Ch 14 Flashcards
Capacit
Engage in a contract and to bind yourself into that contract
Minor
minor until your 18. A contract with a minor is Voidable
What is the status of any contract entered into by a minor?
- Minor has ability to AVOID- walk away from any contract and get back what ever they agreed to
- The blame is with the person that contracted with that minor.. do not punish the minor, you punish the adult.
Disaffirm
A minor who wishes to escape a contract. To give notice of refusal to be bound by an agreement
Ratify
Words or actions of a minor indicating an intention to be bound by a contract
Reality of Consent
Four claims that parties make in an effort to rescind (void) a contract based on lack of valid consent: Fraud, mistake, duress, undue influence
Fraud
someone intentional misrepresents a fact. allow other party to disaffirm the contract
Misrepresentation
mistakes a material fact and induces reliance, but he had good reason to believe that his statement was true, then he has not committed fraud
What must happen before a contract can be set aside based upon fraud or misrepresentation?
- Must be a misrepresentation of fact- something untrue that was told
- If fraud – go straight through Not fraud, it was accident. Wont throw out unless it was material fact (important fact)
- Reliance – if they don’t rely on that information
* It is voidable but not void. It will only hurt party that committed fraud
Mistake
A basic error(an erroneous prediction, mechanical error) Some mistakes lead to voidable contracts, others create enforceable deals.
*Bilateral and unilateral mistakes
Bilateral mistake
Both parties negotiate based on the same factual error. Parties never had “meeting of the mind” never an agreement.
*Voidable by the injured party.
Unilateral mistake
error made by one party, no basis for avoiding contract. contract may be avoided if the error in value in what is to be exchanged is substantial, or if the mistake is caused by or known to the other party.
