Defenses Flashcards
Defense
A legal argument claiming that the agreement is not enforceable as a contract
- Missing formation elements
Statute of Frauds
A contract within the statue is not enforceable unless it is evidenced by a writing signed by the party to be bound
M - consideration of K is marriage
Y - K performance takes longer than one year of its making by its terms
L - land - real estate, lease, easement
E - promise by an executor/administrator to pay the estate’s debts out of their own funds
G - goods of $500 or more
S - suretyship in which parties contract to answer for the debt of another
Land Exception
Full and part performance (sometimes) takes land out of SOF if K unequivocally indicates that parties have contracted for the sale of land
- Payment
- Possession
- Valuable Improvements of land
One is not enough => YOU NEED AT LEAST TWO
Exceptions to SOF
- Specialty manufactured goods - goods not suitable for sale to other buyers
- oral agreement or written confirmation
- sufficient to bind sender
- no written objection within 10 days - Admissions - admit to having a K in court proceeding
- Performance
Mistake
A factual error regarding a fundamental matter that has a material effect on the agreed exchange
Mutual Mistake
DEFENSE
Both parties mistakenly about the same material fact
If mutual mistake, but party so feared should have been alerted to existence of the mistake, then the offeree can use as a defense
Unilateral Mistake
NOT A DEFENSE
Only one party is mistaken about a material fact
Not about the amount, it’s about the relation (%)
Assumption of Risk
Party who assumed the risk of mistake cannot use the mistake as a defense
Party assumes the risk of mistake when:
1. parties know they don’t know a fact
2. party is in a superior position to know a fact
Misunderstanding
If neither party or both parties were aware of ambiguity, then there is no contract unless parties meant the same thing
If only one party knew of ambiguity, then valid contract based on understanding of party unaware of ambiguity
Misrepresentation
Innocent untrue assertion of material fact that induces the other party to justifiably rely on it
CANNOT be:
- opinion
- subjective quality
- about the future
Fraud: intentional misrepresentation
- damages recoverable in addition to recession
Minor Capacity
A K made by someone under the age of majority is voidable by the minor
A minor can disaffirm within a reasonable time after reaching 18 - if not within a reasonable time, then the minor is bound (no longer voidable)
- have to pay for value of items, not contract price
Exception: K for necessaries/necessities - things minors need to survive, food, clothing, shelter, and medical care
Lack of Mental Capacity
K voidable if a person’s mental capacity is so deficient that they cannot understand the nature or significance of the agreement
- can void when lucid
- guardian can void
Voluntary Intoxication
K voidable if other party had reason to know of the intoxication
Involuntary Intoxication
K voidable if the person could not understand the nature or significance of the agreement -> treat like mental incapacity
- voidable whether or not the other party knows
Illegality
Subject matter or consideration is illegal
Ex: gambling or K for sale of marijuana when it’s prohibited
If a K is unlawful because one of the parties doesn’t have a required license and the license was only required as a revenue-raising measure, the court will enforce the contract
Physical Duress
Threatening to do physical harm to the contracting party
Physical duress will render a contract void - neither party can enforce it
Economic Duress
Taking advantage of other party’s economic needs (in most cases = NOT a defense)
A defense when:
1. Party threatens a wrongful or unlawful act that seriously threatens the other party’s property or finances
2. Other party has no reasonable alternative means to prevent the threatened loss other than to agree to K
Undue Influence
When a person is susceptible to pressure by someone such as a confidante or caregiver
Unconscionability
Allows court to refuse to enforce unfair contracts or unfair terms within a K
Circumstances at the time K was formed
Unfair Surprise
When a party slips something unexpected into K
Ex: confessing judgment (inconspicuous risk shifter)
Unequal Bargaining Power
When one party holds all the cards and forces other party’s into bad deal - take it or leave it
Ex: waives warranty rights
Contracts of adhesion are unconscionable
Contracts are not unconscionable based upon price alone
