

If you are being sued for breach of contract, it’s important that you do not delay in consulting with experienced Chicago breach of contract attorneys who will assess the plaintiff’s claims and develop a solid defense strategy.

Equitable estoppel is an affirmative defense in which the breaching party asserts that they detrimentally and in good faith relied on the plaintiff’s conduct or statements. The equitable estoppel defense implies that the breaching party was misled by the plaintiff’s conduct or statements — to their detriment. It is similar in many ways to waiver, and the two affirmative defenses are often confused with one another.

Suppose that a defendant-manufacturer encounters issues in their manufacturing process that make a timely delivery of goods unlikely. The plaintiff-retailer tells the defendant that they will accept the goods if they are delivered late, so long as the delivery is made to a different retail location. The defendant detrimentally relies on this statement and makes the delivery (taking on the cost burden of completing manufacture and delivery of the goods), but the plaintiff subsequently rejects the goods on the basis of the late delivery. An affirmative equitable estoppel defense would be applicable under such circumstances.

In Illinois, contract law requires that the injured party make reasonable efforts to mitigate their breach of contract damages. Failure to mitigate is not an absolute defense. Asserting an affirmative failure to mitigate defense will simply minimize your damage liability — it will not eliminate it altogether.

Suppose that you breach a contract by rejecting a batch of goods from the plaintiff (the goods meet all the requirements under contract). The plaintiff sustains financial losses as a result, but does not attempt to find an alternative buyer. Instead, the goods are left un-bought and in the plaintiff’s distribution warehouse. You could assert an affirmative failure to mitigate defense on the basis that the plaintiff made no reasonable attempt to mitigate their damages by finding an alternative buyer.

Fraudulent misrepresentation of relevant facts pertaining to the contract at-issue may relieve the breaching party of liability.

Under Illinois law, the affirmative defense of misrepresentation requires that:

a) a material fact pertaining to the contract was misrepresented;
b) the misrepresented fact was either known to be false or made in reckless disregard to its truth or falsity;
c) the misrepresentation was intended to induce contract formation; and
d) it was reasonable for the breaching party to believe that the misrepresented fact was true and to rely upon it.

A contract will not be enforced by an Illinois court if material facts were fraudulently misrepresented. For example, suppose that you enter into a software development contract where the developer team is contracted on the basis of their specialized training and experience in a particular subject matter. The developer team lied about their training and expertise, however. If you refuse to work with them and they sue you for breach of contract, you could assert a fraudulent misrepresentation affirmative defense.

Undue influence is an affirmative defense in which the defendant asserts that a fiduciary relationship existed between them and another person (either a party to the contract or some third-party) who exerted control or played a significant advisory role, and that the influencing party benefitted as a result, to the detriment of the defendant.

In the contract context, undue influence may occur if — for example — a third-party (perhaps the defendant’s financial advisor) convinced the defendant to enter into a poor contract while benefitting.