Breach of Contract Defenses: Illinois

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

STATE Q&A

by Diane Cafferata and Allison Huebert, Quinn Emanuel Urquhart & Sullivan, LLP, with Practical Law Commercial Litigation

Status: Law stated as of 23 Mar 2021 | Jurisdiction: Illinois, United States

This document is published by Practical Law and can be found at: us.practicallaw.tr.com/w-025-4362

Request a free trial and demonstration at: us.practicallaw.tr.com/about/freetrial

Defenses to Contract Formation

1. Does your jurisdiction recognize

ambiguity as a defense to contract

formation? If so, when should a defendant

assert this defense?

Ambiguity is a not a formal “defense” to contract

formation under Illinois law. However, a defendant may

argue that the wording of a written contract is ambiguous

and that the plaintiff’s interpretation of the ambiguous

contract language does not match the defendant’s

interpretation.

Illinois courts look to resolve ambiguities that appear

on the face of the contract. The court must consider the

entire agreement to clarify what the parties meant by

the provision in question. (Thompsonv.Gordon, 241 Ill.

2d 428, 442-43 (2011).) If the court cannot resolve the

ambiguity by reference to the entire agreement, the court

may admit parol evidence to determine the meaning by

reference to the parties’ statements and conduct. As a rule

of last resort, the court should construe an ambiguous

term against the drafter. (Bakerv.Am.’s Mortg. Servicing,

Inc., 58F.3d 321, 327 (7th Cir. 1995) (applying Illinois law)

(“This canon of construction (contra proferentem) is a rule

of last resort, a ‘tie-breaker’ of sorts, that comes into play

only when neither the extrinsic evidence nor other methods

of construction can resolve the ambiguity”); Premier Title

Co.v.Donahue, 328 Ill. App. 3d 161, 165-66 (2002).)

2. Does your jurisdiction recognize duress

as a defense to contract formation? If

so, when should a defendant assert this

defense?

Duress is a defense to contract formation under Illinois

law. A defendant may assert duress where:

• The plaintiff induces the defendant, by a wrongful act or

threat, to enter into a contract under circumstances that

deprive the defendant of the exercise of its own free will.

• The plaintiff’s conduct is legally or morally wrongful.

(In re Marriage of Tabassum & Younis, 377 Ill. App. 3d 761,

775 (2007); Krilichv.Am. Nat’l Bank & Tr. Co. of Chicago,

334 Ill. App. 3d 563, 572 (2002).) The facts supporting

the defense of duress should be pleaded as an afﬁrmative

defense (735 Ill. Comp. Stat. Ann. 5/2-613(d)).

3. Does your jurisdiction recognize

economic duress as a defense to contract

formation? If so, when should a defendant

assert this defense?

Economic duress, also known as business compulsion, is

an afﬁrmative defense which releases the party entering

into the contract under duress from all contractual

obligations. A defendant may assert economic duress

where:

• The plaintiff induced the defendant, by a wrongful act

or threat, to make a contract under circumstances that

deprive the defendant of the exercise of its own free will.

• The threat left the defendant “bereft of the quality of

mind essential to the making of a contract.”

(Bank of Am., N.A.v.108 N. State Retail LLC, 401 Ill. App.

3d 158, 173-74 (2010); Krilich, 334 Ill. App. 3d at 572.)

However, economic duress does not exist where the

plaintiff secures the defendant’s consent to an agreement

merely in a lawful demand or by doing or threatening to

A Q&A guide to common defenses to contract claims under Illinois common law. This Q&A covers

defenses to contract formation, performance, and damages. It also covers procedural and equitable

defenses speciﬁc to breach of contract.

2 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

do that which the plaintiff has a legal right to do (Bank of

Am., 401 Ill. App. 3d at 174).

4. Does your jurisdiction recognize failure

of a condition precedent as a defense to

contract formation? If so, when should a

defendant assert this defense?

Failure of a condition precedent is a defense to contract

formation under Illinois law. A defendant may assert

failure of a condition precedent as a defense where:

• A condition precedent must be performed or an event

must occur before:

– a contract becomes effective; or

– one party is obligated to perform.

• The plaintiff failed to perform the required condition

precedent or the required event failed to occur.

(Cathay Bankv.Accetturo, 2016 IL App (1st) 152783, ¶ 32.)

When denying performance of a condition precedent

under a contract, the defendant must allege facts in

connection with the denial showing that there was a

failure to perform (Ill. S. Ct. R. 133(c)).

For more on asserting failure of a condition precedent as a

contract performance defense, see Question 21.

5. Does your jurisdiction recognize fraud as

a defense to contract formation? If so, when

should a defendant assert this defense?

Fraudulent inducement is a defense to contract formation

under Illinois law. A defendant may assert fraudulent

inducement as a defense where:

• The plaintiff made a false statement concerning an

existing material fact.

• The plaintiff made the false statement with knowledge

or belief of that representation’s falsity.

• The plaintiff made the false statement with the purpose

of inducing another party to act or to refrain from acting.

• The defendant reasonably relied on the false statement

and to his detriment entered into the contract or

transaction.

(Avon Hardware Co.v.Ace Hardware Corp., 2013 IL App

(1st) 130750, ¶ 15; Phil Dressler & Assocs., Inc.v.Old Oak

Brook Inv. Corp., 192 Ill. App. 3d 577, 584 (1989); see also

Jordanv.Knafel, 378 Ill. App. 3d 219, 228-29 (2007).)

