Defenses Flashcards
What is the defense of mutual mistake
If both parties are mistaken about existing facts, the contract may be voidable by the adversely affected party if
(1) the mistake concerns a basic assumption on which the contract is made
(2) mistake has a material effect on the agreed-upon exchange (e.g., worth much less)
(3) the party seeking avoidance did not assume the risk of mistake (where one party is better positioned to know the risks than the other)
Is mistake in value a defense?
Generally: no. Both parties typically assume the risk of mistake in value.
When is unilateral mistake a defense?
Generally, when only one party is mistaken about the facts, that does not prevent contract formation.
Except: where the non mistaken party knew or had reason to know of the mistake. then it is voidable by the mistaken party. Still requires material effect and no risk of mistake assumed.
What is the effect of a mistake by an intermediary?
When there is a mistake by an intermediary in the transmission of the offer or acceptance, the message as transmitted is operative unless the other party knew or should have known of the mistake.
What are the defenses of lack of capacity?
The contracts of minors, those mentally incapable of understanding the nature and significance of the contract, and intoxicated persons are voidable. They may be disaffirmed by the incapacitated person, or affirmed once they reach majority, lucidity, or sobriety. There may be quasi-contractual recovery where necessaries were furnished during the period of incapacity.
What is a defense of ambiguity?
Ambiguity exists when a contract term is susceptible of at least 2 reasonable meanings. There is no contract unless both parties intended the same meaning unless one party was aware of the ambiguity. In that case, the binding contract exists on the terms that the ignorant party reasonably believed.
What is the doctrine of unconscionability?
Unconscionability allows courts to refuse to enforce a contract whose terms are unfair and oppressive, often as a result of a flawed bargaining process (look to contracts of adhesion, material terms buried in the boilerplate). Determined as of time of contract formation.
Examples of unconscionability:
— unconscionable if a K limits a party to a certain remedy and that remedy fails of its essential purpose (limits to repair and item cannot be repaired, e.g.)
— may be unconscionable if remedies limitation for property damage is inconspicuous
-exculpatory classes for a party’s own intentional wrongful acts (maybe for negligent acts, too, if Inconspicuous)
What are the defenses of duress and undue influence?
A K formed under duress (or undue influence) is voidable by the innocent party.
Duress constitutes an improper threat. Economic threats are usually not duress unless: (1) threat to commit wrongful act seriously threatening finances, and (2) no adequate means available to prevent threatened loss.
Undue influence elements: (1) undue susceptibility to pressure, and (2) excessive pressure by the other party (watch for caregiver relationship)
What is the statute of frauds?
Certain agreements must be evidenced in writing, signed by the party to bound, to be enforceable.
When is the statute of frauds required?
Marriage – promises in consideration of marriage (not promises to marry!)
Year — cannot be performed within a year starting from the date of agreement
Land – Ks involving interests in land, including leases and easements more than a year, mortgages, fixtures, and minerals but excluding construction of a building and broker contracts
Executor –promise by executor to pay estate debt out of own pocket
Goods – Under the UCC, sales of goods for $500 or more
Suretyship — a promise to answer for the debt or default of another
What constitutes an adequate writing for the statute of frauds?
Must reasonably identify the subject matter of the K, indicate the existence of a K, and state with reasonable certainty the essential terms
What are the exceptions to the statute of frauds?
If the party to be charged admits the existence of K in court
In goods context:
—if goods are specially made and not suitable for resale and seller has made substantial beginning or commitments
— if goods are received and have been accepted or paid for.
— between merchants, a merchant’s confirmatory memo binds a recipient if he knows of the contents and does not object in writing within 10 days
Land:
— seller has conveyed to the buyer
—. Buyer has done at least two of the following: at least part payment, possession, valuable improvements
What is the defense of misrepresentation?
A K is voidable for fraud in the inducement if they justifiably relied on the other party’s fraudulent misrepresentation in deciding to enter into K
What is the defense of illegality?
If the consideration or subject matter is illegal —> K is void unless D knows of illegality and P doesn’t, one party more culpable than the other, or it is a failure to obtain a license not required for public protection
If purpose behind K is illegal —> voidable by party unaware of purpose or aware but did not facilitate if purpose not one of serious moral turpitude
