Defenses Flashcards
When is mutual mistake as to existing facts a defense to contract formation?
If both parties have mutual mistake about a then-existing fact, contract is voidable by adversely affected party if:
(a) mistake concerns a basic assumption (e.g. Peerless)
(b) mistake has a material effect; and
(c) party seeking avoidance did not assume the risk (e.g. by being in position to better know the risks or by knowing that the assumption was doubtful)
- mistake in value not a mutual mistake because both parties assume the risk that they are wrong.
Is unilateral mistake as to existing facts a defense to contract formation?
No, unless the non-mistaken party knew or had reason to know of the mistake (voidable if so)
- most commonly found in computation errors where subcontractor’s bid was wrong or where in acreage in land was miscalculated
What happens if there is a mistake by the intermediary?
If mistake is in transfer of offer or acceptance by intermediary, the message as transmitted is operative unless other party knew or should have known of the mistake.
If there is ambiguous contract language, what is the result?
(i) Neither or both parties aware of the ambiguity: no K unless both parties intended same meaning
(ii) Only one party aware: K exists and term is what ignorant party reasonably believed it to be
- can look to subjective intent here
Does fraudulent misrepresentation (intentional) or material misrepresentation (not intentional) void the contract?
It is voidable by the other party if she justifiably relied on it.
If the consideration or subject matter of the K is illegal, is the K void?
Yes, unless:
(a) plaintiff is unaware of the illegality and defendant is aware; and
(b) the parties are not equally culpable
If only the purpose behind the contract is illegal, is the K void?
It is voidable by:
(a) party who was unaware of the illegal purpose; or
(b) aware but did not facilitate the purpose (only if the crime is of moral turpitude)
Who lacks capacity to contract?
- minors
- mental capacity
- intoxicated persons (voidable only if other person knew of the intoxication)
- any of these persons can be made affirm the contract once the impediment to contracting is eliminated
What is duress and undue influence?
Duress: Taking advantage of another by a threat.
Taking advantage of another’s economic needs not duress unless serious.
Undue influence: susceptibility by another party and extreme pressure (e.g. in a caregiver relationship)
What is covered under statute of frauds?
Marriage Year or longer (must be performed) Land Executor Goods $500 or more Surety
What are the marriage requirements under the statute of frauds?
Any promise which has marriage as consideration
What is the year-or-longer requirement under the statute of frauds?
K cannot be fully performed within a year.
Date runs from time of agreement to full performance
If lifetime is the term, it is not within SOF because person could die within a year from time of agreement
What land interests fall under the statute of fraud?
Pretty much everything (including fixtures. severable minerals, and leases/easements for more than one year), but not:
- building contracts
- K to find a buyer for seller
What is the executor requirement under the statute of frauds?
promise by executor/administrator to pay estate’s debts out of his own funds
When is a land contract removed from the statute of frauds?
Part performance (typically need 2/3) that indicate the land is sold and under new ownership:
(a) some payment;
(b) possession; or
(c) improvements
If removed from statute of frauds, can get specific performance