If pleaded as an afﬁrmative defense, a defendant must plead

it with particularity (735 Ill. Comp. Stat. Ann. 5/2-613(d); see

Connickv.Suzuki Motor Co., 174 Ill. 2d 482, 496-97 (1996);

First Mercury Ins. Co.v.Ciolino, 2018 IL App (1st) 171532, ¶¶

39-40).

6. Does your jurisdiction recognize illegal

purpose as a defense to contract formation?

If so, when should a defendant assert this

defense?

Illegal purpose is an afﬁrmative defense to contract

formation under Illinois law (735 Ill. Comp. Stat. Ann.

5/2-613(d)). If the subject matter of a contract is illegal, the

contract is void from the outset (In re Marriage of Newton,

2011 IL App (1st) 090683, ¶ 39). A defendant should assert

illegal purpose where the contract contravenes either

Illinois or federal law and therefore violates public policy

(Gamboav.Alvarado, 407 Ill. App. 3d 70, 75 (2011)). While

this doctrine bars a cause of action for breach of contract,

depending on the circumstances, an aggrieved party may

still assert a claim for return of consideration given to the

defendant based on fraudulent inducement of the illegal

contract (Gamboa, 407 Ill. App. 3d at 75).

7. Does your jurisdiction recognize infancy

as a defense to contract formation? If

so, when should a defendant assert this

defense?

Infancy is a defense to contract formation under Illinois

law. The contract of a minor is not void, but voidable

at the minor’s election on reaching the age of majority

(Fletcherv.Marshall, 260 Ill. App. 3d 673, 675 (1994);

Terrance Co.v.Calhoun, 37 Ill. App. 3d 757, 761 (1976)).

A minor or the minor’s estate may still be liable for

necessaries furnished to the minor (Managov.Cty. of

Cook, 2016 IL App (1st) 121365, ¶ 31).

A defendant who is a minor at the time of entering into

a contract ratiﬁes the contract if the defendant, after

attaining the age of majority, either:

• Fails to disafﬁrm the contract within a reasonable time.

• Does any distinct and decisive act clearing showing an

intent to afﬁrm the contract.

(Fletcher, 260 Ill. App. 3d at 675.)

Therefore, a defendant may assert infancy if the defendant

is still under 18 years old or disafﬁrmed the contract within

a reasonable time of turning 18 years old (755 ILCS 5/11-1

3 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

(deﬁnition of minor); see Villalobosv.Cicero Sch. Dist. 99,

362 Ill. App. 3d 704, 712-13 (2005); Terrance Co., 37 Ill.

App. 3d at 760-61).

A minor above the age of 16 may apply to the court for

complete or partial emancipation (750 ILCS 30/4). A fully

emancipated minor has the right to enter into valid legal

contracts (750 ILCS 30/5(a)), but a partially emancipated

minor has only the rights and responsibilities speciﬁed in

the court’s emancipation order (750 ILCS 30/5(b)).

When repudiating the contract, the minor generally must

return any consideration to the other party unless the

consideration is lost or expended (Terrace Co.v.Calhoun,

37 Ill. App. 3d at 762).

8. Does your jurisdiction recognize mental

deﬁciency or illness as a defense to contract

formation? If so, when should a defendant

assert this defense?

Mental deﬁciency or illness is a defense to contract

formation under Illinois law. A defendant may assert this

defense if, when it entered into the contract:

• The defendant suffered from a mental or physical

weakness.

• That weakness rendered the defendant unable to

comprehend the effect and nature of the transaction.

(In re Marriage of Davis, 217 Ill. App. 3d 273, 276 (1991); see

also In re Estate of Gruske, 179 Ill. App. 3d 675, 678 (1989);

In re Lewis-Pride, 330 B.R. 660, 662-63 (Bankr. N. D. Ill.

2005) (applying Illinois law).)

Even where a party’s mental weakness, standing alone, is

insufﬁcient to void a contract, mental weakness coupled

with undue inﬂuence, fraud, or concealment may be a

basis to set aside the contract (Friedersv.Dayton, 61 Ill.

App. 3d 873, 880 (1978)).

9. Does your jurisdiction recognize mutual

mistake as a defense to contract formation?

If so, when should a defendant assert this

defense?

Mutual mistake is a defense to contract formation under

Illinois law. A defendant should assert mutual mistake

where both parties either:

• Had erroneous beliefs at the time of contracting that

certain material facts were true, unless the party seeking

to avoid the contract bears the risk of the mistake.

• Came to an understanding and unintentionally drafted

and signed a contract that failed to express the true

agreement.

(Alliance Prop. Mgmt., Ltd.v.Forest Villa of Countryside

Condo. Ass’n, 2015 IL App (1st) 150169, ¶ 39.)

A party pleading mutual mistake must plead facts

establishing the “who, when, and where” (Schaferv.

UnionBank/Central, 2012 IL App (3d) 110008, ¶ 23;

Briarcliffe Lakeside Townhouse Owners Ass’nv.City of

Wheaton, 170 Ill. App. 3d 244, 251-52 (1988)).

10. Does your jurisdiction have a statute of

frauds that requires certain contracts be in

writing and signed by the defendant? If so:

• What types of contracts must be in writing?

