Defenses Flashcards
i.music; list (6)
What are the defenses
- Incapacity
- Mutual assent, absence of (aka lack of offer + acceptance)
- Unconscionability
- SOF
- Illegality
- Consideration, absence of
voidable vs void
When a contract is voidable, a party to the contract is able to cancel or revoke the contract
A contract may be deemed void if the agreement is not enforceable as it was originally written
list (4)
What are the incapacity defenses
- Voluntary Intoxication
- Involuntary intoxication
- Mental incapacity
- Infancy/minority
incapacity defense
When is voluntary intoxication a defense
K is voidable (aka not enforceable) if other party had reason to know of intoxication
incapacity defense
When is voluntary intoxication not a defense
If there was “no reason to know” of intoxication then the K is NOT voidable aka the K is enforceable
incapacity defense
When is involuntary intoxication a defense
K voidable if person could not understand nature or significance of agreement when entered;
treated like mental incapacity
incapacity defense
When is mental incapacity a defense
Person so mentally deficient they cannot understand nature or significance of agreement when they entered it
incapacity defense, list (2)
Mental incapacity can void a K when:
- A previously incapacitated person can void/disaffirm a K when lucid or
- Void a K through use of a legal represenative
incapacity defense
When is infancy/minority a defense
when minor makes a K, minor can void the K
incapacity defense; list (2)
When can a minor affirm or void a K
- By conduct
- Before turning 18 or ~6mo after turning 18
AMA; list (3)
Types of “absence of mutual assent”
- Misunderstanding
- Misrepresentation
- Mistake
- unilateral mistake
- mutual mistake
AMA
When is misunderstanding a defense
If K includes a term with at least two possible meanings
AMA; list (3) - misunderstanding
If K language is ambiguous, K formed/not formed depending on awareness.
What are the levels of awareness and is K formed?
- Neither party aware - NO K unless both parties intended same meaning
- Both parties aware - NO K unless both parties intended same meaning
- One party aware - binding on what ignorant party reasonably believed to be the meaning of the ambiguous words
AMA; list (3)
Mutual mistake makes a K void if:
remember - void means unenforceable from the start
- mistake concerns a basic assumption on which K is made
- mistake has a material effect -AND-
- adversely affected party (and thus, the party seeking avoidance) did not assume the risk of the mistake
AMA
Unilateral mistake is voidable** when
remember - voidable means one or both parties can avoid
Nonmistaken party knew or had reason to know about mistake, then mistaken party (party who did not know of the mistake and acted upon K) can void
iow: the unilateral mistake will not prevent formation of the contract _unless_ the nonmistaken party knew or had reason to know of the mistake
AMA
Unilateral mistake is NOT voidable when
(aka K is enforceable/can have a case for breach of K)
when nonmistaken party DID NOT have reason to know of the mistake
which means that the mistaken party will be liable on the K and cannot void it
AMA; list (2)
Types of misrepresentation
- fraudulent misrepresentation
- material misrepresentation
fraudulent misrepresentation - what happens to K?
K is voidable by innocent party if the justifiably relied on the fraud
material misrepresentation
K is voidable by innocent party if the justifiably relied on misrepresentation AND misrep was material
list (2)
A misrepresentation is material if
- induces a reasonable person to agree -OR-
- maker knows that a particular person would agree (because of some special circumstance) even if a reasonable person would not
SOF
Certain agreements (MYLEGS) - by statute - need to be in writing AND signed to be enforceable
who needs to have signed the K under SOF
party being sued
MYLEGS
M - marriage
Y - performance that cannot be performed in one year
L - interest in land
E - Executor (or administrator)
G - Goods over $500
S - surety
Marriage
a promise where the consideration given is marriage
Year
a promise that cannot be completed within one year
when does time period start for “Year” Ks
date of agreement NOT date of performance
list (5)
Land
promise creating an interest in land, which includes
- leases from more than one year
- easements for more than one year
- mortgages and most other security liens
- fixtures
- minerals or structures if they are severed by buyer
Equal Dignity Rule
Granting authority to a 3rd party to enter into a K on behalf of someone else only needs to be in writing IF the subject of the K falls under SOF
ex: Billy alleges Nas orally agreed to seel Ranch for $4m. Nas authorizes an agent to sell the ranch. Must authorization be in writing? YES b/c underlying subject is the sale of land which is an SOF issue
ist (2)
what does NOT create interest in land
- Ks to build
- Ks to find a buyer for a seller
Executor
promise by executor or administrator to pay estate’s debts from their own funds
Goods
K for sale of goods $500 or more
Signature for Goods - what to consider
- who has signed? is it party being sued?
- if not, is it a merchant’s confirmatory memo? (merchant sends signed writing to another merchant to memorialize their oral agreement → other merchant can deny within certain time frame otherwise, writing becomes enforceable)
- If neither of the above, the writing NOT enforceable
SWAP; list (4)
Goods $500 and over that can be enforced without a signed writing
- Specially made goods
- Written confirmation by a merchant to an oral agreement - merchant’s confirmatory memo
- Admission in court
- Performance
Surety
a promise to relieve the debts of another IF offered as collateral to that person’s promise to pay.
Example
- collateral promise- give him the goods, if he does not pay, I will;*
- signed writing needed*
primary promise - give him the goods and i will pay; no signed writing needed
Key phrase for suretyship to apply
“If he doesnt pay, I will pay”
Main purpose doctrine
(as it applies to surety)
main purpose to relieve debt - writing is needed
main purpose guarantee completion of an agreement - writing is not necessary
if the writing does meet SOF requirements, then
the party being sued can raise it as a defense for lack of a sufficient writing thus rendering the K unenforceable
if a written K is modified orally and the contract as modified falls within SOF, then
the modified K must be in writing to be enforceable
Under CL, what happens if there is oral modification if a written K expressly provides that it can only be modified by a writing
oral modification will be enforceable!
Under UCC, what happens if there is a provision that says K may only be modified or rescinded by a signed writing?
if it is btwn a merchant and a nonmerchant?
the provision is respected and signed writing will be required
separate signature of nonmerchant will be required
what happens if parties try to orally modify a K that requires written modification?
will be ineffective as modification but can be considered a waiver
