How to Defend a Breach of Contract - Learn About Law
How to Defend Yourself in a Contract Fraud Lawsuit
If you are sued for contract fraud, then you should quickly identify what statements were allegedly fraudulent. Generally, you can defend yourself by arguing that the statements were true or that you didn’t intend to defraud the other person. To figure out how best to defend yourself, you should meet with a lawyer. Show the lawyer relevant documents in the dispute and ask him or her about what defenses you can bring.
Planning Your Defense
Read the complaint.The person suing you will start the lawsuit by filing a “complaint” in court. This document will describe the circumstances surrounding the contract fraud lawsuit and will make a demand for money payment as compensation.A copy should be delivered to you.
- You will also receive a summons. You should read that closely as well. The summons will tell you how much time you have to respond to the lawsuit. Make note of the deadline. If you fail to respond in time, then you could lose the lawsuit without ever getting to make your case.
Identify the allegedly fraudulent statements.A person commits fraud when they make a false statement, knowing it is false, with the intent to induce the other person to rely on the statement, and the other person does in fact justifiably rely on the statement to their detriment.In the complaint you receive, the plaintiff will identify what statements he or she believes were fraudulent. There are generally two kinds of contract fraud:
- Fraud in the inducement. This fraud goes to the entire contract. The plaintiff will claim you made false statements during negotiations which induced him or her to sign the contract. For example, you might have misrepresented that you were an experienced public relations professional with 18 years’ experience when, in fact, you only just started.
- Fraud in fact. The plaintiff might claim that you lied about specific facts in the contract. For example, you might have sold someone a product which you claim was manufactured using parts made in the U.S. when, in fact, the parts were made in Thailand.
Gather proof that your statements weren’t false.The best defense to fraud is to actually prove that your statements were true when you made them.For example, you might have claimed that you were the most experienced real estate agent in your county. If that’s true, then you can’t be sued for fraud.
Meet with a lawyer.To fully understand how to respond to the contract fraud lawsuit, you should meet with a lawyer for a consultation. You can get a referral by contacting your local or state bar association, which should run a referral program.
- Take all relevant documents to show the lawyer.The lawyer will want to see a copy of the complaint as well as any evidence you have that shows you didn’t commit fraud.
- Also write up a list of questions. For example, ask how the lawyer would defend your case.
- You should also ask about fees. You would benefit by having a lawyer represent you during the entire lawsuit, although this isn’t financially possible for some people. Ask about different fee arrangements and see if you can hire the lawyer.
Talk about possible defenses with the attorney.Truth is a defense to a fraud claim. However, you can also raise other defenses. Your attorney will have a better idea of what kinds of defenses are appropriate based on the circumstances of your lawsuit. Some common defenses include:
- You didn’t intend to defraud the plaintiff. The focus of this defense is on your mental state. Remember that fraud is a false statement you made knowing it was false and with an intent to induce the plaintiff to rely on the statement.If the plaintiff can’t prove you knew the statement was false or can’t prove that you intended to defraud them, then you can win the lawsuit.
- The plaintiff didn’t justifiably rely on your false statement. With this defense, you admit the statement was false. However, you then argue that the plaintiff investigated the truth of your claims but was careless in their investigation. In many states, this will be a defense to a fraud claim.
- The fraud didn’t injure the plaintiff. If the plaintiff didn’t suffer any injury, then you can win the lawsuit.
- The plaintiff also committed fraud. This defense is called “unclean hands.” Essentially, the plaintiff can’t sue you for fraud if he or she also committed fraud.You should find evidence of the plaintiff lying during contract negotiations.
- The plaintiff waited too long to sue. Each state has a “statute of limitations” which says show much time a plaintiff has to bring a fraud lawsuit. If the plaintiff waited too long, then you can ask the judge to dismiss the case.
Responding to the Lawsuit
Draft an answer.You will probably respond to the complaint by filing an answer with the same court where the plaintiff filed the complaint. If you have a lawyer, he or she can draft the complaint for you. If you don’t have a lawyer, then you should ask the court clerk if there is a “fill in the blank” answer form for you to use.
- In your answer, you respond to each allegation made by the plaintiff. You should admit to the allegations that are true. For example, if the plaintiff identifies the contract correctly by name and date, you can admit that you formed a contract.
- You should also deny any allegations that are not true. For example, the plaintiff will allege you made the false statement knowing it was false and with an intent to induce the plaintiff to sign the contract. You should deny both of those allegations.
