Chapter 10 Flashcards
Capacity to contract - incapability
May not have capability if they are
Minor
Mental incapability
Intoxicated
Void
Rendered invalid and uninformed
Each party should return any benefit received (not always possible in reality)
Voidable
Endanger of being void due to one of the previously mentioned examples
A minor can create an enforcible contract for
Necessities of life
Employment contracts that are beneficial to the minor
That person may affirm contract made when they were a minor through conduct once they reach the age of majority
- continue to use a gym membership signed up for as a minor
If no guardian is aware of a claim for a minor the statute of limitations will begin once they turn 18
- if you have known to sue on your behalf, you can sue until you’re 20 for wrongdoings done to you as a minor
Mental incapability
If judicially declared incapable
- void
If not legally declared incapable
- voidable
Intoxication
Cannot enter a contract when intoxicated
Other party must have known/ought to have known
Difficult to prove plus issue of faking
Three kinds of unfair bargaining
Voidable if during negotiations there is
- duress
- undue influence
- unconscionable
Duress
Violence or threat of violence
Duress of a person means to threaten a person or their loved ones
Duress of goods means to threaten to damage or seize goods
Economic duress means to enter into an agreement due to threat to finances
- sign this contract or we won’t ship your goods
Unconscionable contract
When someone exploits another weakness in order to create an unfair agreement
No threat or manipulation just immoral
Undue influence
A person is psychologically manipulated into entering a contract
Elements of undue influence
A relationship of influence
- strong in power party influences a weak more vulnerable party
Causes a suspicious contract to be created
- One party benefits, more heavily or one party incurs way more risk
Mistakes in contractual deficits
Mistake occurs when one or both parties incorrectly believe a fact to be true
Contracts are only impacted by very serious fundamental mistakes
Kinds of mistakes
Mistakes in forming a contract
Frustration
Non est factum
Formation of a contract, material mistake
Mistake that affects the parties decision to enter into a contract
Mistakes related to the heart of the parties agreement will make a contract void due to no meeting of the mind
Frustration of a contract
When an event beyond the parties control makes performance impossible or radically, undermines its purpose
Essentially when it’s impossible to perform or the circumstances have changed to where it no longer makes sense
Will not be frustrated if
Frustration cannot be self induced
A contract is not frustrated if the parties anticipated the frustrating event
Non est factum (not my document)
Applies if a party signed an agreement because of mistake in the belief of its content and would not have signed if they had known
If successful agreement would be void 
Non est factum elements
Radical difference (in what you agreed to)
Carelessness (on the part of the drafter of the contract)
Misrepresentation
Illegality
I contract is illegal if it’s creation, purpose, or performance would be contrary to the law
Common law illegality
Statutory illegality
Common law illegality
Even though there’s no law specifically saying it’s illegal, the context implies in the legal result
Statutory illegality
There’s a specific law saying the contents of the contract is something illegal
(unconscionable) and 2 elements
Created when someone exploits another weakness in order to create an unfair agreement
- substantial inequity of bargaining power
And
- substantial unfairness of terms
