Contracts - Defenses Flashcards

Question

What are the different forms of materiality in fraudulent misrepresentation?

Answer 1

1. Objective Materiality * Where such an assertion is likely to induce a reasonable persont o enter into a K 2. Subjective Materiality * Where the pty making the assertion had reason to know it was likely to induce the particular aggreived pty into entering into the K

Answer 2

_Unreasonable if:_ * aggrieved pty has independent knowledge that the statement in question is false * the aggreived pty reason to believe statement is made by an unreliable person * if no reasonable person would have believed the assertion * the aggreived pty could have easily ascertainthe truth by cursory inspection of the goods

Answer 3

1. Negligent misrepresentation 2. Innocent misrepresentation

Answer 4

1. A misrepresentation 2. Materiality of the misrepresentation 3. Reasonable reliance on the misrepresentation NOTE - Do not need "scienter" or "intent to mislead" 1. State of mind * Negligent misrepresentation * D would have known the assertion was false if he had exercised reasonable care * Innocent misrepresentation * D simply made an assertion not in accord with existing facts

Answer 5

The defendant’s silence when there was a duty to disclose

Answer 6

1. The nondisclosure was material to the contract 2. Reasonable reliance on the nondisclosure 3. A duty to disclose AND a failure to fulfill it * Duty to disclose if a pty is aware of material facts that are unlikely to be discovered by the other pty in the exercise of ordinary care & diligence: * where ptys enjoy a relationship of trust & confidence * when a pty has made an assertion that was true @ the time but has since been rendered untrue by intervening events * if the obligation of good faith would require the pty to disclose the info

Answer 7

Available for all types: * use as a :shield" (avoidance) * All can be used as defenses to a breach of contract claim * use as a "sword" (rescission & reliance damages) * All can be used in a tort action for recession of the contract & also for damages resulting from reliance on the misrepresentation Available for only fraudulent/non-fraudulent: * They may live with the contract & sue for the benefit of the bargain Available only to fraudulent misrepresentation: * A party can seek punitive damages since it is an intentional tort (willful/malicious/intentional wrongdoing)

Answer 8

Modern law: 1. A threat * a manisfestation of intention to inflict harm on a person made in words or by conduct 2. The threat is wrongful in nature * Three types of circumstances: * If what is threaten is either a crime or a tort * If what is threaten is a criminal prosecution or bad faith civil process * If what is threaten is a bad faith breach of K/economic duress 3. There must be no reasonable choice but to succumb to the threat * Usually arise in economic duress cases in 3 situations: * Where there are no adequate & reasonably priced substitutes for the services or goods that are threaten to be withheld * When the threaten breached would caused the aggrieved party to break his own Ks * When the alternative of acquiesces to the threat & then suing for damages is inadequate to address the harm caused 4. The aggrieved party must protest the threaten breach rather than acquiesce w/o complaint to the wrongful threat\*\*\*\*\*\*\*\*\*(this 4th element is only in minority jurisdictions)

Answer 9

_Avoidance:_ * Contracts made under physical compulsion are absolutely void & all other contracts are voidable _Restitution:_ * The aggrieved party is entitled to restitution of any benefits conferred on the other party so long as he likewise returns any benefits received

Answer 10

1. Unfair persuasion used * Test include these factors: * Discussion of the transaction at an unusual or inappropriate time * Consummation of the transaction at an unusual place * Insistent demands that the transaction or business be finished immediately * Extreme emphasis on the untored consequences of delaying the transaction * The use of multiple persuaders against the target of persuasion * Absent of 3rd party advisors to the target of persuasion * Statements that there is no time to consult an advisor or attorney 2. The other pty was vulnerable to such persuasion * Established if the following circumstances exist: * Where the mental infirmary is due to age or illness * Where the vilnerability is due to recent trauma or event * Where there is a relationship of trust or confidence

Answer 11

* The contract is voidable at the option of the aggrieved party * The aggrieved party is entitled to restitution of any benefits conferred to the other party so long as he likewise returns any benefits received

Answer 12

1. Procedural unconscionability 2. Substantice unconscionability

Answer 13

It is where the bargaining process created an absence of meaningful choice for the aggreived party (you didn't really have much say in the matter) * Types of Circumstances in which this occurs * Near miss cases * Absence of bargaining power * i.e. - adhesion K, pty weakened by poverty/language * Fine print terms - terms you need a magnifying glass to see

Answer 14

It is where the K terms are unreasonably favored to one pty of the K * Types of circumstances where this is found: * Grossly excessive price - @ some point it will be too excessive * Grossly disproportional consequences for a minor breach * Provisions binding on one pty but not another * seen alot in environmental K & arbitration clauses

Answer 15

The court may find: 1. Refuse to enforce the contract altogether 2. Excise the offending clause & enforce the remainder of the K 3. Limit the application of the offending clause so as to avoid any unconscionable result

Answer 16

1. When the subject of the K itself is specifically prohibited by law * i.e. - prostitution, bribery, gambling 2. Where a K is formed for the purpose of committing a crime * i.e. - murder 3. Where the K performance would constitute a tort 4. Where the K performance would violate certain values & freedoms designated by the state * i.e. - selling organs on the black market

Answer 17

1. Legislation 2. Judicial decisions * where the subject matter is not specifically prohibited by law but judicial plocies may be invoked * Moral & social values * K against marrying, selling organs, selling child * Economic consideration * i.e. - antitrust, K not to compete * Protection of governmental processes & institutions

Answer 18

* This defense is almost always used * When sucessful, D will win whether he was the pty promising to perform the PP violation of paying for it thus the pty attempting to enforce the K will be out of luck * EXCEPT * Where one pty has been more egregiously "in the wrong" than the other, the courts will allow an ***_in pari delicto_*** )not equally at fault) defense allowing the innocent pty to receove rstitution against the guiltier pty for any benefits conferred even though the K itself remains unenforceable * Voidable @ the option of the defending pty

Answer 19

1. Noncompete Agreements * generally enforceable, they may be contrary to the PP of promoting a citizen's right to work * Should consider the extent the provision imposes an unreasonable geographic or durational barrier on the employee 2. Sales of goods ia bribery * the victim of the bribe has a PP defense 3. Sales of goods intended for unlawful use * if seller knows it is for unlawful use,l PP prohibits actions by the seller to get payment & action by the buyer for delivery 4. Liability limitation provisions * provisions limiting liability restricting an injured pty's right against reckless or intentional harm will not be upheld * provisions that limit liability for negligent conduct is generally permissible 5. Unlicensed goods for services