• May a defendant assert the statute of frauds as a

defense if the plaintiff fully performed its obligations

under an oral contract?

Illinois’s statute of frauds requires that certain contracts

be in writing and signed by the defendant, including:

• A promise to pay for the debt or default of another

person (740 ILCS 80/1).

• Any agreement in consideration of marriage

(740ILCS80/1).

• An agreement for the sale or lease or other disposition

of real property. However, the lease of property for less

than one year is not within the statute of frauds and

may be oral. (740 ILCS 80/2.)

• Any agreement that could not possibly be performed

within one year (740 ILCS 80/1). This does not

necessarily include contracts that have an indeﬁnite

duration if, at the time the contract was made, the

contract’s full performance could have occurred

within one year from inception of the contract

(Dugas-Filippiv.JP Morgan Chase, N.A., 66 F. Supp.

3d 1079, 1089 (N.D. Ill. 2014) (applying Illinois law);

Armaganv.Pesha, 2014 IL App (1st) 121840, ¶ 41).

• A wholesale brewer’s agreement (815 ILCS 720/5(4)).

• The sale of a business opportunity that must be registered

under the Business Opportunity Sales Law of 1955

(815ILCS 602/5-40(a)).

The defense should be plead as an afﬁrmative defense

(735 Ill. Comp. Stat. Ann. 5/2-613(d) or raised in a

pre-answer motion for dismissal (735 Ill. Comp. Stat.

Ann. 5/2-619)(a)(7)). A defendant may not assert

4 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

the statute of frauds defense if the plaintiff fully

performed its obligations under an oral contract (see

Goldwaterv.Greenberg, 2017 IL App (1st) 163003, ¶ 14;

Meyerv.Logue, 100 Ill. App. 3d 1039, 1043-44 (1981)).

The acts allegedly done in performance musty be

“positively attributable exclusively to the contract” (John

O. Schoﬁeld, Inc.v.Nikkel, 314 Ill. App. 3d 771, 784 (2000);

Blaisev.Stein, 75 Ill. App. 3d 793, 796 (1979)).

However, contracts for the sale of goods for the price of

$500 or more are governed by the UCC’s statute of frauds

(810 ILCS 5/2-201).

11. Does your jurisdiction recognize unclean

hands as a defense to contract formation?

If so, when should a defendant assert this

defense?

Unclean hands is a defense to contract formation under

Illinois law. A defendant may assert unclean hands where:

• The plaintiff seeks equitable relief.

• In connection with the transaction, the plaintiff

committed either:

– misconduct;

– fraud; or

– bad faith.

(Zahlv.Krupa, 365 Ill. App. 3d 653, 658 (2006).)

The doctrine of unclean hands is not a defense to a claim

for money damages (Zahl, 365 Ill. App. 3d at 658).

12. Does your jurisdiction recognize

unconscionability as a defense to contract

formation? If so, when should a defendant

assert this defense?

Unconscionability is a defense to contract formation under

Illinois law. A defendant may assert unconscionability

where a contract is both:

• Procedurally unconscionable because, for example:

– the defendant lacked the opportunity to understand

the terms of the contract; or

– important terms were hidden in a maze of ﬁne print.

• Substantively unconscionable because the contract’s

terms:

– are overly harsh; or

– one-sided.

(Sweisv.Founders Ins. Co., 2017 IL App (1st) 163157, ¶ 63;

Aliaga Med. Ctr., S.C.v.Harris Bank N.A., 2014 IL App (1st)

133645, ¶ 27; Draper & Kramer, Inc.v.King, 2014 IL App

(1st) 132073, ¶ 28.)

13. Does your jurisdiction recognize

undue inﬂuence as a defense to contract

formation? If so, when should a defendant

assert this defense?

Undue inﬂuence is a defense to contract formation under

Illinois law. A defendant may assert undue inﬂuence where:

• The defendant was under the domination of the plaintiff

or, by virtue of the parties’ relationship, the defendant

was justiﬁed in assuming that the plaintiff intended to

act in a manner consistent with defendant’s welfare.

• The parties entered into a contract in which there was

an urgency of persuasion.

• The defendant would not otherwise have voluntarily

entered into the contract but for the undue inﬂuence.

(Ill. Pattern Jury Instr.-Civ. 700.00 Intro. 1; see

Brittonv.Esson, 260 Ill. 273, 277-79 (1913);

Kusterv.Schaumburg, 276 Ill. App. 3d 220, 224 (1995).)

This defense often arises in cases where the plaintiff is

a ﬁduciary. Although available as a defense to breach of

contract, the cases in which the issue is raised involve

testamentary capacity (see Kuster, 276 Ill. App. 3d at

224, 227).

14. Does your jurisdiction recognize

unilateral mistake as a defense to contract

formation? If so, when should a defendant

assert this defense?

Unilateral mistake is a defense to contract formation

under Illinois law. A defendant may assert unilateral

mistake where:

• The mistake is of a material fact.

• The mistake renders enforcement of the contract

unconscionable.

• The mistake occurred despite the exercise of due care by

the party asserting the defense.

• Rescission of the contract can return the other party to

the status quo at the time of contracting.

• Reformation is available to remedy the other party’s

fraud (see Harris Bank Napervillev.Morse Shoe, Inc.,

5 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

716 F. Supp. 1109, 1121 (N.D. Ill. 1989) (applying Illinois

law); Ringgold Capital IV, LLCv.Finley, 2013 IL App (1st)

121702, ¶¶ 31-32).

