Defenses Flashcards
Statute of Frauds
applies to sales of land, services K > 1yr, sale of goods $500 or more, and requires a signed writing by the party to be charged to satisfy the SOF.
SOF Exception UCC 2-201
(1) Between Merchants, if within a reasonable time a writing in confirmation of the K and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the SOF against such party unless written notice of objection is given within 10 days after it is received. (2) the goods are specially manufactured for the buyer and not able to be sold by the seller in his normal course of business and before repudiation was received, the seller has reasonably began manufacturing or procuring the goods; (3) if the party admits in a pleading or otherwise that a K was made; or (4) goods that have been paid for and payment accepted by the seller.
Fraud/Misrepresentation
where a party is induced to enter into a transaction with another party by means of the latter’s fraud or material misrepresentation, the transaction is voidable.
Non-Disclosure
Generally a person does not have a duty to disclose except: 1) when he knows disclosure of a fact is necessary to prevent some previous assertion from being a misrepresentation; 2) where disclosure of a fact would correct a mistake of the other party as to a basic assumption on which the K was made and if non-disclosure of that fact amounts to a failure to act in good faith and fair dealing; 3) where the other person is entitled to know the fact based on a relation of trust or confidence between them.
Capacity
General rule is that a K of a minor, other than for necessaries, is void or voidable at his discretion. However, the K may be ratified expressly or impliedly through inaction after a reasonable time of reaching majority.
Duress
A K is voidable on grounds of duress when the party making the claim was forced to agree to it by means of 1) a wrongful threat, 2) precluding the exercise of his free will (reasonable choice). Physical/Economic. Economic= wrongful threat to breach the K and other party has no meaningful choice.
Undue Influence
Involves 1) excessive pressure to persuade, 2) one vulnerable to such presumer occur at unusual place, time or multiple parties trying to persuade one party.
Illegality or Public Policy
a promise or other terms of an agreement are unenforceable grounds of public policy if the legislation provides it is unenforceable or the interest of its enforcement is clearly outweighed in the circumstances by public policy against the enforcement of such terms. (Exculpatory Ks, Covenants not to compete)
Unconscionability UCC 2-302
if a court finds a K or any clause to be unconscionable, it may refuse to enforce it or may enforce the rest of the K without the clause or it may limit the application of any unconscionable clause to avoid an unconscionable result Defined as 1) the absence of meaningful choice by one of the parties and 2) a contract provision which unreasonable favors one party. It must be both procedurally unconscionable “unfair surprise” and substantively unconscionable “oppressive terms.”
Mutual Mistake §152
A mistake by both parties at the time the K was made, on a basic assumption which the K was made and has a material affect on the agreed performances, the K is voidable by the adversely affected party unless he bears the risk of the mistake.
Unilateral Mistake §153
Same rule as Mutual Mistake plus 1) the effect of the mistake would render the K unconscionable; 2) the other party had reason to know of the mistake or his fault caused the mistake
Risk of Mistake §154
a party bears the risk of mistake if 1) the risk is allocated to him; 2) he is aware at the time the K is made that he has limited knowledge with respect to the facts but treats his knowledge as sufficient; 3) the risk is allocated to him by the court because it is reasonable to do so.
