Avoidance Flashcards
(29 cards)
Avoidance
A contract that would otherwise be enforceable may be rendered unenforceable due to some defect in the process interfering with mutual manifestation of assent.
Void and Voidable
A contract is void if no one can enforce it because it does not exist
A contract is voidable if one party can choose to enforce it or escape it
Misunderstanding
The two parties apply different meaning to the same term or provision in a contract. Where neither had knowledge the provision had a different meaning, the contract is void.
Misunderstanding: Knew or should have known
When a party knew or should have known what was meant, the contract is voidable by the party that did not have knowledge, though a valid contract may still exist
Mistake: two types
Mutual and Unilateral
Mutual Mistake
Exist where 1) both parties are mistaken on an 2) assumption basic to the contract which 3) has a material effect on performance. Renders contract voidable unless one party assumed the risk
Assumption of Risk
Party assumes the risk when they
1) contractually assume it 2) knowingly have insufficient knowledge yet treat it as enough or 3) it is reasonable under the circumstances to do so.
Unilateral Mistake
Only one party made a mistake. Generally, contract will be enforced unless mistake was basic to the contract and party knew and took advantage of mistake
A misrepresentation is fraudulent when
It induces assent and maker
1. Knows or believes assertion not in accord with facts
2. Does not have confidence that is stated
3. Knows that does not have basis that he states or implies
A misrepresentation is material where
It would induce a reasonable person to manifest assent
An opinion is generally not a basis for fraud, unless
Asserted by one who has superior knowledge and plaintiff had no reason to know better
Reliance on a fraudulent statement must be . . .
Reasonable. If one of plaintiff’s knowledge and intelligence should have known they were being deceived, they cannot recover.
Elements of innocent misrepresentation
- Reliance
- Were statements material
- Was reliance justified
Material fact
One in which a reasonable person would attach importance to when making their decision
Non-disclosure is equivalent to an assertion where
- It could correct a previous assertion
- Correct a mistake
- When it should be told
Duress: Two types
Physical compulsion (gun to head, puppetteering) renders contract void.
Improper threat: voidable
Improper threat: elements
- What is threatened is a crime or a tort
- What is threatened is a criminal prosecution
- Civil process used improperly/ bad faith
- Breach of good faith and fair dealing
Where there is an improper threat, the contract will only be voidable if there was no [ ] [ ] then to sign the contract
Reasonable alternative
Economic Duress
Defendant, by wrongful acts or threats, intentionally caused an involuntary entry into contract. No choice or face financial ruin.
Undue Influence
Coercive pressure placed on one susceptible to it. Weakness of mind concurrent with gross inadequacy of consideration or circumstances of suspicion.
Persuasion that tends to be coercive. Overcomes the will without convincing the judgement
Undue influence
Factors for undue influence
- Time of discussion
- Lack of sleep
- Unusual place
- Demand of haste
- Emphasis on consequences of delay
- Multiple persuaders
- Absence of third party advisors
Illegality
Contract need not be actually illegal, but can be. Can be something unenforceable on public policy grounds.
If a provider does not have a required license, such contract will be unenforceable if
License is required for a public policy reason
