11 Flashcards
What are some defenses to an enforceable contract ? , (bilateral)(unilateral)(when is it not a defense)
Defenses - Negating consent:
- with lack of consent contracts can be voided (essentially if there was no agreement)
-mistakes (1st thing that can negate)
-mistake of fact( one party is mistaken abt what factually were talking abt :
bilateral-either party can recind(backout) the contract( ex: both thought they were talking abt the same ship but weren’t)
unilateral-a mistake regarding a material fact,the other person must have known or should have known that the person was mistaken or there was a mathematical error( ex: sold red shoes knowing they weren’t louis vuitton unlike the buyer ,buyer can void the contract once they find out it’s not vuitton)
-mistake of value/quality: not a defense (if one or both are mistaken for how much smth is worth u cant back out. it means it can’t be back out unlike mistake of fact)
bilateral mistake (Material Mistake of Fact)
-both parties mistaken
- contract can be rescinded by either party
unilateral mistake ( material mistake of fact) ,how many parties were mistaken,2 ways contract won’t count
-one party was mistaken
contract doesn’t count if/Contract is enforceable unless:
(1)other party knew or should have know that mistake was made or
(2)mistake was due to substantial mathematical error,made inadvertently (careful) and without gross negligence (
Negating Voluntary Consent (3 types of ways one may enter contract without actual intent)
- fraudulent misrepresentation
-Undue Influence
-Duress
What’s Fraudulent Misrepresentation. ,what can it be a defense from,what does it affect ?
4 ways it counts as fraud
(can also be a tort. fraud can be a defense in contract or tort as it affects types of remedies )
1.A misrepresentation of material fact occurred(lied)
2. An intent to deceive (wasn’t an accident, wanted to deceive other side)
3. the innocent party justifiably relied on the misrepresentation (person lied to didn’t have a reason to know they were lied to)
4. the party was harmed as a result of the misrepresentation (economic damage,etc)
What’s Undue Influence
(emotional pressure)
- pressuring another into signing a contract
-there must be a clear and convincing evidence that the party wasn’t acting off their own free will
-usually arises from a trust relationship
(ex: fathers will, he changed it cuz person emotionally pressured ,which is why wills must have witnesses as it was a classic example of undue influence)
what’s duress
(threat)
- when someone is threatened into signing a contract, there is no consent ( boat sunk ,and ppl with other boats would only offer help if victims paid them $1 million )
What are some other defenses (miscellaneous);unconscionability,procedural v substantive unfairness,form type
- material breach by other party
-unconscionability (extreme unfairness, extremely unfair to force a contract
— procedural unfairness v substantive unfairness:
p- the way u went on negotiating contract was unfair as a take it or leave it ,unfair bargaining power
s- the terms themselves are extremely unfair
-against public policy (non compete clauses are not enforceable by employers or company ,penalty clauses,etc)
-improper form
Discharge by performance (what happened) (how does a complete performance look,when is it a Breach, when is it Substantial)
-complete performance- the contract conditions are met(both parties do what they’re were supposed to do)
-if performance isn’t perfect it’s a Breach(anything less than perfect performance)
-Substantial performance occurs when:
—party must have performed in good faith
—performance must not vary greatly from the performance promised in the contract
—performance must not create substantially the same benefits as those promised in the contract
(ex: missing one pizza box flavor still causes buyer to pay for it but if the delivery man takes 2 hrs later to delivery they don’t have to pay cuz it’s the same benefit as promised)
(have to decide if it was material breach or substantial performance)
Discharge by Operation of Law (other ways contract can end/wouldn’t count)(5)
- Statutes of Limitations(time limit of bringing a lawsuit for contract branch,can’t sue after 2 yrs)
- bankruptcy (if one party declares bankruptcy)
3.impossibility of performance( impossible to do it,literally ,not even physically)
4.commercial impracticality
5.Frustration of purpose (both parties know the contract is being into for a specific reason.ex: daughter died before painting for her bday)
Types of Damages( that you can recover for breach of contract case)(4)
- Compensatory: paying you back for direct losses and costs cuz of breach(bakery flour ex;had to spend $400 more for their breach of contract)
-Consequential: indirect and foreseeable losses ( had to open store at 7 instead of 6,loss of sales during that hr)
-Punitive: to punish and deter wrongdoing (never given for contract dispute.must have some element of tort-like fraud)
-Nominal: to recognize wrongdoing when no monetary loss is shown
Mitigation of Damages
when a breach occurs,the other party has a duty to reduce damages
Liquidated Damages v Penalties;what are they intended to do
Liquidated: specific amount agreed to be paid as damages in the event of future breach
Penalty: designed to penalize,generally unenforceable
(liquidated damages are intended to compensate the non-breaching party for actual damages suffered, while penalties are intended to punish the breaching party)
Rescission (part of equitable remedies)
Remedy where the contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions (rewind or undo contract as if it wasn’t done in 1st place, court orders restitution)
what’s Restitution,when’s it used (part of equitable remedies)how
-To rescind(cancel)a contract, both parties must make restitution to each other by returning goods, properties, or funds previously conveyed
-if the goods or property have been consumed, restitution must be made in an equivalent dollar amount
(ex: compensating for the amount of cookies you ate)
