Avoidance of Contract Flashcards
Misunderstanding Doctrine:
If both parties attach different meaning to the word or provision and the provision or word can have either meaning, both meanings are reasonable, there is no manifestation of assent.
If the word is vague, then there is no reasonably certain terms.
Mutual Mistake Elements
An adversely affected party can void a contract under mutual mistake if:
- Both parties make a mistake a formation of the contract
- Mistake was about a basic assumption which the contract was made
- Mistake was a material effect
- Adversely affected party did not bar the risk
How can a person bear the risk?
- if the risk is allocated ot the party by the agreement
- There is conscious ignorance (Party knows of limited knowledge but still think it is sufficient)
- Risk is allocated to the party by the court
Unilateral Mistake Elements:
Adversely effected party can void the contract if:
- Adversely affected party makes the mistake at the formation of the contract.
- Mistake was about a basic assumption on which the contract was made
- Mistake was a material effect
- Adversely affected party did not bear the risk of mistake
- mistake is such that enforcement of the contract would be unconscionable or the other party had reason to know of the mistake or his or her fault caused the mistake
Reformation Remedy:
If there is srtrong, clear and convincing evidence there was a typographical error, the court will allow the contract to be reformed to reflect the parties’ agreement.
Misrepresentation elements:
Recipient of a misrepresentation can void the contract if:
- There was a misrepresentation
- the misrepresentation was fraudulent or material
- misrepresentation induces the party’s assent to the contract
- recipient is justified in relying on the representation
What are the factors that justify a person’s reliance on misrepresentation?
- Stands in such a relation of trust and confidence to the person whose opinion is asserted
- reasonably believes the person whose opinion is asserted has special skill, judgment or objectivity with respect to the subject matter
- is particularly susceptible to a misrepresentation of the type involved
Misrepresentation elements:
Recipient of a misrepresentation can void the contract if:
- There was a misrepresentation
- the misrepresentation was fraudulent or material
- misrepresentation induces the party’s assent to the contract
- recipient is justified in relying on the representation
Duress
victim can void a contract if:
- other party makes an improper threat
- threat induces the victim to manifest assent to the contract
- threat left the victim with no reasonable alternative
Undue Influence
victim can void a contract if:
- other party exerted unfair persuasion
- victim was either under the domination of the party or by virtue of the relation between them was justified in assuming that the person will not act in a manner inconsistent
- manifestation of assent was induced by the unfair persuasion
What is an improper threat?
- A threat to commit a crime or tort
2. Threat to breach a contract
Agreements against public policy:
An agreement is void on grounds of public policy if:
- legislation provides that it is void or unenforceable
- interest in the agreement’s enforcement is clearly outweighed in the circumstances by a public policy
An agreement in restraint of trade (including a non-competition agreement) is void on grounds of public policy
Infancy Doctrine BLL:
person younger than 18 has the power to void a contract (has the capacity to enter into a voidable contract).
Infancy Majority Rule (necessaries):
A minor has the power to disaffirm a contract for necessaries, minor will be liable in quasi-contract (a claim for unjust enrichment seeking restitution) for the reasonable value of the necessaries.
Infancy Majority rule (not necessaries):
only responsible for returning whatever property he or she received from the adult or services and not responsible for paying back.