- If you need to do more research before admitting or deny whether an allegation is true, then you should claim insufficient knowledge to either admit or deny.
File your answer.Make several copies and take the copies, along with the original, to the court clerk. Ask the court clerk to file the original.The clerk should stamp your copies with the filing date.
- You may have to pay a fee to file your answer. Ask the clerk ahead of time and bring acceptable methods of payment.
Serve a copy of your answer on the plaintiff.If the plaintiff has a lawyer, then send the copy of your answer to the lawyer.You can tell if the plaintiff has a lawyer by checking the complaint.
- Generally, you can make service in a variety of ways. For example, you could hire a private process server to hand deliver the answer to the plaintiff.
- Alternately, you could have someone 18 or older make hand delivery.
- In some courts, you might be able to mail your answer certified mail, return receipt requested. Ask the court clerk.
Preparing for Your Trial
Request helpful information from the plaintiff.After you file your answer, the lawsuit enters a fact-finding phase called “discovery.” Discovery has a couple of purposes. You can uncover helpful information for your defense to contract fraud. You can also get a better understanding of what the plaintiff will show at trial to support their claim.
- Request documents. You can get a copy of any document in the plaintiff’s custody or control so long as it is related to the contract fraud dispute.For example, you should ask for copies of all documents the plaintiff believes shows you committed fraud. You should also ask for copies of all documents that show the plaintiff suffered an economic loss because of your alleged fraud.
- Have the plaintiff answer written questions. These are called “interrogatories,” and they are helpful for getting basic information. For example, you could ask the plaintiff to identify anyone with information about the lawsuit.
Ask the plaintiff to sit for a deposition.“Depositions” are also part of discovery. With a deposition, you ask a witness to answer questions face-to-face under oath. A court reporter records the questions and answers.If, for some reason, a witness can’t attend trial, you can introduce statements from a deposition. You certainly want to have the plaintiff sit for a deposition.
- Your goal when deposing the plaintiff is to find helpful information. For example, it would be helpful to ask whether the plaintiff suspected that your statement was false and whether they performed an investigation to look into its truth. If they thought you were lying but didn’t investigate, then you could use that fact as part of your defense at trial.
Give a deposition yourself.You will probably have to sit for a deposition as well. The focus of a fraud lawsuit tends to be on what you were thinking when you made the false statement. Did you intend to defraud the plaintiff? Did you know the statement was false? You should expect the plaintiff’s lawyer to probe you about these issues during a deposition.
- You can prepare for the deposition by getting a good night’s sleep. Depositions can go on all day, so the more rested you are, the better.
- Don’t guess during your deposition. If you don’t know the answer, then say, “I’m not sure.”
- Take your time before answering. Any statement you make can be brought up at trial, so be sure you understand the question and your answer before speaking.
- Consult with your lawyer whenever you want. Simply say, “I think I need to confer with my lawyer.”
File a motion for summary judgment.As soon as discovery concludes, you should consider filing a motion for summary judgment. If successful, the litigation will end immediately and the court will find in your favor. To be successful, you will have to persuade the court that there are no genuine issues of material fact and that you are entitled to judgment as a matter of law. In other words, you will have to persuade the court that even if it made every factual assumption in the plaintiff's favor, he or she could still not win. You can persuade the court by submitting evidence and affidavits.
- Even if the litigation does not end with your motion, the court may dismiss pieces of the litigation if you can persuade it.
Organize your evidence as trial approaches.Your lawyer (if you have one) can pull all of your evidence together as the trial date approaches. If you are representing yourself, then you need to pull everything together. Make sure to do the following:
- Identify your witnesses. You will have to give the plaintiff a list of witnesses you intend to call at trial, so you should identify these people in advance. Make sure only to call people who have personal knowledge of whatever it is they are testifying to. A witness can’t testify to gossip.However, someone could testify that the plaintiff said they would have entered the contract regardless of the fraudulent statement.
- Subpoena your witnesses. Tell your witnesses the date to show up to trial. To be safe, also serve them with a subpoena, which is a legal command to show up at a certain time to testify.Ask the court clerk where you can get blank subpoena forms.
- Make exhibits. Find helpful documents and turn them into exhibits by attaching an exhibit sticker. You will have to make copies of all exhibits for the plaintiff and for the court.
Observe a trial.If you are representing yourself at trial, you are probably nervous about what will happen. To calm your nerves, you should sit in on a trial and watch how it unfolds.Courtrooms are generally open to the public, and you should ask the court clerk if there is a contract dispute trial you can watch.