(ZippySack LLCv.Ontel Prod. Corp., 182 F. Supp.

3d 867, 872 (N.D. Ill. 2016) (applying Illinois law);

Vandenbergv.Brunswick Corp, 2017 IL App (1st) 170181, ¶

36; Cameronv.Bogusz, 305 Ill. App. 3d 267, 273 (1999).)

A party pleading unilateral mistake must plead facts

establishing the “who, when, and where” of the mistake

(Schafer, 2012 IL App (3d) 110008, ¶23).

15. Does your jurisdiction recognize any

additional defenses to contract formation?

If so, when should a defendant assert the

defenses?

No.

Defenses to Contract Performance

16. Does your jurisdiction recognize accord

and satisfaction as a defense to a breach

of contract claim? If so, when should a

defendant assert this defense?

Accord and satisfaction is a defense to a breach of contract

claim under Illinois law. An accord and satisfaction is

a contractual method of discharging debts or claims

between the parties to such an agreement. To constitute

an accord and satisfaction there must be:

• A genuine dispute pending between the parties.

• An unliquidated sum owed.

• Consideration.

• A shared mutual intent to compromise the claim.

• The parties’ execution or performance of the

agreement.

(MKL Pre-Press Elecs./MKL Computer Media Supplies,

Inc.v.La Crosse Litho Supply, LLC, 361 Ill. App. 3d 872,

877 (2005); Koulesv.Euro-American Arbitrage, Inc., 293

Ill. App. 3d 823, 829-30 (1998).)

17. Does your jurisdiction recognize

ambiguity as a defense to a breach of

contract claim? If so, when should a

defendant assert this defense?

Ambiguity is a not a formal “defense” to contract

performance under Illinois law. However, a defendant may

argue that the wording of a written contract is ambiguous

and that the plaintiff’s interpretation of the ambiguous

contract language does not match the defendant’s

interpretation.

Illinois courts look to resolve ambiguities that appear

on the face of the contract. The court must consider the

entire agreement to clarify what the parties meant by the

provision in question. (Thompson, 241 Ill. 2d at 442-43.)

If the court cannot resolve the ambiguity by reference to

the entire agreement, the court may admit parol evidence

to determine the meaning by reference to the parties’

statements and conduct. As a rule of last resort, the

court should construe an ambiguous term against the

drafter. (Baker, 58 F.3d at 327 (applying Illinois law) (“This

canon of construction (contra proferentem) is a rule of last

resort, a ‘tie-breaker’ of sorts, that comes into play only

when neither the extrinsic evidence nor other methods of

construction can resolve the ambiguity”); Premier Title Co.,

328 Ill. App. 3d at 165-66.)

18. Does your jurisdiction recognize

anticipatory breach as a defense to a breach

of contract claim? If so, when should a

defendant assert this defense?

Anticipatory breach is a defense to a breach of contract

claim under Illinois law. A defendant may assert

anticipatory breach where:

• The parties had a valid contract.

• Both parties had future performance obligations under

the contract.

• The plaintiff unequivocally repudiated the contract, by

words or deeds, before performance was due.

(Bussev.Paul Revere Life Ins. Co., 341 Ill. App. 3d 589,

594-95 (2003); Alguirev.Walker, 154 Ill. App. 3d 438,

446 (1987).)

19. Does your jurisdiction recognize

economic duress as a defense to contract

performance? If so, when should a

defendant assert this defense?

Economic duress, also known as business compulsion,

is an afﬁrmative defense to a contract, which releases

the party signing under duress from all contractual

obligations. See Question 3. Although this defense relates

6 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

speciﬁcally to contract formation, if successful, it also

relieves the defendant from its performance obligations.

20. Does your jurisdiction recognize

equitable estoppel as a defense to a breach

of contract claim? If so, when should a

defendant assert this defense?

Equitable estoppel is a defense to a breach of contract

claim under Illinois law. A defendant may assert equitable

estoppel where:

• The plaintiff knowingly misrepresented or concealed

material facts.

• The defendant did not know of the falsity of the

representations when they were made or acted on.

• The plaintiff intended or reasonably expected the

representations to be acted on by the party claiming

estoppel.

• In performing the contract, the defendant reasonably

relied on the representations in good faith to its

detriment.

• The defendant would be prejudiced by its reliance.

(Packaging Corp. of Am., Inc.v.Croner, 419 F. Supp.

3d 1059, 1075 (N.D. Ill. 2020) (applying Illinois law);

see also Ruizv.Cal-Ful Condo. Ass’n, 2019 IL App (1st)

181734, ¶ 21; Bd. of Library Trs. of Vill. of Midlothianv.Bd.

of Library Trs. of Posen Pub. Library Dist., 2015 IL App

(1st) 130672, ¶ 40.)

Estoppel should be pleaded as an afﬁrmative defense

(735Ill. Comp. Stat. Ann. 5/2-613(d)).

21. Does your jurisdiction recognize failure

of a condition precedent as a defense to a

breach of contract claim? If so, when should

a defendant assert this defense?

Failure of a condition precedent is a defense to a breach of

contract claim under Illinois law. A defendant may assert

failure of a condition precedent if:

• The defendant is not obligated to perform under the

contract until:

– a speciﬁc event occurs; or

– the plaintiff performs a speciﬁc act.

