CH 8 Flashcards
what are the three exceptions to enforcing a contract
an unequal relationship between the two parties
misrepresentation or important mistake concerning the contract
a defect within the contract itself
what is a voidable contract
an aggrieved party has the option to enforce a contract or end it
what is a void contract
a contract that that has a defect so substantial that it cannot be enforced
WHAT DO YOU CALL THE ABILITY to make binding contracts
LEGAL CAPACITY
how would one describe a contract made by a minor
contracts made by minors are voidable
what do you call the age at which someone become an adult for legal purposes
age of majority
what are the two exceptions for legal capacity for minors
1 Minors are obligated by contracts for essentials known as “necessaries” (for example, food, shelter, and so on that the minor does not have already).
2 Minors are bound to beneficial contracts of service (if not unfair to the minor).
what happens to a contract when economic duress is established
the contract is voidable
what do you call The threat of economic harm that coerces the will of the other party and results in a contract.
economic duress
what is duress
The threat of physical or economic harm that results in a contract.
what is undue influence + example
Unfair manipulation that compromises someone’s free will or choice.
a contract between an elderly person and their caregiver
contract is voidable
what do you call : A false statement of fact that causes someone to enter a contract.
misrepresentation
what is a Rescission:
The remedy that results in the parties being returned to their pre-contractual positions.
what 5 things are needed to show that there was misrepresentation
is false
is clear and unambiguous
is significant to the decision of whether or not to enter into the contract
induces the aggrieved party to enter into the contract
is concerned with a fact and not an opinion
define fraudulent misrepresentation
The speaker has a deliberate intent to mislead or makes the statement recklessly without knowing or believing that it is true.
define negligent misrepresentation
The speaker makes the statement carelessly or negligently.
define innocent misrepresentation
The speaker has not been fraudulent or negligent, but has misrepresented a fact.
what types of misrepresentation can damages in tort be used as a remedy
fraudulent
negligent
what is a legal mistake
An error made by one or both parties that seriously undermines a contract.
A legal mistake is much more narrow than an everyday mistake.
1 A simple oversight or error is not a mistake.
2 It must seriously undermine a contract.
what is a common mistake plus example
A legal mistake may also occur if both parties have made the same error (known as common mistake).
If Kerry’s car appears to be old and relatively worthless, and she and Sean negotiate on that basis for a relatively low price, their agreement is based on a common mistake if the car turns out to be a valuable antique.
what is the two step process for unconscionability
proof of inequality in the positions of the parties.
proof of an improvident bargain or proof of exploitation
Give an example of economic duress.
Economic duress includes threatening to break a contract known to be very important to the other side, provided the coercion went beyond ordinary commercial pressure to a force or compulsion that prevented the other side from giving true consent to the proposal.
Name one statute that makes certain kinds of contracts illegal.
Any of the three examples given are acceptable: the Criminal Code, the federal Competition Act, and Ontario’s Real Estate and Business Brokers Act.
How does the Statute of Frauds affect contracts?
Contracts caught by a writing requirement, contained in the Statute of Frauds or equivalent, must be evidenced in writing to be enforceable.
What four types of contracts relevant to business law are required to be in writing?
Contracts not to be performed within a year, contracts dealing with land, contracts of guarantee, and contracts for the sale of goods above a set minimum must all be in writing.
what is a contract of guarantee
A guarantee is a promise to pay the debt of someone else, should that person default on the obligation. A guarantee must generally be evidenced in writing
what is the statue of frauds
some contracts must be in writing
Contracts of Guarantee
Contracts Not to Be Performed Within a Year
Contracts Dealing With Land
three things needed to show that there was no undue influence
he or she has explained the proposed transaction to the weaker party.
the weaker party appears to understand the proposed transaction.
the weaker party is proceeding with the transaction on a free and informed basis.
what happens to a contract if it violates public policy or statute
it is voidable
three needs for economic duress
- threat made in bad faith
- victim could not reasonably resist
- victim acted promptly after pressure was gome
how to prove that there was no undue influence
there was independent legal advise
or
there was no advantage
what are some things needed for unconsionability
- no fair minded person would offer
- no fair minded person would accept
there must be a great deal of inequality
there must be explotation
