Defenses Flashcards
Lack of Capacity Categories
- Minors
- Intoxicated Persons
- Mentally incompetent persons
Lack of capacity General rule
an incapacitated defendant has the right to disaffirm the contract
(she does not have to disaffirm, but she can if she wants to avoid the k)
Implied affirmation after gaining capacity
- If someone gains capacity, they impliedly affirm the k if they still reap the benefits.
- e.g. minor turns 18 and waits 3 months before rescinding k.
Exception to incapacity defense
- An incapacitated party is liable for necessaries (i.e. food, shelter, clothing, or medical care), but only for their reasonable value, not the k price.
- Have to pay restitution, not k price. Reasonable value
Ambiguity/Misunderstanding
- If neither party has any idea about the ambiguity or misunderstanding, k not enforceable.
- Parties go home without a transaction. If one party knows about it, hold it against them.
Mutual mistake about a material fact
- If both are mistaken about the material fact, not enforceable.
- BUT, if both are only mistaken about the value of the item, still enforceable.
Unilateral mistake
- Courts reluctant to let mistake off the hook, because the other party is relying on it.
- BUT, if party knew or should have known it was a mistake, not enforceable.
- Can’t take advantage of someone’s obvious mistake.
Effect of Unconscionability on the rest of the K
Empowers a ct to enforce all or part of an agreement.
Unconscionability tests
- party must be subject to unfair surprise(e.g. all your stuff repossessed)
- k must have oppressive terms (e.g. acceleration clause that allows company to repossess despite paying 90% of the balance).
When Unconscionability is tested by the ct
- Unconscionability is tested by the court at the time the agreement was made.
- MBE usually tests over this.
Unconscionability of long term k that now looks one-sided/unprofitable to one party
This is not unconscionable
VA unconscionability
applies only to formation of k, whereas good faith obligation applies only to performance or enforcement of the k.
economic duress
- bad guy makes an improper threat, e.g. threat to breach the k.
- vulnerable guy- no reasonable alternative, e.g. cannot mitigate damages
Most commonly tested topic
Staute of Frauds
When is a writing required under the SoF?
MY LEGS
- marraige
- year
- land
- executor
- goods 500+
- suretyship
Marriage & SoF
- Kx in consideration of marriage are subject to SoF, NOT a promise to marry!
- e.g. I promise to marry you—not within SoF, but cts likely won’t enforce it.
- e.g. I promise not to go after the house if we get married—within SoF
SoF Year Requirement
- Kx which cannot possibly be completed in 1 year or less.
- Look at the dates!
- e.g. job k that binds party for more than 1 year, or k for concert more than a year from now.
- It does not matter if performance actually takes more than a year.
- As long as full performance within a year was theoretically possible, no writing is required by the SoF. Incl. lifetime kx.
- But no date needs to be specified
Land Sale/Transfer of an interest in real prop and SoF
- Includes transfers of interest of land for more than one year
- Authorizing an agent to enter in land is within SoF only if original underlying k is within SoF.
Executors & SoF
Promises by executor of an estate to pay the estate’s debts from some other source of funds/out of his own pockets within the SoF.
Likely not to be tested
Suretyship and SoF
- A promise to answer for the debt of another person,
- e.g. If he doesn’t pay you, I will.
- If surety is an answer on the exam, it’s likely the wrong answer.
- But watch out, not the same as a mere promise to pay money.
- Promises to pay $$ not necessarily within the SoF. e.g. I’ll pay you to do that for him.
VA SoF
Contract to devise property by will
For an oral agreement to make such a devise enforceable despite SoF, the following requirements must be met:
- agreement must be certain and definite in its terms;
- acts done in part performance must have been done pursuant to the agreement
- k must have been so far executed that a refusal to enforce it would operate a fraud upon the party rendering services and, if found unenforceable, party rendering services may seek restitution
K modification and interaction with SoF
The modification must be in writing only if the k as modified (not the original k) is within the SoF
Oral modification clauses under the CL
- unenforceable.
- You can generally modify a k orally under common law even if you have agreed not to!
UCC oral modification clauses
clauses that prohibit oral modification are enforceable unless waived
Adequate writing- UCC
- must contain a quantity and be signed by the party to be charged with breach
- Doesn’t matter if party suing signed it and put quantity if party to be charged did not.
Adequate writing- CL
- must have all material terms and signed by party to be charged with breach
- Material terms=who and what who it’s between and what it’s about
Adequate writing in VA
writing need not conclusively establish existence of a k so long as it provides a basis for believing that the offered ev rests on a real transaction
SoF exceptions- land sale/real prop
- Leases of one year or less;
- Part performance of real estate- need 2 out of 3: some payment possession improvements
Performance and SoF
Full performance of service k satisfies SoF, but part performance does not
Types of UCC SoF exceptions
- Goods accepted or paid for by buyer;
- Custom-made goods;
- Judicial admission;
- Merchants’ confirmatory memo;
- Suretyship
- main purpose
UCC SoF Exception
Goods accepted or paid for by buyer
- SoF defense for any remaining goods not accepted/paid still valid.
- But, cannot apportion one high value item, esp. if all buyer paid was a deposit.
- So exception made if buyer paid a deposit on a high value item.
UCC SoF Exception
Custom-made goods
- need to show a substantial beginning to satisfy exception
- i.e. that the goods are custom made and not suitable for others.
UCC SoF Exception-
Judicial admission
if a party admits under oath that she had a deal, then she will lose her SoF defense.
UCC SoF Exception
Merchants’ Confirmatory memo
One party can use its own signed writing to satisfy the SoF against the other party if:
- Both parties are merchants
- Writing claims agreement and has quantity;
- and There’s no written obj. within 10 days.
BUT, objection must be that a k existed. Objection to the terms themselves actually fills SoF requirement, but smallest quantity agreed upon is all that’s enforceable.
UCC SoF Exception
Suretyship
the main purpose exception. If main purpose in surety is to benefit the payor, not within SoF/writing not required.