• The event or act did not occur.

(Beal Bank Nev.v.Northshore Ctr. THC, LLC, 2016 IL App (1st)

151697, ¶ 18; Cathay Bank, 2016 IL App (1st) 152783, ¶ 32.)

A defendant claiming that the plaintiff failed to perform a

condition precedent must allege facts to show the plaintiff’s

failure to perform (Ill. S. Ct. R. 133(c); see Deutsche Bank Nat’l

Tr. Co.v.Roongseang, 2019 IL App (1st) 180948, ¶¶ 22-24

(non-ﬁnal opinion not yet released for publication)).

For more on asserting failure of a condition precedent as a

contract formation defense, see Question 4.

22. Does your jurisdiction recognize failure

of consideration as a defense to a breach

of contract claim? If so, when should a

defendant assert this defense?

Failure of consideration is a defense to breach of contract

(and also a ground for rescission) under Illinois law. A

defendant may assert failure of consideration where the

plaintiff neglected, refused, or failed to either:

• Perform its contractual obligations.

• Furnish the agreed-on consideration.

(Ahernv.Knecht, 202 Ill. App. 3d 709, 715 (1990); Worner

Agency, Inc.v.Doyle, 121 Ill. App. 3d 219, 222 (1984).)

Failure of consideration should be pleaded as an

afﬁrmative defense (735 Ill. Comp. Stat. Ann. 5/2-613(d)).

23. Does your jurisdiction recognize

frustration of purpose as a defense to a

breach of contract claim? If so, when should

a defendant assert this defense?

Frustration of purpose is a defense to a breach of

contract claim under Illinois law. A defendant may assert

frustration of purpose where:

• The contract is rendered meaningless due to an

unforeseen change in circumstances.

• The frustrating cause totally or almost totally destroys

the value of the plaintiff’s performance.

(Sunshine Imp & Exp Corp.v.Luxury Car Concierge, Inc.,

2015 WL 2193808, at *5 (N.D. Ill. May 7, 2015) (applying

Illinois law); Illinois-American Water Co.v.City of Peoria,

332 Ill. App. 3d 1098, 1106 (2002); Smithv.Roberts, 54 Ill.

App. 3d 910, 912-913 (1977).)

24. Does your jurisdiction recognize breach

of the implied covenant of good faith

and fair dealing as a defense to a breach

of contract claim? If so, when should a

defendant assert this defense?

7 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

Breach of the implied covenant of good faith and fair

dealing is a defense to a breach of contract claim

underIllinois law. A defendant may assert breach of

theimplied covenant of good faith and fair dealing

where:

• The contract vests plaintiff with discretion.

• The plaintiff failed to exercise that discretion reasonably

and with proper motive.

• The plaintiff acted:

– arbitrarily;

– capriciously; or

– in a manner inconsistent with the reasonable

expectations of the parties.

(Mid-West Energy Consultants, Inc.v.Covenant Home, Inc.,

352 Ill. App. 3d 160, 165 (2004); Berahav.Baxter Health

Care Corp., 956 F.2d 1436, 1443 (7th Cir. 1992), applying

Illinois law and citing Dayanv.McDonald’s Corp., 125 Ill.

App. 3d 972, 991 (1984).)

The duty of good faith and fair dealing cannot, however,

be used to overrule or modify the express terms of a

contract (Bank One, Springﬁeldv.Roscetti, 309 Ill. App.

3d 1048, 1059-60 (1999)).

25. Does your jurisdiction recognize

impossibility of performance as a defense

to a breach of contract claim? If so, when

should a defendant assert this defense?

Impossibility is a defense to a breach of contract claim

under Illinois law. A defendant may assert impossibility

where both:

• Performing the contract became objectively

impossible:

– because the subject matter of the contract was

destroyed; or

– by operation of law.

• The event or circumstance that rendered performance

impossible:

– was not reasonably foreseeable at the time of

contracting; or

– cannot be guarded against in the contract.

(YPI 180 N. LaSalle Owner, LLCv.180 N. LaSalle II, LLC, 403

Ill. App. 3d 1, 6-7 (2010).)

26. Does your jurisdiction recognize novation

as a defense to a breach of contract claim?

If so, when should a defendant assert this

defense?

Novation is a defense to a breach of contract claim under

Illinois law. A defendant may assert novation where the

parties:

• Had a valid existing contract.

• Expressly or impliedly agreed to:

– extinguish their obligations under the original

contract; and

– make a new contract in place of the original contract.

• Entered into a new contract supported by valid

consideration.

(Crest Hill Land Dev., LLCv.Conrad, 2019 IL App (3d)

180213, ¶ 35.)

27. Does your jurisdiction allow the parties

to modify the terms of their written

contract? If so, under what circumstances

may a modiﬁcation vary the terms of a

written contract?

Illinois law allows parties to modify a written contract

in writing or orally. To modify a contract, the parties

must satisfy all criteria essential for a valid contract,

including:

• Offer.

• Acceptance.

• Consideration.

(VC Mgmt., LLCv.Reliastar Life Ins. Co., 195 F. Supp. 3d

974, 985 (N.D. Ill. 2016) (applying Illinois law); Nebel,

Inc.v.Mid-City Nat’l Bank of Chicago, 329 Ill. App. 3d 957,

964 (2002).)

