Chapter 2. Formation Of Contracts—Parties And Capacity (9-16) Flashcards
A, B, C and D enter into a written contract by which A makes certain promises to B, other promises to C, and other promises to D. In return B, C and D promise a single performance to A, or each promises A a separate performance. Is there a contract?
In either case there is a contract, and numerous variations may be made from this illustration in regard to the number of parties and the various promises which they may make. Restatement 2d of Contracts § 9(b)
A promises to convey a tract of land to his three sons , B, C and D. In return B and C promise to build and maintain a home for A. D promises to live with A and to support and care for him. B, C and D promise that A will receive $200 a year. Who has what duty?
As to the home , B is the principal obligor for his share and C for his. B is C’s surety for C’s share and C is B’s surety for B’s share. Similarly, as to the $200, each is principal as to a third and surety for each of the others. D alone is bound to furnish care and support. Restatement 2d of Contracts § 10(b)
A becomes a member of an unincorporated society, and by so doing promises to pay dues to the society. Is there a contract?
He is bound by a contract. Restatement 2d of Contracts § 11(a)
A , a trustee of an estate jointly with B, enters into a written agreement by which he individually promises to buy and A and B as trustees promise to sell a piece of land belonging to the trust. Is there a contract?
This is a contract, and, though it is voidable by the beneficiaries if made without either their consent or the authority of a court, it is enforceable unless the beneficiaries elect to avoid it. Restatement 2d of Contracts § 11(a)
A, under guardianship by reason of mental illness, buys an old car from B for $300, giving a promissory note for that amount. A subsequently abandons the car. Who is liable?
A is not liable on the note. B may reclaim the car or, if the car is found to be a necessary, has a claim for having furnished it to A. Restatement 2d of Contracts § 13(b)
Shortly after commitment to a hospital for the insane and while still confined, A conveys land to B, taking back a purchase-money mortgage. Subsequently C is appointed guardian of A’s property. On A’s behalf, C ratifies the conveyance and sues to enforce the mortgage by foreclosure. Is it enforceable?
B has no defense: since A was not under guardianship, the conveyance and mortgage were voidable, not void. See § 15. Restatement 2d of Contracts § 13(c)
A, a school teacher, is a member of a retirement plan and has elected a lower monthly benefit in order to provide a benefit to her husband if she dies first. At age 60 she suffers a “nervous breakdown,” takes a leave of absence, and is treated for cerebral arteriosclerosis. When the leave expires she applies for retirement, revokes her previous election, and elects a larger annuity with no death benefit. In view of her reduced life expectancy, the change is foolhardy, and there are no other circumstances to explain the change. She fully understands the plan, but by reason of mental illness is unable to make a decision based on the prospect of her dying before her husband. The officers of the plan have reason to know of her condition. Two months after the changed election she dies. Is it enforceable?
The change of election is voidable. Restatement 2d of Contracts § 15(b)
A, an incompetent not under guardianship, contracts to sell land to B, who does not know of the incompetency. A continues to be incompetent. Is it enforceable?
On discovering the incompetency, B may refuse to perform until a guardian is appointed, and if none is appointed within a reasonable time may obtain a decree canceling the contract. Restatement 2d of Contracts § 15(d)
A, an incompetent not under guardianship, contracts to buy land for a fair price from B, who does not know of the incompetency. Shortly after transfer of title to A and part payment by A, A dies. What can A’s representative do?
A’s personal representative may recover A’s part payment on reconveying the land to B. Restatement 2d of Contracts § 15(e)
A, an incompetent not under guardianship, contracts to buy land for a fair price from B, who does not know of the incompetency. Shortly after transfer of title to A and part payment by A, A dies. C, with knowledge of A’s incompetency, renders legal services to A in the transaction. After learning of A’s incompetency, B pays $500 to C pursuant to the contract. Can B demand reimbursement?
A’s personal representative need not reimburse B for the payment. Restatement 2d of Contracts § 15(e)
A, an incompetent spouse not under guardianship, mortgages land on fair terms to B, a bank which has no knowledge or reason to know of the incompetency , for a loan of $2,000. At A’s request the money is paid to the other spouse, C, who absconds with it. Is the contract voidable?
The contract is not voidable. Restatement 2d of Contracts § 15(f)
A, an incompetent not under guardianship, lives on a homestead with his mother B and brother C. A also holds a mortgage on a second tract of land owned by C. To prevent foreclosure of a mortgage on the homestead, A, B and C join in borrowing money from D on a mortgage of both tracts on fair terms. D acts in good faith but has reason to know of A’s incompetency. A dies, leaving B his sole heir. Is the mortgage voidable?
The mortgage to D is not voidable for the benefit of B. Restatement 2d of Contracts § 15(f)
A, while in a state of extreme intoxication, signs and mails a written offer on fair terms to B, who has no reason to know of the intoxication. B accepts the offer. Is there a contract?
A has no right to avoid the contract. Restatement 2d of Contracts § 16(b)
A is ill and confined to his bed. B, knowing that the illness is incurable, plies A with intoxicating liquor for a week and then purports to treat him by rubbing him with oil. While intoxicated, A executes by mark a contract to sell land to B for a grossly inadequate consideration. Six days later A dies. Is there a contract?
A’s heirs may avoid the contract. Restatement 2d of Contracts § 16(b)
A has been drinking heavily. B, who has also been drinking, meets A, offers to buy A’s farm for $50,000, a fair price, and offers A a drink which A accepts. In drunken exhilaration A, as a joke, writes out and signs a memorandum of agreement to sell, gets his wife to sign it, and delivers it to B, who understands the transaction as a serious one. Is there a contract?
A’s intoxication is no defense to B’s suit for specific performance. Restatement 2d of Contracts § 16(b)
