Defenses Flashcards
what is lack of capacity to K based on infancy?
anyone under the age of 18 (minor) do not have the capacity to enter into a K binding on themselves
are K promises of an adult made to a minor binding?
ONLY as to the adult (not the child)
when can a minor disaffirm a K?
any time before OR shortly after reaching the age of majority
if a minor chooses to disaffirm, what portion of the K is affected?
ALL of it (can’t partially disaffirm)
if a minor chooses to disaffirm and they still have things that they’ve received under the K, what must they do?
they must return those things
must a minor who disaffirms return consideration that has been squandered, wasted, negligently destroyed?
NO
can disaffirmance be be implied?
YES (ie – minor reaches age 18 and continues to use car that was sold to him when he was 17)
when will a minor be liable for in RESTITUTION for the value of benefits received even though they disaffirm?
if the K is for necessaries (items necessary for subsistence, health, education – ie: food, shelter, clothing, medical care)
will a minor be liable in CONTRACT for value of benefits received under a K for necessaries?
NO (only in RESTITUTION)
how must a minor affirm a K once they reach majority?
either…
1) expressly, or
2) by conduct (ie – failing to disaffirm within a reasonable time after reaching majority)
when may mental incapacity be a defense to K enforcement?
when a person’s capacity is so deficient that they are incapable of understanding the nature and significance of a contract
how does a person disaffirm a K based on mental incapacity?
disaffirms either…
1) when they later become lucid, or
2) by a later appointed legal representative
are mentally incapacitated people liable in restitution for necessaries?
YES (just like minors)
when may intoxication be a defense to K enforcement?
when a person is so intoxicated that they don’t understand the nature and significance of their promise
when does intoxication create a voidable promise?
when the other party had reason to know of the intoxication
are intoxicated people liable in restitution for necessaries?
YES (just like minors and mentally incapable)
may a contract induced by duress or undue influence be rescinded?
YES (so long as it has not been affirmed)
generally, when does duress occur?
when a party’s assent is procured by an improper threat
generally, does taking advantage of someone’s economic needs count as duress?
NO
when is there sufficient economic duress? (2 requirements)
when, by withholding something someone wants or needs…
1) the party threatens to commit a wrongful act that would seriously threaten the other contracting party’s property or finances, AND
2) there are no adequate means available to prevent the threatened loss (offered no choice)
what are the elements of undue influence? (2)
1) undue susceptibility to pressure by one party, and
2) excessive pressure by the other party
**NOTE = usually arises when dominant party is in a confidential or caregiver relationship with influenced party
what does the result depend on when there are two possible meanings to a term of a K?
depends on the parties’ awareness of the ambiguity
when NEITHER party is aware of the ambiguity, what results?
there is NO contract UNLESS the parties intended the same meaning
when BOTH parties are aware of the ambiguity, what results?
there is NO contract UNLESS the parties intended the same meaning
when ONE party is aware of the ambiguity and the other is NOT, what results?
there IS a binding contract bases on what the IGNORANT party reasonably believed to be the meaning of the ambiguous terms
when is one party “aware” for purposes of ambiguity?
when they knew or should have known of the ambiguity
will a contract in which BOTH parties are mistaken about an EXISTING fact relating to the K be voidable? (doctrine of mutual mistake)
only if…
1) it’s being voided by the ADVERSELY affected party,
2) mistake concerns a basic assumption upon which the K was made,
3) mistake has a material effect on the agreed upon exchange, AND
4) the party seeking avoidance did NOT assume the risk of the mistake
when does a party “bear the risk” of a mistake? (2 situations)
when one party is in a position to better know the risks than the other party OR where the parties knew that their assumption was doubtful
is mutual mistake as to VALUE a defense to K enforcement?
NO (both parties assume the risk that their assumptions as to value may be wrong)
generally, if only ONE of the parties is mistaken as to an existing fact, will this make the contract voidable?
NO (K still enforceable)
in what circumstance is a unilaterally mistaken K nonetheless voidable by the MISTAKEN party?
when the NONMISTAKEN party knew or had reason to know of the mistake made by the other party (obvious)
to void a K based on unilateral mistake, what is required? (2 showings)
1) the mistake had a material effect on the exchange, and
2) the mistaken party had not borne the risk
what is the effect of a mistake in the transmission of an offer or acceptance by an intermediary?
(majority view)
the message as TRANSMITTED is operative UNLESS the other party knew/should have known of the mistake
when is a contract induced by fraudulent misrepresentation voidable by the innocent party?
if they justifiably relied on the fraudulent misrepresentation
what is fraudulent misrepresentation?
inducing a party to enter into a contract by asserting info they know is untrue
