Contracts 2 Flashcards
Consent,Misrepresentation
Parent Liability
- Parents aren’t responsible if a contract was btwn the minor and the retailer, depends on minor’s age
- Are liable if cosigned contract, responsible for full pay
- If minor uses parent’s credit card and parents pay for account, parents are liable
Mentally Impaired and Incompetent Persons
-What is impairment due to?
- Mental disability, illness, alcohol, drugs and hypnosis
- Impaired persons aren’t liable for contracts
- Liable to pay only a reasonable price for necessities (like minors)
A contract for non-necessities is voidable or null if they can prove that: (for mentally impaired or incompetent ppl)
-If an impaired person continues to benefit from the contract after he or she has recovered:
A. At the tome of making the contract, they didn’t understand what was happening
B. That the other party knew or should have known this condition (other side knew they were incompetent)
-He or she is bound by that contract (may have to pay to continue contract if you benefit)
Consent
- A contract must have a legal object or purpose.
- Contracts performing in legal acts (murder) is not legal, is void and unenforceable
- Genuine consent exists when both parties freely enter into a contract (w/o pressure)
4 main conditions that may prevent genuine consent from occurring:
- Misrepresentation
- Mistakes/errors
- Undue influence/fear
- Duress
Misrepresentation:
- What is misrepresentation
- Persons entering contract
- Caveat Emptor
- Buyers have the responsibility:
- 2 types of misrepresentation
- A false statement concerning a very important or material fact by one person, which causes another person to enter the contract. More than a small detail or opinion
- Must be willing to accept the consequences of their actions , CAVEAT EMPTOR applies “Let the buyer beware”
- Buyers have responsibility to check the claims about a product whenever possible before buying it
- Innocent and fraudulent
Innocent misrepresentation -When does it exist? -All that is necessary to prove is that: -In spite of the seller's innocence" -Basic remedy for innocent misrep Basics of remind remedy
-If a false statement of a material fact is made by a person in the belief that it is true
–The seller may also have made a genuine error in the quoting facts
-Statements not true
-The buyer is entitled to rescind (void or cancel) the contract if the misrepresentation is material to the contract
-Cancelling contract
-
Fraudulent misrepresentation
- If a seller makes a false statement about material fact, in the full knowledge that the statement is false, the fraudulent misrepresentation exists
- Obviously Fraud is a more serious offence, in this case a buyer may rescind or cancel the contract as well punitive damages may also be awarded by the courts.
Mistake/errors
- It is understood that each party has read and understood the contract
- “Ignorance of the law is no excuse”
Types of errors
- A common error: Each party is thinking abt the same thing and intends to fulfill the contract, but the subject matter is diff from what they believed it to be (Car burns down)
- Both parties make the same, declared void - Mutual Error: Occurs when the parties do not understand each other, bc each is thinking about smt diff
- Both parties make diff mistakes,void(sailboard/surfboard) - Unilateral Error: One party makes mistake, other party knew of mistake, no attempt to correct it, voided
Undue influence/fear
- Definition
- A contract formed under the above situation is:
- Where does this usually arise?:
- Who can be influence, by who?
- Claims that a contract was entered into bc of undue influence/fear must:
- The proof shifts to who? who must then prove..:
- If one party is obviously dominant:
- Improper exercise of any form of mental or emotional pressure over a person’s mind in order to induce that that person to enter into a contract involuntarily
- Voidable at the option of the victim
- Special Relationships (husband-wife, doctor-patient, lawyer-client)
- Anyone in urgent need, by person who can prove it
- Must first prove that such fear or influence existed
- Shifts to dominant party, must prove they didn’t take advantage of dominant position.
- Burden of proof falls on the dom party immediately
Duress
- Definition
- Pressure applied:
- Related to undue influence or fear. Consists of actual or threatened violence, force a person to enter contract
- Physical punishment,depriving liberty, blackmail, threatening criminal prosecution, publishing libel(written defamation or slander (oral defamation)
Legal Purpose
- Last essential element in a legally binding contract
- All contracts must have: otherwise:
- What are examples of contracts against public policy
- Object or Purpose
- Must have a legal purpose, otherwise they’re against public order (not in best interest/void)
- Bribing a public official or attempting to bribe a witness at a trial
- Another example: if someone hired another to harm a third party (contract is illegal)
Discharging the Contract
- One contract has been agreed to and essential requirement have been met:
- However: In most cases:
- Once obligations of both parties have been fulfilled:
- 3 main ways contracts are discharged by:
- Enforceable contract exists btwn parties.
- All contracts must come to an end, this happens when both parties fulfill their obligations
- Completed and discharged
1. Performance
2. Mutual agreement
3. Impossibility of performance
- Performance:
2. Mutual Agreement
1.Most common way for a contract to be discharged. Occurs when the parties have completed obligations
- Parties to a contract may mutually agree to cancel contract, releasing one another from contractual obligations
- Businesses often terminate contracts by replacing all earlier contracts w/ new one.
