Defenses

Question 1

Defenses Based on Lack of Capacity

Legal Incapacity to Contract

Answer 1

1. Contracts of Infants (Minors)
2. Mental Incapacity
3. Intoxicated Persons

Question 2

Lack of Capacity

Contracts of Infants (Minors) - Disaffirmance

Answer 2

a Minor may choose to disaffirm a contract any time before (or shortly after) reaching the age of majority. The contract msut be disaffirmed as a whole; it can’t be affirmed in part and disaffirmed in part.

If a minor chooses to disaffirm, they must return anything that they received under the contract that still remains at the time of disaffirmance.

However, there is no obligation to reutnr any part of the consideration that has been squandered, wasted, or negligently destroyed.

Question 3

Contracts of Infants (Minors) -
Necessaries

Answer 3

NEcessaries are items necessary for subsistence, health, or education (including food, shelter, clothing, and medical care).

A minor may disaffirm a contract for necessaries but will be liable in restitution for the value of benefits received (fair market value).

Question 4

Contracts of Infants (Minors) -
Affirmance upon Attaining Majority

Answer 4

A minor may affirm upon reaching majority. A minor affirms either expressly or by conduct, such as by failing to disaffirm the contract within a reasonable time after reaching majority.

Question 5

Duress and Undue Influence

Answer 5

Contracts induced by duress or undue influence are voidable and may be rescinded as long a they are not affirmed.

Duress
1. Assent procurred by improper threat
2. economic duress

Undue Influence
* often arises when the dominant party is in a confidential or caregiver relationship with the influenced party.

Question 6

Absence of Mutual Assent

Misunderstanding - Ambiguous Contract

Answer 6

If the contract includes a term with at least two possible meanings, the result depends on teh parties’ awareness of the ambiguity:

Neither party aware - no contract

Both parties aware - no contract unless both parties inteded same meaning

One party aware - contract based on ignorant party understanding.

Question 7

Absence of Mutual Assent

Mutual Mistake as to Existing Facts

Answer 7

if both parties entering into a contract are mistaken about existing facts, teh contract may be voidable by the adversely affected party if:

1. the mistake concerns a basic assumption on which the contract is made
2. the mistake has a material effect on teh agreed-upon exchange; and
3. teh party seeking avoidance did not assume the risk of the mistake.

This is not a defense if the party bore the risk. Mistake in value is generally nto a defense

Question 8

Absence of Mutual Assent

Unilateral Mistake

Answer 8

If only one of the parties is mistaken about facts relating to the agreement, the mistake will not prevent formation of a contract. But, if the nonmistaken party knew or had reason to know of the mistake made by the other party, the contract is voidable by the mistaken party.

As with mutual mistake, the mistake must have amaterial effect on the agreed-upon exchange, and the mistaken party must not have borne th erisk of the mistake.

Question 9

Absence of Mutual Assent

Misrepresentation
Fraud in the Inducement

Answer 9

If a party induces another to enter into a contract by using fraudulent misrepresentation, the contract is voidable by the innocent party if they justifiably relied on teh fraudulent misrepresentation. This is fraud in the inducement

Question 10

Absence of Mutual Assent

Material Misrepresentation

Answer 10

Whether or not a misrepresentation is fraudulent, the contract is voidable by the innocent party if the innocent party justifiably relied on the misrepresentation and the misrepresentaion was material.

It is material if:
1. it would induce a reasonable person to agree, or
2. the maker knows that for some special reason it is likely to induce the particular person to agree, even if a reasonable person would not.

Question 11

Absence of Mutual Assent

Misrepresentaiton - Justified Reliance

Answer 11

A party is not entitled to relief if the reliance was unreasonable under the circumstances. However, just becuase a misrepresentation could have been revealed by the exercise of reasonable care does not mean that reliance was unjustified.

Failure to read a contract or use care in reading it does not necessarily preclude a party from avoiding a contract for misrepresentation.

Question 12

Absence of Mutual Assent

Misrepresentation - Innocent Party

Answer 12

Innocent party may rescind the agreement and recover damages.

the innocent party does nto have to wait until they’re sued on teh contract but may take affirmantive action in equity to rescind the agreement. Additionally, they may pursue all remedies avialble for breach of contract.

Question 12

Absence of Consideration

Answer 12

If the promises exchanged. atthe formation stage lack the elements of bargain or legal detriment, no contract exists. In this situation, one of the promises is always illusory.

Question 13

Public Policy Defenses

Illegality

Answer 13

If the consideration or subject matter of ac ontract is illegal, the contract is void.

Exceptions:
1. P is unaware of th eillegality while the D knows of it.
2. the parties are nto in pari delicto, or
3. the illegality is the failure to obtain a license when the license is for revenue-raising purposes rather than for protection of the public.

Question 14

Unconscionability

Answer 14

CL and Art 2 Defense
* Allows a court to modify or refuse to enforce an entire contract or a provision in it to avoid “unfair” terms, usually due to some unfairness in teh bargaining process.
* Unfair price alone is not a ground for unconscionability
* Unconscionability is determined at the time the contract was formed

Question 15

Effect if court finds Unconscionable Clause

Answer 15

If a court finds as a matter of law that a contract or any clause of the contract was unconscionable when made, the court may:
1. refuse to enforce the contract
2. enforce the remainder fo the contract without the unconscionable clause; or
3. limit teh applicaiton of any clause so as to avoid an unconscionable result

Question 16

Statute of Frauds

Answer 16

MY LEGS
* Marriage
* Year
* Land Sales
* Executors
* Goods for $500+
* Sureties

Question 17

SOF

Promises in Consideration of Marriage

Answer 17

A promise in consideration of marriage must be evidenced by a writing. This applies to promises that induce marriage by offering something of value (if you marry, i will give you ‘x’)

Question 18

SOF

Performance Not within one year from date of contract

Answer 18

Contracts that cannot be completed within a year must be in writing. the contract terms must be over a year.

