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Contracts > Contract Defenses > Flashcards

Contract Defenses Flashcards

1
Q

Can minors enter contracts?

A

Yes, but the contracts are voidable at the option of the minor

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2
Q

What are implications of a minor’s powers of avoidance?

A

If a minor exercises their right to disaffirm a contract:
1. minor is obligated to return any goods received but is not liable for damage, wear and tear or depreciation in value
2. if the contract is a service contract or least and is not returnable, minor is under no further obligations to compensate the other party

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3
Q

What is minor’s power of ratification?

A

At age 18 a minor may expressly or impliedly ratify a contracted entered during minority and bind themselves to obligations

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4
Q

Is silence sufficient for ratification of contract by a minor reaching the age of majority?

A

No, silence along is insufficient

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5
Q

What are rights of party contracting with minor for necessities?

A

Contracts with minors for necessities including food, shelter, clothing or medication create quasi-contract right for merchant to recover the reasonable value of goods and services

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6
Q

Are contracts with minors for necessities voidable?

A

Yes

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7
Q

When is the competence of a contracting party assessed?

A

Mental competence is assessed as of the time of contracting

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8
Q

What are implications of mentally incompetent person’s powers of avoidance?

A

Mentally incompetent person is obligated to not only return any goods received but is also liable for any damages or reasonable value for use of goods or services

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9
Q

When will mentally incompetent person not be liable for damages or reasonable value when exercising their power of avoidance?

A

If the other party was aware of incompetence then incompetent individuals are treated like minors for purposes of avoidance and must only return the goods

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10
Q

Can mentally incompetent people ratify a contract?

A

May expressly or impliedly ratify any contracts once regaining competence

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11
Q

What are rights of party contracting with incompetent person for necessities?

A
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12
Q

What are rights of party contracting with incompetent person for necessities?

A

Contracts for necessities including food, shelter, clothing or medication create quasi-contract right for merchant to recover the reasonable value of goods and services

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13
Q

Are contracts with incompetent people for necessities voidable?

A

Yes, subject to the same limitations as minors

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14
Q

What elements are required for fraudulent misrepresentation defense?

A
  1. misrepresentation
  2. requisite state of mind of scienter and intent to mislead
  3. misrepresentation is material
  4. reasonable reliance
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15
Q

What is a misrepresentation?

A

A misrepresentation is an assertion inconsistent with existing facts, and may include fraudulent conduct like concealment, may be an oral or written misrepresentation

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16
Q

Are broken promises misrepresentations?

A

No

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17
Q
  1. What is state of mind required for fraudulent misrepresentation
A
  1. scienter: party made assertion either knowing it to be false or knowing they didn’t know whether it was true or false
  2. intent to mislead: party made assertion for purpose of misleading or knowing there was a substantial likelihood the statement would mislead
18
Q

What is materiality requirement for fraudulent misrepresentation?

A
  1. Objective materiality: the misrepresentation would induce a reasonable person to enter contract
  2. Subjective materiality: party making misrepresentation has reason to know the misrepresentation would induce that party to enter into contract
19
Q

When is reliance unreasonable for purposes of fraudulent misrepresentation

A

Reliance of aggrieved party will be deemed unreasonable if the aggrieved party:
-knew otherwise
-knew the person making the statement was unreliable
-no reasonable person would believe the misrepresentation

20
Q

Elements of negligent non-fraudulent misrepresentation

A
  1. misrepresentation
  2. materiality
  3. reasonable reliance
  4. reasonable care would have revealed misrepresentation
21
Q

Elements of innocent misrepresentation

A
  1. misrepresentation
  2. materiality
  3. reasonable reliance
  4. good faith assertion taht turned out not to be true
22
Q

What is fraudulent non-disclosure

A

D remains silent where there is a duty to disclose

23
Q

What are elements of fraudulent non-disclosure?

A
  1. nondisclosure was material to the contract
  2. reasonable reliance on non-disclosure
  3. party had duty to disclose that they failed to fulfill
24
Q

Remedies for all types of misrepresentation

A
  1. Avoidance of contract
  2. recession and reliance damages resulting from reliance on misrepresentation
25
Q

Remedies for fraudulent and non-fraudulent misrepresentation only

A

Aggrieved party may honor contract and sue for the benefit of the expected bargain

26
Q

Remedies for fraudulent misrepresentation only

A

Punitive damages

27
Q

What are elements of duress defense?

A
  1. a threat
  2. threat is wrongful in nature
  3. no reasonable choice but to succumb to threat
28
Q

What is required for something to be a threat for purposes of duress defense?

A

A threat is a manifestation of intent to inflict harm made by words or conduct

29
Q

When is a threat considered wrongful in nature for purposes of duress defense?

A

Threats are wrongful in nature when what is being threatened isL
1. a crime or tort
2. criminal prosecution or bad faith civil process
3. bad faith breach of contract/economic duress

30
Q

When would a party have no choice but to succumb to an economic threat for purposes of duress defense

A
  1. D threatens to withhold when there is no adequate substitute available
  2. would cause aggrieved party to break their own contracts
  3. alternative of submitting to threat and then suing for damages is inadequate to address harm
31
Q

What are remedies for duress defense

A
  1. avoidance: contracts under physical compulsion are void, whereas others are voidable
  2. restitution: aggrieved party is entitle to restitution of any benefits conferred and received
32
Q

What are elements of undue influence defense?

A
  1. unfair persuasion
  2. other party was vulnerable to such persuasion
33
Q

What are remedies for undue influence?

A
  1. contract is voidable at option of aggrieved party
  2. aggrieved party is entitled to restitution of any benefits conferred and return of any benefits received
34
Q

What are the two types of unconscionability defenses

A
  1. Procedural unconscionablility
  2. substantive unconscionability
35
Q

What is procedural unconscionability

A

Bargain process creates absence of meaningful choice for aggrieved party
-taking advantage of language barrier, adhesion contracts, etc.

36
Q

What is substantive unconscionability

A

Contract terms are unreasonably favorable to one party to contract
-grossly excessive price, provisions that are binding on one party only

37
Q

What are remedies for unconscionability defense

A

Upon a finding of unconscionability, a court may
1. refuse to enforce the contract
2. excise the offending clause and enforce remainder of contract
3. limit application of the offending clause to avoid unconscionable result

38
Q

What is the public policy / illegality defense?

A

Subject of the contract itself is specifically prohibited by law

39
Q

When would the public policy or illegality defense apply

A
  1. subject of the contract is prohibited by law
  2. contract is formed for purpose of committing a crime or tort
  3. contract performance would violate certain values or freedoms designated by the state
40
Q

Remedy for illegality or public policy defense

A

Contract is void if illegal, and otherwise voidable at the option of the defending party

Contracts (17 decks)

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