Chapter 4: Enforceability of Contractual Rights Flashcards
1
Q
Requirements of Form and Writing
A
- The Statute of Frauds initiated a writing requirement to demonstrate intention for certain contracts.
- Contracts associated with business (required to be in writing/signed) include those respecting land, guarantees, agreements to assume liability in tort law.
2
Q
Assumed Liability: The guarantee
Figure 4-1
A
- Guarantor: third party to whom a creditor will turn if a principal debtor defaults on the payment of a loan, but who otherwise not primarily liable. The guarantor’s consent is required if the creditor/debtor wish to alter security of loan. A court may refuse enforcement of a guarantee where a guarantor’s consent was not obtained.
3
Q
Assumed Liability: In Tort Law
A
- The assumption of liability by a third party (guarantor) for the tort of another must be in writing and signed to be enforceable. This agreement parallels the assumption of liability in a guarantee.
- On default upon debt, the third party arranges a settlement (out of court compensation for an injured plaintiff).
4
Q
Interests in Land
A
- Intention of the writing requirement was to prevent fraud.
- The doctrine of part performance creates an exception if:
a. Acts performed refer only to the contract for the land in question.
b. To enforce statute would be a hardship.
c. Agreement relates to an interest in land.
d. Apart from missing writing requirement, the agreement is valid and enforceable.
5
Q
Writing Memorandum Requirements
A
- To comply with the Statute of Frauds ( no formal document is needed as long as essential terms of the contract are included and memorandum is signed).
- Parole evidence rule prohibits use of evidence which contradicts otherwise ambiguous contract terms.
- A condition precedent may preclude a contract from coming into force until a condition is met.
6
Q
Parole Evidence Rule Exceptions
A
The parol evidence rule does not exclude the lated evidence of a subsequent agreement.
- An implied term is another exception to the parol evidence rule permitting the inclusion of a term intended by the parties but omitted, and normally included by business practice.
- Another exception is the collateral agreement, one relevant to and supporting the original agreement but having its own consideration.
7
Q
Agreements in Principle
A
- It confirms that the parties have a view to making a formal contract in the future. Contain key issues but not necessarily the detail expected in a formal contract.
- To be enforceable, all terms must be certain and the agreement must contemplate a second contract (as condition to the present bargain).
8
Q
Mistake
A
- Error made by one/both parties to a contract, falling into one of 4 categories.
- Mistake of facts: error regarding the subject matter or identity of one of the the parties.
- Non est factum: mistake to the nature of a contract arising from having been misled, allowing an illiterate/infirm person to avoid liability.
- Unilateral Mistake: error made by one of the parties.
- Mutual Mistake: error made by both parties.
- Rectification: judicial correction of a mistake when the intention of the parties was clear/written agreement does not match verbal arrangement.
9
Q
Misrepresentation
A
- False statement which induces someone to enter a contract.
- Remedy: rescission of contract if someone makes innocent misrepresentation.
- Negligent misrepresentation: when someone carelessly makes an statement (without concern if true/false) which induces another to enter a contract.
10
Q
Fraudulent Misrepresentation
A
- The maker of a statement knows it is false and intentionally misleads the other party, also when a statement is made recklessly (without caring if true/false).
- Besides contract rescission of contract, punitive damages are available as punishment for the fraud (as long as the victim doesn’t accept any benefit after fraud is discovered).
11
Q
Misrepresentation: Nondisclosure
A
- The greatest good faith contracts are those which impose a duty of disclosure. For these contracts a special relationship of trust/confidence is required.
12
Q
Undue Influence
A
- “Freedom of contract” is altered when one of the parties is under power/influence of the other to the extent that his/her decision making is impaired (doctor-patient of solicitor-client).
- Presumption of undue influence can be rebutted by evidence of the vulnerable party getting independent legal advice.
13
Q
Risk Management of Undue Influence
A
- Businesses are alert to situations which might give rise to defence of undue influence. When there is potential for undue influence situation, businesses insist upon evidence that the vulnerable party at least had the opportunity to receive independent legal advice.
14
Q
Duress
Figure 4-2
A
- Threat/actual violence perpetrated upon someone to induce a person to enter a contract. The type of harm may be physical/psychological/financial and threat direct/indirect - made to harm contracting party of member of the family.
- Such contract may be held to be unenforceable at the opinion of the victim.
15
Q
Assignment of Contractual Rights
A
- Privity of a contract rule: only the parties to a contract can enforce the contract of be liable under it.
- Exceptions to the privity rule: partnerships contracts, acceptance of land/goods, doctrine of constructive trust, statutory enforcement of third party rights.