Question 19

SOF

Interests in Land

Answer 19

A promise creating an interest in land must be evidenced by a writing. This includes:
* Agreements for the sale of real property
* leases for more than a year
* easements of more than one year
* mortgages
* fixtures
* minerals (or the like) or structures if they are to be severed byt eh buyer

Question 20

SOF

Executors

Answer 20

A promise by an executor or administrator to pay the estate’s debts out of their own funds must be evidenced by a writing.

Question 21

SOF

Goods

Answer 21

Goods priced at $500 or more must be evidenced by a signed writing to be enforceable.

Question 22

SOF

Surtyship Promises

Answer 22

A promise to answer for the debt or default of antoher must be evidenced by a writing.

Question 23

Removing Contract from SOF

Contract Modifications

Answer 23

A written contract can be modified orally, but the modification must be in writing if the contract as modified falls within teh SOF.

CL - even if there is an express provision in teh contract saying that it can only be modified by writing, parties can orally modify the contract.

UCC - If a contract explicitly provides that it may not be modified or rescinded except by a signed writing, that provision is given effect. If the contract is between merchant and nonmerchant, this provision requires teh nonmerchant’s separate signature.

Question 24

Removing Contract from SOF

Contract Modification - Waiver

Answer 24

If the parties attempt to orally modify a contract that requires written modification, it is technically ineffective as a modification but can operate as a waiver.

A waiver will be found whenever the other party has changed position in reliance on teh oral modification. However, a party who makes a waiver affectuing an executory protion of the contract may retract the waiver if they notify the other party that strict performance of the waived terms is required. The wiaver may nto be retracted if the other party detrimentally relied on it.

Question 25

Removing Contract from SOF

Performance - Land Sale Contracts

Answer 25

IF a seller conveys property to the buyer, the seller can enforce the buyer’s oral promise to pay. Likewise, the buyer may seek to specifically enforce an oral land sale contract under the doctrine of part performance.

Part performance that unequivocally indicates taht hte parties have contracted for the sale of land takes the contract out of the SOF. Most jx’s require at least two of teh following: payment (in whole or in party), possession, and/or valuable improvements.

Question 26

Removing Contract from SOF

Service Contracts

Answer 26

Full performance required

An oral contract that cannot be compelted within one year but has been fully performed by one party is enforceable.

Question 27

Removing Contracts from SOF

Sale of Goods Contracts

Answer 27

Part performance takes a sale of goods contract out of hte STatute of Frauds when:
1. the goods have been specially manufactured, or
2. the goods have been either paid for or accepted.

Question 28

Removing Contract from SOF

When Writing not Required

Answer 28

There are three situations in which contracts are neforeceable without the writing:
1. Specially Manufactured Goods
2. Admissions in Pleadings or Court
3. Merchants - Confirmatory Memo Rule

Question 29

When Writing Not Requied SOF

Specially Manufactured Goods

Answer 29

If goods are to be specially manufactured for the buyer and are nto suitable for sale to others by the seller in the oridinary course of their business, the contract is enforceable if the seller has, under circumstances that reasonably indiciate that the goods are for the buyer, made a substantial beginning in their manufacture or commitments for their purchase before notice of repudiation is received.

Question 30

Admission in Pleadings or Court

Answer 30

If the party against whom enforcement is sought admits in pleadings, testimony, or otherwise in court that the contract for sale was made, the contract is enforceable without a writing (but in such a case the contract is not enforced beyond th equantity of goods admitted).

Question 31

Merchants - Confirmatory Memo Rule

Answer 31

Merchant to Merchant Rule
In k’s between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under teh SOFs to bind the sender, it will also bind the recipient if:
1. they have reason to know of the confirmation’s contents; and
2. they do not object to it in writing within 10 days

Question 32

Equitable and Promissory Estoppel

Answer 32

EStoppel may be applied if it would be inequitable to allow the Statue to defeat a meritorious claim.

Examples include situations where the D falsely and intentionally tells the plaintff that the contract is not within the SOF or induces the P to change position in reliance on an oral agreement.

Question 33

No Writing Required

Judicial Admission

Answer 33

If a party admits in pleadings or testimony taht there is an agreement, it’s treated the same as though the party signed a writing.

Question 34

Writing Requirement

Answer 34

SOF doesn’t require a formal written contract. Among other things, the writing can be a receipt, a letter, a check with details in teh memo line, or a writtenoffer that was accepted orally.

SOF requires only one or more writings that:
1. reasonably identify the subject matter of hte contract,
2. indicate that a contract has been made between teh parties, and
3. state with reaosnble certainty the essential terms.

Question 35

Writing Requirement

Essential Material Terms

Answer 35

Writing Requirement Art 2 (UCC)
* Quantity term
* D’s Signature

CL Writing Requirements
* All Material Terms
* D’s Signature

Writings evidencing land sale contracts must contain a description of the land and the price

Writings for employment contracts must state the length of employment

Writings evidencing sales of goods contracts (UCC) must indiciate that a contract has been made and specifiy the quantity term

Question 36

The Writing

Signature Requirement

Answer 36

The signature requirement is liberally construed by most courts.

A signature can be any mark of symbol made with the intention to authenticate the writing as that of the signer.

It can be printed ro typed. Under UCC, a party’s intials or letterhead may also be sufficient. An electronic signature is also sufficient.

Question 37

Remedies if Contract is within Statute

Answer 37

If a contract violates teh SOF, in almost all cases a party can sue for the reasonable value of the services or part performance rendered, or the restitutionof any other benefit that has been conferred.