defenses Flashcards
courts may refuse to enforce contracts due to (IT D IP)
- Impermissible Parties
- Defects in the bargaining process
- Impermissible terms
impermissible parties
lack of capacity
defects in the bargaining process
fraud, mistake, duress, unconscionability
impermissible terms
illegality
infancy
under the age of 18
a contract entered into by a minor may be:
voidable at the minors option
a minor may chose to:
disaffirm or ratify the contract upon reaching the age of majority
looking older
is not a defense to infancy to a seller because ag is a determinable fact
ratification
- upon turning 18 if the person maintains the contract , or takes actions affirming the contract (like making payments)
- no additional consideration is required
- must occur within a reasonable time
necessities
contracts for necessities (food, clothing, shelter) are enforceable to prevent fairness
determining necessities
depending on the socioeconomic status of the minor
depend on the minors circumstance
disaffirmance
- a minor declares they do not wish to be bound by the contract.
- this can occur at any time during minority or within a reasonable time after reaching majority
contracts are voidable on the grounds of mental incapacity if:
the person was unable to understand the NATURE AND THE CONSEQUENCE of the transaction at the time of contracting and the other party KNEW OR REASON TO KNOW
a contract may be void if
the person was unable to understand the nature and consequence of the transaction
evaluating mental capacity
medical testimony, unfair advantage by the other party, observable behavior at the time of contracting
intoxication as mental capacity
- can not understand nature/consequence
- other party knew or should have known
a mistake is
a belief not in accord with the facts existing at the time of contracting
Mutual Mistake (AMA no b)
both parties are mistaken about a material fact.
The contract is voidable if:
1. The mistake concerns a basic assumption (important aspect)
2. it materially affects the exchange
3. the adversely affected party does not bear the risk of the mistake
rescission
the undoing of a contract
unilateral mistake AMA (no b) UK
- basic assumption
- material effect
- adverse party does not bear the risk
- the mistake would result in an unconscionable outcome OR
- the other party knew or caused the mistake
the party bears the risk of the mistake if:
they consciously assumed with limited knowledge
2. agreed to the risk
3. risk allocated to the party by the court (leaving goods in the hands of someone else)
4. got insurance
5. “as it”
a misunderstanding occurs when
the parties use the same term, but each party interprets it differently.
a misunderstanding often arises from
ambiguous language
if the misunderstanding concerns a material term, there may be no enforceable contract because there is no meeting of the minds
examples of misunderstanding
the peerless case
- each party referred to a different ship named peerless
reformation
the court modifies the writing to align it with the agreement actually reached
scrivener’s error
a clerical or typographical error resulting in a written agreement that does not accurately express the parties’ intended agreement
scrivener’s error remedy
reformation: the court modifies the writing to align it with the agreement actually reached
mutual mistake in written expression
both parties are mistaken about how their agreement has been reduced to writing
no reformation if..
the court may not change the writing in a contract if:
1. a party has relied on the mistake writing in good faith
2. the mistake was caused by fraud, bad faith, or intentional misrepresentation
in a bid for a public works contract recission was allowed if MUG N NP
- the mistake was material
- the enforcement would be unconscionable (undue hardship)
- the mistake was in good faith
- the plaintiff would not be prejudice by the loss of the deal
- prompt notice of the error was given
as is
goes to the condition (buyer is agreeing to it)
- assuming the risk
- no warranty as there usually would be
- purchaser should examine before contracting
final sale
does not go to condition
- is being sold final sale for other reasons such as season
- defective goods may still be returned because it goes against the warranty
a contract is void
a legal nullity
-there is no legal force
categories of defenses (A, B i. ii. iii)
A. No Contract formed
- Misunderstanding
B. Contracts formed but Unenforceable
- i. incapacity ii. defects in bargaining process (mistake) iii. impermissible terms
misrepresentation (A F/M R J)
- there must be an assertion that is not in accord with the facts
- the assertion must be either fraudulent or material
- the assertion must induce the recipient to make the contract (reliance)
- the reliance must be justified
restitution
a remedy that aims to restore the injured party to the position they were in before the contract
failure to disclose
- failure to disclose what you know may be an misrepresentation of the fact, that the fact does not exist
- need not be a fiduciary (legal) relationship, can be family
— one whom trust and confidence is placed) - if a party makes an assertion and later learns something new, they must assert that
fraudulent misrepresentation
did the maker..
know or believe?
not have confidence of truth?
knew she had no basis to say?
if answers are no, move to material
misrepresentation
- there must be an assertion
- the assertion must be fraud or material
- the assertion must unduce the recipient to make the contract (reliance)
- the reliance must be justified
when are opinions treated as facts 4 FATE
opinions are not typically actionable at law
- however, opinions on fiduciary
- superior knowledge (special skill, judgment, expert)
- there has been some trick used
- parties do not in general deal at “arms length”
when is there a duty to disclose SHAL FF 6
- fiduciary
- half-truths/misleading statements
- active concealment
- latent defects in transactions
- correcting prior statements
- statutory or legal disclosure duties
undue influence
- the stronger party uses 2. unfair persuasion on the weaker party 3. to gain that party’s assent and 4. unfair benefit
- Courts consider the relationship of the parties.
- Was there an imbalance between the parties?
- Could the weker party get independent advice?
-Is there high pressure? - How susceptible is the weaker party? Was there reflection time?
undue influence
unconscionable
an unfair or oppressive contract
procedural unconscionable
looks to how the contract was formed
Unequal bargaining power
Deceptive practices
Fine print or complex language
High-pressure sales tactics
procedural unconscionable
substantive unconscionable
focuses on the actual terms of the contract
- Unreasonably harsh on one-sided
- Grossly unfair
- Against public policy
- Is there a large disparity between the prevailing market price and the contract price?
substantive unconscionable
duress
Wrongful act or threat (threats include economic harm)
That compels or unfairly coerces the other party to enter into a contract against their will
That they would not have entered into otherwise
Was there any reasonable alternative
duress