Illinois law permits parties to a written contract to alter

or modify its terms by later oral agreement, even where

the written contract precludes oral modiﬁcation (R.J.

O’Brien & Assocs., Inc.v.Vierstra, 2003 WL 1627271,

at *5 (N.D. Ill. Mar. 27, 2003) (applying Illinois law);

Tadrosv.Kuzmak, 277 Ill. App. 3d 301, 312 (1995); Falcon,

Ltd.v.Corr’s Nat. Beverages, Inc., 165 Ill. App. 3d 815,

821-22 (1987)).

8 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

28. Does your jurisdiction recognize

ratiﬁcation as a defense to a breach of

contract claim? If so, when should a

defendant assert this defense?

Ratiﬁcation is a defense to a breach of contract claim under

Illinois law. A defendant may assert that the plaintiff ratiﬁed

the defendant’s breach of contract where the plaintiff clearly

evinced an intent to be bound by the defendant’s acts that

amounted to a breach. The court may infer ratiﬁcation

from the circumstances of the case, including the plaintiff’s

long-term acquiescence in the defendant’s conduct. (See VC

Mgmt., LLC, 195 F. Supp. 3d at 994 (applying Illinois law).)

29. Does your jurisdiction recognize unclean

hands as a defense to a breach of contract

claim? If so, when should a defendant

assert this defense?

Unclean hands is a defense to a breach of contract claim

under Illinois law. A defendant may assert unclean hands

where:

• The plaintiff seeks equitable relief.

• As part of the transaction, the plaintiff either:

– engaged in misconduct;

– committed fraud; or

– acted in bad faith.

(Zahl, 365 Ill. App. 3d at 658.)

The doctrine of unclean hands is not a bar to a claim for

money damages (Zahl, 365 Ill. App. 3d at 658).

30. Does your jurisdiction recognize waiver

as a defense to a breach of contract claim?

If so, when should a defendant assert this

defense?

Waiver is a defense to a breach of contract claim under

Illinois law. A defendant may assert waiver where:

• The defendant was required to perform under the

contract.

• The defendant did not perform.

• The plaintiff:

– knew that the defendant did not perform;

– knew or should have known that it had the right to

require the defendant’s performance; and

– freely and intentionally gave up its right to require the

defendant’s performance either by express words or

implied by conduct.

(Takiff Props. Grp. Ltd. #2v.GTI Life, Inc., 2018 IL App

(1st) 171477, ¶ 26; Bd. of Trs. of City of Harvey Fireﬁghters’

Pension Fundv.City of Harvey, 2017 IL App (1st)

153074, ¶ 222; see also N. League of Prof’l Baseball

Teamsv.Gozdecki, Del Giudice, Americus & Farkas, LLP,

2018 IL App (1st) 172407, ¶ 74. (waiver is the intentional

relinquishment of a known right).)

31. Does your jurisdiction recognize any

additional defenses to a breach of contract

claim? If so, when should a defendant

assert the defenses?

No.

Defenses Related to Damages

32. How, if at all, does your jurisdiction

prevent a plaintiff’s double recovery for

breach of contract claim?

Under Illinois law, a plaintiff may not recover damages

that are duplicative of damages sought for another

claim (see Grittersv.Ocwen Loan Servicing, LLC, 2014 WL

7451682, at *10 (N.D. Ill. Dec. 31, 2014) (applying Illinois

law) (potential recovery for breach of contract and breach

of ﬁduciary duty are duplicative and therefore must be

appropriately limited); see also Anekom, Inc.v.Estate of

Demith, 2018 IL App (3d) 160554, ¶¶ 40-45; Otto Baum

Co.v.Süd Family Ltd. P’ship, 2020 IL App 3d 190054,

¶30 (non-ﬁnal opinion not yet released for publication);

Douglas Theater Corp.v.Chicago Title & Tr. Co., 288 Ill.

App. 3d 880, 886-87 (1997)).

33. Under what circumstances may

a liquidated damages clause be

unenforceable in your jurisdiction?

Under Illinois law, a liquidated damages clause is

unenforceable as a penalty unless the court ﬁnds:

• The parties intended to agree in advance to the

settlement of damages.

• The parties made a reasonable estimate that bore

“some relation” to the damages that would be

sustained by the breach.

• Actual damages would be:

9 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

– uncertain; and

– difﬁcult to prove.

(See Berggrenv.Hill, 401 Ill. App. 3d 475, 479-80 (2010);

Jameson Realty Grp.v.Kostiner, 351 Ill. App. 3d 416,

423-24 (2004).)

In doubtful cases, Illinois courts construe the stipulated

sum as an unenforceable penalty (GK Dev., Inc.v.Iowa

Malls Fin. Corp., 2013 IL App (1st) 112802, ¶ 47).

34. What kinds of damages, if any, does

your jurisdiction prohibit a plaintiff from

recovering for breach of contract claim?

Under Illinois law, a plaintiff suing for breach of contract

typically may not recover:

• Punitive damages (see Morrowv.L.A. Goldschmidt

Assocs., Inc., 112 Ill. 2d 87, 94-95 (1986); Bank of Ill.

in Mt. Vernonv.Bill’s King City Stationary, Inc., 198 Ill.

App. 3d 434, 436 (1990); McGradyv.Chrysler Motors

Corp., 46 Ill. App. 3d 136, 141 (1977) (punitive damages

generally not recoverable for breach of contract unless

accompanied by an independent tort claim that involves

fraud, malice, wantonness, or oppression)).

