Defenses Flashcards
Statute of Frauds
(MYLEGS)
- Marriage
- Term of Years
- Land Ks
- Executory
- Sale of Goods $500+
- Suretyships (promising to answer for another’s debt/cosignor)
These must be in writing, otherwise, valid defense, unless certain exceptions apply.
SOF: Surety Exception
“Main Purpose Rule”
Main purpose of the guarantor in promising to answer for the debt of another, was to benefit themselves, the K is removable from SOF and it becomes ENFORCEABLE!
Mutual Mistake
When both parties are mutually mistaken about the terms of K, if the mistake goes to the “essence of the K,” it is grounds for RECISSION.
Unilateral Mistake
When only one party is mistaken about the K terms, GENERALLY, it WILL NOT prevent K formation.
HOWEVER, if mistaken party knows or has reason to know of the other party’s mistake, they will not be permitted to take advantage of that mistake.
I.E.: A notable gap in pricing for submitted bids for construction. This is sufficient grounds for “has reason to know.”
Minor
Ks will GENERALLY be unenforceable if he is a minor.
There are certain exceptions, such as necessities or if the the minor ratifies the K through action or does not repudiate prior to turning of age (assumes it).
Minor Exception:
Necessities
Food, clothing, shelter, and medical attention are carved out from from being unenforceable because they are necessities.
Unconscionability
One of the parties has SUBSTANTIALLY superior bargaining power over the other party, and can dictate the terms of the contract to the other party, who has inferior bargaining power.
SOF: Sale of Goods $500+ Exception
“Merchant’s Confirmatory MEMO Exception”
- BOTH parties are Merchants;
- If within a reasonable time after entering an oral agreement, one sends a writting confirmation of that verbal agreement, it will bind that sending merchant immediately.
- If the recipient Merchant does not object to the contents of that writing within 10 days of receipt, THEY ARE BOUND AS WELL.
