Contract 16-23 Flashcards
Settlement of Legal Claims
The voluntary relinquishment of some known right or privilege.
*Constitutes valid consideration.
Priority: N/A
What is the Common Law Pre-Existing Duty Rule?
What are the exceptions?
Past performance or performance of a pre-existing duty is NOT adequate consideration.
Exceptions:
If there is an addition or change in performance or promise; OR
A fair and equitable modification is made due to unanticipated changed circumstance AND the contract is not yet fully performed by either party.
Priority: HIGH
Is consideration required for a modification to a UCC Art. 2 sale of goods contract?
NO, consideration is not required for contract modifications made in good faith.
BUT, the modification must be in writing if:
It falls within the Statute of Frauds; OR
The original contract states that modifications must be in writing.
Priority: HIGH
Are contracts enforceable when entered into by those who lack capacity?
A party MUST have capacity to enter into a contract, otherwise they are VOIDABLE.
Minors (under 18) and those who lack mental capacity lack the capacity to enter into a contract.
Priority: Low
Duress
Physical Compulsion vs. Economic Duress
Physical Compulsion: If a person physically compels a person to agree to contract, then the contract is void.
Economic Duress: If a person makes an improper threat that induces a party (who has no reasonable alternative but to enter into the contract), then the contract is void.
*A mere threat to breach is generally insufficient.
Priority: N/A
Undue Influence occurs when?
There is:
Unfair persuasion of a person,
Who is either:
Under the domination of the person exercising the influence; OR
Justified in assuming that the person will not act in a manner inconsistent with his welfare because of his relationship between them (i.e. parent/child).
Priority: N/A
Mutual Mistake vs. Unilateral Mistake
Mutual Mistake: When (1) both parties are mistaken as to the basic assumption on which the contract is made, (2) the mistake is material to the contract, AND (3) the person asserting the mistake did not bear the risk of the mistake.
Unilateral Mistake: A mistake by one party, that is unknown to the other party, concerning a basic assumption that has a material effect on the contract. (not a valid defense to formation)
Priority: HIGH
Fraudulent Misrepresentation
vs.
Non-Fraudulent Misrepresentation
Fraudulent: When one party knowingly makes a false representation of a fact AND the other party reasonably relies on the misrepresentation to their detriment.
Non-Fraudulent: When there is a statement of material fact by a party or agent that is false, inducing the contract, AND the other party reasonably relies on the misrepresentation to his detriment.
Priority: N/A