• Damages that are speculative or cannot be

established with reasonable certainty (see Santorini

Cab Corp.v.Banco Popular N. Am., 2013 IL App (1st)

122070, ¶ 19; Jonesv.Melrose Park Nat’l Bank, 228 Ill.

App. 3d 249, 259 (1992) (a breach of contract plaintiff

cannot recover speculative damages or damages that

were not the proximate result of the breach); Oakleaf

of Ill.v.Oakleaf Assocs., Inc., 173 Ill. App. 3d 637, 648

(1988) (discussing whether a claim for lost proﬁts was

speculative)).

• Damages or remedies that the contract expressly

precludes or limits (see Coxv.U.S. Fitness, LLC, 2013 IL

App (1st) 122442, ¶ 14; Hicksv.Airborne Express, Inc.,

367 Ill. App. 3d 1005, 1011-12 (2006)).

35. What restrictions, if any, does your

jurisdiction place on a plaintiff’s ability to

recover general compensatory damages for

breach of contract claim?

Under Illinois law, a plaintiff suing for breach of contract

typically may not recover general compensatory damages

if they:

• Are superseded by a valid liquidated damages clause

(see Berggren, 401 Ill. App. 3d at 479 (if a liquidated

damages clause is enforceable, a nonbreaching party

may not seek more than the liquidated damages

amount); Hartford Fire Ins. Co.v.Architectural Mgmt.,

Inc., 194 Ill. App. 3d 110, 115 (1990)).

• Do not directly and naturally result from the breach

(Midland Hotel Corp.v.Reuben H. Donnelley Corp., 118 Ill.

2d 306, 318 (1987); Westlake Fin. Grp., Inc.v.CDH-Delnor

Health Sys., 2015 IL App (2d) 140589, ¶ 31).

36. What restrictions, if any, does your

jurisdiction place on a plaintiff’s ability to

recover special or consequential damages

for breach of contract claim?

Under Illinois law, a defendant can challenge the plaintiff’s

alleged special or consequential damages by showing that

either:

• The plaintiff cannot prove that the special or consequential

damages were within the contemplation of the parties at

the time that it entered into the contract.

• The plaintiff injury did not arise from the defendant’s

breach.

• The plaintiff failed to plead the special or consequential

damages with the requisite speciﬁcity.

(1472 N. Milwaukee, Ltd.v.Feinerman, 2013 IL App (1st)

121191, ¶ 31; Allstate Ins. Co.v.Winnebago Cty. Fair Ass’n,

Inc., 131 Ill. App. 3d 225, 232 (1985); Clarkv.Standard Life

& Accident Ins. Co., 68 Ill. App. 3d 977, 986 (1979); but see

Heller Int’l Corp.v.Sharp, 839 F. Supp. 1297, 1303 (N.D.

Ill. 1993) (federal pleading standards do not require these

speciﬁc allegations to support a request for consequential

damages in a complaint).)

37. Does the failure to mitigate damages

preclude or limit recovery for breach of

contract in your jurisdiction?

Under Illinois law, contracting parties generally have

a duty to mitigate their damages. A plaintiff’s failure

to mitigate may preclude or limit its ability to recover

damages in a civil suit. A defendant should assert failure

to mitigate where the plaintiff did not take reasonable and

available steps to minimize injury and reduce its damages

(Pokorav.Warehouse Direct, Inc., 322 Ill. App. 3d 870, 880

(2001) (a breach of contract plaintiff is obligated to use

all reasonable means to mitigate its damages); see, for

example, Sharon Leasing, Inc.v.Phil Terese Transp., Ltd.,

299 Ill. App. 3d 348, 360 (1998); Bank of Hillsidev.Laurel

Motors, Inc., 259 Ill. App. 3d 362, 366 (1994)).

10 Practical Law

(static.legalsolutions.thomsonreuters.com/static/agreement/westlaw-additional-terms.pdf) and Privacy Policy (a.next.westlaw.com/Privacy).

Breach of Contract Defenses: Illinois

38. Does your jurisdiction recognize any

additional damages defenses to a breach

of contract claim? If so, when should a

defendant assert the defenses?

No.

Procedural Defenses

39. Does your jurisdiction recognize lack of

legal capacity to sue or be sued as a defense

to a breach of contract claim? If so, when

should a defendant assert this defense?

Under Illinois law, a defendant may assert that a plaintiff

lacks the legal capacity to sue for breach of contract where

the plaintiff does not have the power to appear and bring

its grievance before the court, such as where the plaintiff is:

• A natural person who is:

– incompetent;

– a minor; or

– deceased.

(A Plus Janitorial Co.v.Grp. Fox, Inc., 2013 IL App (1st)

120245, ¶ 15; In re Marriage of Kutchins, 157 Ill. App. 3d

384, 388-89 (1987) (mentally incompetent persons);

Freidersv.Dayton, 61 Ill. App. 3d 873, 883 (1978) (same);

Klakv.Skellion, 317 Ill. App. 3d 1092, 1094-95 (2000)

(minors); Villalobosv.Cicero School Dist. 99, 362 Ill. App.

