Chapter 6 Flashcards
Green was adjudicated incompetent by a court having proper jurisdiction. Which of the following statements is correct regarding contracts subsequently entered into by Green?
All contracts are VOID
What is novation?
In a novation, the agreement is unchanged but one of the original parties is released and a new party is substituted into their place
What is a substituted contract?
In a substituted contract, the original parties are both released from the original agreement but are both bound by a new agreement.
Generally, which of the following contract rights are assignable?
Generally, all contract rights are assignable unless the assignment would result in a change in the obligor’s risk. Thus, option contract rights generally are assignable. Rights to malpractice insurance are not assignable because the insurer’s risk varies based on the identity (and characteristics) of the insured.
What is Undue Influence?
When a person in a position of trust or confidence takes unfair advantage of the RELATIONSHIP such that the other party’s free will to contract is overcome.
To prevail on the defense of fraud in the inducement, a victim must prove that the:
The common law defense of fraud requires a showing of intent to deceive. Fraud in the inducement (as opposed to fraud in the execution) merely means that the victim was deceived as to the reason for the transaction.
The parol evidence rule?
prohibits evidence of prior oral or written agreements that seek to contradict the terms of a fully integrated contract (i.e., one intended as the complete agreement).
In which of the following situations does the first promise serve as valid consideration for the second promise?
A debtor’s promise to pay $500 for a creditor’s promise to forgive the balance of a $600 disputed debt.
Anything having legally recognized value can constitute consideration. If parties legitimately disagree as to the amount owed under their contract, a promise to compromise, such as the parties are doing here, has legal value and constitutes consideration since both parties are giving up the right to litigate the dispute.
Under the parol evidence rule, oral evidence will be excluded if it relates to:
The parol evidence rule generally bars evidence of prior or contemporaneous oral statements offered to vary the terms of a fully integrated written contract. Oral evidence is permissible when the contract is incomplete, ambiguous, invalid, or subject to a condition precedent, or when modification is made after the original contract is written. A contemporaneous oral agreement will be excluded.
To cancel a contract and to restore the parties to their original positions before the contract, the parties should execute a:
A rescission “undoes” a contract and restores the parties to the positions they would have been in if no contract were made
Kaye contracted to sell Hodges a building for $310,000. The contract required Hodges to pay the entire amount at closing. Kaye refused to close the sale of the building. Hodges sued Kaye. To what relief is Hodges entitled?
When a contract for the sale of real property is breached, the nonbreaching party can either recover compensatory damages (damages that compensate for the breach) or obtain specific performance (forced performance).
In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be:
To be effective, consideration must be legally sufficient, which means something that the law recognizes as consideration.
Which of the following statements is true with regard to the Statute of Frauds?
The contract terms may be stated in more than one document.
What is duress?
Duress occurs when a person overcomes the will of another through wrongful force or threats of imminent force. Economic duress generally is not recognized as a defense to contract, and even where it is, it is usually required that the party taking advantage of the other party’s poor financial condition must have caused the poor condition.
Yost contracted with Egan for Yost to buy certain real property. If the contract is otherwise silent, Yost’s rights under the contract are:
Most contracts are assignable unless they involve personal services or the assignment would vary the risks or burdens of the contract. Normally a real estate contract is assignable.
On May 25, Fresno sold Bronson, a minor, a used computer. On June 1, Bronson reached the age of majority. On June 10, Fresno wanted to rescind the sale. Fresno offered to return Bronson’s money and demanded that Bronson return the computer. Bronson refused, claiming that a binding contract existed. Bronson’s refusal is:
In this problem, Fresno was an adult and Bronson was a minor at the time of contracting. The common law gives minors the right to disaffirm a contract anytime while a minor or within a reasonable time after becoming an adult. Only the minor has the right to disaffirm. The adult may not disaffirm the contract.