- Take a note pad and write down how the lawyers ask witnesses questions.
- Also note how people are dressed, and where they stand when speaking to the judge or jury. You will want to look as natural as possible when you appear at your trial.
Think about hiring a lawyer to defend you at trial.You might not have had the money to hire a lawyer to represent you when the case started. However, you should think about hiring a lawyer to represent you at trial.In most states, you can hire someone to handle just the trial. This is called “limited scope representation.”
- At a minimum, you should think about paying a lawyer for a couple hours of coaching. The lawyer can help you strategize about what witnesses to present and how to make effective arguments to the judge or jury.
Defending Yourself at Trial
Pick a jury.If either you or the plaintiff chose to have a jury, then you will need to pick a jury first. Jury selection is called “voir dire,” and although it may differ slightly by court, it generally follows the same process.
- The judge asks a panel of potential jurors to come sit in the jury box. The judge then asks the jurors basic questions about whether they can be fair, whether they know either you or the plaintiff, what their jobs are, etc.
- If you think a juror can’t be fair, you can ask the judge to dismiss the juror “for cause.” You need to have a solid reason why you think the juror will be biased. For example, a juror might admit to knowing the plaintiff in person and also admit that they can’t be fair.
- You will probably also be given a certain number of “peremptory challenges.” With these, you can dismiss a juror without asking the judge’s permission. You can use peremptory challenges for any reason other than to discriminate on the basis of race, ethnicity, or sex.
Make an opening statement.You should give the jury a sneak peek at what evidence you will present in your opening statement. Remember the following tips for an effective opening statement:
- Don’t argue. Instead, simply tell the jurors what you anticipate the evidence will show.Say, “As the evidence will show, the plaintiff….”
- Discuss witnesses in the same order that you will present them. If you have four witnesses testifying, then mention them in 1, 2, 3, 4 order to the jury during your opening statement. Don’t mention them in a 3, 1, 4, 2 order, which will only confuse jurors when you actually present your witnesses.
- Keep it brief. The opening statement shouldn’t be any longer than necessary. If your defense is simple, then your opening statement probably doesn’t need to be longer than five minutes.
Cross-examine the plaintiff’s witnesses.The plaintiff gets to put his or her case on first. You must sit quietly as the plaintiff’s lawyer asks the witnesses questions. If you think a witness is speculating or testifying as to gossip, you can stand and say, “Objection, Your Honor. Speculation” or “Objection, Your Honor. Hearsay.”
Present your case.You should have witnesses testify if they have helpful information. You will almost certainly have to testify on your own behalf at a fraud trial. If you have a lawyer, then he or she will ask you questions. If you don’t have a lawyer, then the judge might let you deliver your testimony in the form of a speech or let you ask yourself questions and then answer them.
- The defense attorney will cross-examine you, which could be a nerve-wracking experience. However, you must try to calm yourself as much as possible.
- Be sure to sit up straight and look at the attorney. You have nothing to fear. When you answer, turn to the jury and make eye contact.
- Don’t dodge questions. Be upfront. The lawyer will get the answer out of you anyway, so you don’t benefit by dragging your feet.
- Remember to always tell the truth. You commit perjury if you lie under oath.
- Avoid using humor. Many people don’t understand each other’s sense of humor, so it is best to leave the wisecracks at home.
Make a closing argument.In closing, go through the evidence and show how it actually supports your position.If you refer to a document, then hold up the document so that the jury can see it. Be sure to make eye contact with the jury. You will be more persuasive that way.
Wait for the verdict.After closing arguments, the judge will give the jury instructions and let them retire to deliberate. The jury could reach a verdict quickly or take a long time. Usually, you can leave the courtroom and the court clerk will contact you when a verdict has been reached.
- If you took a bench trial (no jury), then the judge will probably deliver the verdict immediately after closing arguments.
Appeal, if necessary.If you lost, you should think about appealing. Your appeal would be heard by a higher court made up of three judges which would look to see if the judge made an error during the trial or if the evidence was strongly against the verdict.
- If you want to appeal, then you need to promptly file a Notice of Appeal with the trial court. You typically only have 30 days from the date final judgment is entered against you, though the amount of time differs by state and could be less than 30 days.
- Think about settling the dispute. The plaintiff might only want to cancel the contract (called “rescission”). In this situation, you might be better off just agreeing so that you can avoid a drawn-out lawsuit. If you agree to cancel the contract, then you and the plaintiff should both sign a “mutual rescission agreement.” One of your attorneys could draft it.
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