Contracts II Flashcards
Undue influence Rule and Proof
R = When one party with power over another party improperly exerts that power to negotiate an unfair contract
1) Improper persuasion of a party
2) Special rel.
3) Persuasion induces assent
Duress rule and proof
R = Threat of force or other unlawful action to induce a party to consent 1) If a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim with no reasonable alternative, the contract is voidable by the victim
2) If a party’s manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim
3) Unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction
Mutual Mistake Rule and Proof
R = belief not in accord with the facts
1) Both parties share the same mistake
2) At the time of formation
3) Nature/Subject matter is a basic assumption so fundamental parties did not expressly address - cannot be about value
4) Has a material effect on agreed exchange
5) Party seeking relief does not bear the risk of mistake
Unilateral Mistake Rule and Proof
R = Belief not in accord with the facts
1) Mistake of one party
2) At the time of formation
3) Nature/Subj matter is so fundamental parties did not expressly address - cannot be value
4) Has material effect on agreed exchange
5) Party seeking relief does not bear the risk of mistake
6) Effect of the mistake would make enforcement unconscionable OR the other party had reason to know of the mistake caused the mistake
Public Policy Rule Proof
R=
1) Is there a significant public policy involved
2) Would enforcement of this contract conflict with that policy
3) Do the public policy concerns outweigh the public interest in enforcing contracts generally
Illegality rule and proof
R = It is against public policy to enforce a contract that violates the law
1) Is there a statute that expressly makes the contract illegal or
2) Is the subject matter of the contract illegal
4) Does the contract conflict with a statute
5) Should the party that violated the contract get restitution
Express Warranty
R = Warranty that addresses the quality and characteristics of a good being sold and arises only through words or actions by the seller that requires all of the goods to conform to either the fact, promise, description, model or sample.
1) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods & becomes part of the basis of the bargain OR
2) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description OR
3) Any model or sample which Is made part of the basis of bargain
Implied Warranty of Merch
R = Are implied as a matter of law and address sellers title to the goods, and the basic quality of the goods and unless expressly excluded become apart of any contract for sale of goods
1) A contract for the sale of goods
2) The seller is a merchant with respect to goods of that kind, and
3) There is no valid exclusion or modification of the implied warranty of merchantability
Implied Warranty of fitness for a particular purpose
1) A contract for the sale of goods and
2) At the time of contract, the seller has reason to know of any particular purpose for which the goods are required and
3) That the buyer is relying on the seller’s skill or judgment to select suitable goods, and
There is no valid exclusion or modification of this implied warranty
The exception to the general rule that contracts void of PP do not allow restitution
- Necessary to prevent is proportionate forfeiture
- Result of excusable ignorance
Options for courts that have found contract voidable because of PP
- Rescind contract
- Partial enforcement by severing the offending provisions
If enforcing the rest of the contract would not violate PP they will enforce the rest
The court will assess if the party whom enforcement would benefit acted in good faith - Blue pencil the contract
- Exceptions for restitution
Three most common categories of contracts that violate PP
Contracts that restrict competition
- Courts review non-competition agreements in light of the competing policies to determine the reasonableness of the terms by looking at: scope of restricted activities, time period of restriction, and geographic scope of the restriction
- Covenants are not valid unless they are protecting legitimate interests other than employers desire to protect themselves
Contracts that limit tort liability
Contracts that impair family law obligations
Tunkl factors for determining if an agreement such as this violates public policy
1) Agreement involves a business generally thought of as suitable for public regulation
2) The party seeking exculpation is engaged in performing a service of great importance to the public - something of practical necessity
3) Party performs the service for any member who seeks it or a member within certain established standards
4) The party has a decisive advantage of bargaining strength against any member of the public seeking services
5) The party makes no exception and allows no provisions for the purchaser to pay more for protection against negligence
6) The person is placed under the power and control of the seller
Determining the importance of furthering a competing PP
1) Is there any special public interest that is affected by the outcome?
2) How strong is the PP?
3) Will voiding out the contract or clause actually further the PP?
4) What is the seriousness of any misconduct (bad faith) involved?
Substantive unconscionability
Defin = general inequality of the exchange or the oppressive nature of a particular provision
- Discuss the disproportionality of the exchange
- We don’t question adequacy we just look at the sufficiency but if there is such an inequality a court could find there is something off
- Req for unconscionability claim*