3d 704, 711-12 (2005) (where a parent or guardian appears

for a minor, the minor is considered a ward of the court);

Volkmarv.State Farm Mut. Auto. Ins. Co., 104 Ill. App. 3d

149, 151 (1982) (deceased persons); Castanedav.Ingram,

2018 IL App (1st) 170065, ¶ 5 n. 1 (only the administrator

of a decedent’s estate can bring a survival action on the

decedent’s behalf); 755 ILCS 5/11a-18(c) (the guardian of a

disabled adult must appear for and represent the disabled

adult in legal proceedings).)

• An unincorporated association (A Plus Janitorial Co.,

2013 IL App (1st) 120245, ¶ 15).

• A corporation that:

– failed to pay a franchise tax, license fee, penalty, or

interest;

– is dissolved; or

– is organized under foreign law but not authorized to

do business in Illinois.

(805 ILCS 5/15.85(c); 805 ILCS 5/13.70(a); Askew Ins.

Grp., LLC v AZM Grp., Inc., 2020 IL App (1st) 190179,

¶25 (non-ﬁnal opinion not yet released for publication)

(adissolved corporation cannot sue or be sued)).

(735 ILCS 5/2-619(a)(2) (motions for involuntary dismissal

based on lack of capacity to sue or be sued)).

40. Does your jurisdiction recognize a

plaintiff’s lack of standing as a defense to a

breach of contract claim? If so, when should

a defendant assert this defense?

Under Illinois law, a defendant may assert that the

plaintiff lacks standing to bring a breach of contract claim

when the plaintiff does not have a sufﬁcient interest in the

outcome of the lawsuit (see Greerv.Ill. Housing Dev. Auth.,

122 Ill. 2d 462, 492-93 (1988); Muirhead Hui L.L.C.v.Forest

Pres. Dist. of Kane Cty., 2018 IL App (2d) 170835, ¶ 21).

Illinois law recognizes both intended and incidental third-

party beneﬁciaries, but only intended beneﬁciaries have

rights and may sue on the contract (Hackerv.Shelter Ins.

Co., 388 Ill. App. 3d 386, 394 (2009)).

41. Does your jurisdiction recognize laches

as a defense to a breach of contract claim?

If so, when should a defendant assert this

defense?

Laches is a defense to a breach of contract under Illinois

law. A defendant may assert laches where:

• The plaintiff seeks equitable relief.

• The plaintiff had knowledge of the defendant’s conduct

giving rise to the claim.

• The plaintiff delayed in asserting its rights.

• The defendant did not know or was not on notice that

the plaintiff intended to assert its rights.

• The delay induced the defendant to adversely change

position.

(See Osler Inst., Inc.v.Miller, 2015 IL App (1st) 133899,

¶23; Nancy’s Home of the Stuffed Pizza, Inc.v.Cirrincione,

144 Ill. App. 3d 934, 940-41 (1986).)

Laches is the equitable counterpart to a statute of

limitations defense. Statutes of limitations generally

apply to actions at law, while laches applies to equitable

remedies. (Gen. Auto Serv. Station, LLCv.Garrett, 2016 IL

App (1st) 151924, ¶ 16.)

Breach of Contract Defenses: Illinois

About Practical Law

Practical Law provides legal know-how that gives lawyers a better

starting point. Our expert team of attorney editors creates and maintains

thousands of up-to-date, practical resources across all major practice

areas. We go beyond primary law and traditional legal research to give

you the resources needed to practice more efﬁciently, improve client

service and add more value.

If you are not currently a subscriber, we invite you to take a trial of

our online services at legalsolutions.com/practical-law. For more

information or to schedule training, call 1-800-733-2889 or e-mail

referenceattorneys@tr.com.

42. What is the statute of limitations for a

breach of contract action in your jurisdiction?

The limitations period for breach of contract in Illinois is:

• Ten years of the alleged breach of a written contract (735

ILCS 5/13-206; Clarkv.Robert W. Baird Co., 142 F. Supp.

2d 1065, 1075 (N.D. Ill. 2001) (applying Illinois law)).

• Five years of an alleged breach of an oral contract (735

ILCS 5/13-205; Clark, 142 F. Supp. 2d at 1075 (applying

Illinois law); Hassebrockv.Ceja Corp., 2015 IL App (5th)

140037, ¶31 (if parol evidence is necessary to make a

contract complete, it is treated as an oral contract for

purposes of the statute of limitations)).

• Four years from the time plaintiff knew or should

reasonably have known of the act or omission giving

rise to the claim arising from a construction contract

(735 ILCS 5/13-214).

The limitations period starts to run from the date of the

breach (Clark, 142 F. Supp. 2d at 1075 (applying Illinois

law); Am. Family Mut. Ins. Co.v.Krop, 2018 IL 122556, ¶ 17).

However, the statute of limitations for contracts for the

sale of goods is four years from when the cause of action

accrued (810 Ill. Comp. Stat. Ann. 5/2-725).

43. Does your jurisdiction recognize any

additional procedural defenses to a breach

of contract claim? If so, when should a

defendant assert the defenses?

No.

Equitable Defenses

44. What defenses based in equity, if

any, can a defendant assert in a breach of

contract action in your jurisdiction?

Under Illinois law, a defendant may assert several

different equitable defenses, including:

• Equitable estoppel (see Question 20).

• In pari delicto (in equal fault) (see McRaithv.BDO

Seidman, LLP, 391 Ill. App. 3d 565, 595 (2009)).

• Laches (see Question 41).

• Unclean hands (see Question 11 and Question 29).