Defenses

Question 1

What is the CL statute of frauds?

Answer 1

These contracts must be executed in writing in order to be enforceable:

(a) executor-administrator
(b) suretyship
(c) marriage
(d) interest in land
(e) where performance extends longer than 1 year
(f) for goods priced at >$500.

Question 2

What is the UCC statute of frauds?

Answer 2

For goods priced at >$500 unless there is some
1. writing sufficient to indicate that a contract for sale has been made, and,
2. signed by the offending party/authorized agent.

Not enforceable beyond the quantity of goods shown in writing.

Question 3

Can a contract with a minority be valid?

Answer 3

Contracts executed with minors will always be voidable by the minor UNLESS for necessaries. The minor can CHOOSE to enforce.

The adult’s only remedy is replevin (request return of benefit/property) but services aren’t easily quantifiable.

Question 4

What remedies are available when one of the contract parties is (a) a minor, or (b) mentally ill?

Answer 4

A contract for a minor/mentally ill person cannot be rescinded or avoided without restoring consideration or allowing recovery of compensation for all of the benefit conferred upon the party seeking to avoid the contract.

Question 5

What is the effect of marriage on the voidability of a contract with a minor?

Answer 5

In some states marriage begets capacity.

Question 6

Can a contract with a mentally ill person be valid?

Answer 6

Contracts with mentally incapacitated persons are voidable at their election. If the other party can be made whole, rescission will be granted, once incompetence has been demonstrated.

Question 7

What is the burden of proof when alleging mental incapacity?

Answer 7

Burden of proving incapacity is on the alleging party then the burden shifts to the party requesting enforcement, to prove lack of knowledge and fairness.

Question 8

What is the two standards for establishing mental incapacity?

Answer 8

1. A party is mentally incapacitated when their incapacity is such that they have no reasonable perception or understanding of the nature and terms of their contract.

OR

2. If party is deprived of the capacity governing his own conduct in accordance with reason.

Requires expert testimony.

Question 9

What does it mean to be mentally incapacitated?

Answer 9

To be lacking the ability to appreciate the effect of what they are doing to understand the nature and consequences thereof.

Question 10

Name two exceptions to the parol evidence rule?

Answer 10

1. Misrepresentation
2. Fraud

Question 11

What is misrepresentation?

Answer 11

Misrepresentations must be about facts (not opinions). Statements made by a party with superior knowledge must be regarded as statements of fact.

Question 12

What two remedies are available when claiming misrepresentation?

Answer 12

1. Rescission
2. Monetary damages

Question 13

Under which 4 circumstances does a party have a duty to disclose?

Answer 13

(a) The fact is necessary to prevent a previously stated assumption from misrepresentation, fraudulent, or material breach
(b) where it would correct other party’s mistake or would be noncompliant with Good Faith & Fair Dealing
(c) where the fact is necessary to prevent a contract term from being misrep, fraudulent, or material
(d) where the fact would impact a fiduciary relationship

Question 14

Does a contracting party generally have a duty to disclose?

Answer 14

No.

Question 15

What are the elements of misrepresentation?

Answer 15

(1) A false statement (2) about a fact (3) upon which P (4) justifiably (5) relied , where D has a duty to disclose.

Question 16

What types of misrepresentation are there?

Answer 16

A. Affirmative Misrepresentation
1. Fraud (intentional deceit)
2. Negligent Misrepresentation
3. Innocent Misrepresentation
B. Nondisclosure / Concealment

Question 17

What 2 types of misrepresentation must be material to be asserted?

Answer 17

1. Negligent Misrepresentation
2. Innocent Misrepresentation

Question 18

How can you distinguish between misrepresentation and fraud?

Answer 18

A party misrepresenting information has neglected to disclose information whereas a party liable for fraud is actively concealing information.

Question 19

When is a party liable for fraud?

Answer 19

When they make promises that they have no intent to fulfill.

Question 20

Can you contract out of either misrepresentation or fraud?

Answer 20

Innocent Misrepresentation - Yes
Fraud - No

Question 21

What is duress?

Answer 21

If assent is based on (a) threat that (b) leaves them no reasonable alternative + (c) unlawful = duress

Question 22

What is the consequence of a finding of duress?

Answer 22

Contract becomes voidable.

Question 23

What is always deemed to be duress?

Answer 23

Threat of criminal prosecution.

Question 24

What are 3 types of duress?

Answer 24

1. Physical compulsion
2. Undue influence
3. Duress by threat

Question 25

What factors should be considered in an action for duress?

Answer 25

Injured party’s:
1. Age
2. Sex
3. State of health
4. Mental characteristics

Question 26

What is undue influence?

Answer 26

(1) Undue influence is (a) unfair persuasion of a party (b) who is:
(i) under the domination of the person exercising the persuasion, or
(ii) who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare.

OR

(2) When a party’s manifestation of assent is induced by undue influence by the other party.

Focus = voluntariness of victim’s actions.

Question 27

What is the effect of an undue influence holding?

Answer 27

The contract is voidable by the victim.

Question 28

When considering an undue influence claim, what factors are reviewed?

Answer 28

1. Discussion of the transaction at an unusual or inappropriate time,
2. Consummation of the transaction in an unusual place,
3. Insistent demand that business be finished at once,
4. Extreme emphasis on untoward consequences of delay,
5. Use of multiple persuaders by the Dominant side against a single servient party,
6. Absence of third party advisers to servient party,
7. Statements that there is no time to consult financial/legal advisers.

Question 29

What is unconscionability at CL?

Answer 29

(a) gross inequality of bargaining party,
(b) manner in which K was entered,
(c) whether each party had opp. to understand K
(d) whether terms were hidden.

Question 30

What 2 things combined comprise a qualitative test of unconscionability at CL?

Answer 30

Reasonableness and fairness.

Question 31

What might a court do upon finding unconscionability?

Answer 31

If a court finds a contract or contract term to be unconscionable at the time it was made, it may:
(1) refuse to enforce it
(2) refuse to enforce the clause,
(3) limit the unconscionable result.

Court will NOT disturb the contractual allocation of risk.

Question 32

Name 5 defenses to contract condition enforcement.

Answer 32

1. Statute of Frauds
2. Capacity
3. Fraud / Misrepresentation
4. Duress / Undue Influence
5. Unconscionability