2-b. Additional Reasons for Nonenforcement Flashcards
If the subject matter of an agreement is illegal,
the agreement is not enforceable.
If the subject mater of an agreement is legal, but the purpose is illegal,
the agreement is enforceable if the plaintiff didn’t have reason to know of the underlying illegal purpose.
If a court finds that an agreement exempts intentional/reckless conduct from liability, or imposes a covenant not to compete without reasonable need or reasonable the court may
refuse to enforce the agreement on the grounds of public policy considerations.
If an agreement contains misrepresentations, it may not be enforced. Look for
(1) a statement of “fact” before the contract, (2) by one of the contracting parties or agents, (3) that is false, and (4) induces the contract. REMEMBER: No wrongdoing is required for material misrepresentations.
Does honesty or good faith matter in deciding whether an agreement is unenforceable due to misrepresentation?
NO. Wrongdoing is not required for a finding of misrepresentation. HONESTY DONT MATTER.
If an agreement purposely fails to disclose a fact or issue,
it may be struck down. Wrongdoing must be shown. Look for fiduciary-like relationship or concealment.
What is the difference between un-enforceability of contracts based on Misrepresentation vs. Nondisclosure?
Misrepresentation results in strict liability and contract termination, no malice or plot required. Nondisclosure requires a showing of intent.
Generally, does a person making a contract have a duty to disclose what they know?
NO.
Termination of Agreement based on Unconscionability:
the two basic tests, (1) unfair surprise (procedural) and oppressive terms (substantive) are, (ii) tested by the court (iii) as of the time the agreement was made.
Termination of Agreement based on Ambiguity in Words of Agreement.
There will be no contract if ( parties use a MATERIAL term that is open to at least two reasonable interpretations, and (ii) each party attaches different meaning to the term, and (iii) neither party knows or has reason to know the term is open to at least two reasonable interpretations.
Termination of Agreement based on MUTUAL Mistake of Fact Existing at Time of Contract.
Relief for mutual mistakes only if both parties are mistaken (not just uncertain) about existing facts. Even then, no relief for mistake if the person seeking relief bears the risk of mistake.
What is the difference between Misrepresentations and Mistakes?
Misrepresentations are much more likely to effect the viability of an agreement while mistakes are less likely to effect/terminate contractual agreements.
Termination of Agreement based on UNILATERAL Mistake of Fact Existing at Time of Contract.
Courts are even more reluctant to void contracts for a unilateral mistake. There will be relief in situations where the other party had reason to know of the mistake, known as a PALPABLE MISTAKE.
