Defenses Flashcards
mutual mistake
contract may be voidable if
- mistake concerns a basic assumption on which the k is made
- the mistake has a material effect on the agreed upon exchange
Assumption of risk
not a defense if party assumed risk that assumption was mistaken. this occurs where one party it in a better position to know risks than other parters
Value
generally mistake in value not a defense both assume risk as to value is wrong
Unilateral mistake
not a defense however if the nonmistaken party knew or had reason to know of the mistake made by the other party, the k is voidable by the mistaken party. eg. subcontrators bid.
Mistake by intermediary
mistake in transmission of offer or acceptance the message as transmitted is operative unless the other party knew or should have known mistake
Misunderstanding of ammbiguous k language
One party aware - binding k based on what the ignorant party reasonably believed to be the meaning of ambiguous words.
Misrepresentation
k is voidable if one party induces another to enter into a k by using fraudulent misrep. K is voidable by innocent p if she justifiably relied on the fraudulent statement
Material misrepresentation
justifiably rely and material. material if
1) induce a reasonable person to agree
2) the maker knows that for some special reason it is likely to induce the person to agree, even if reasonable person would not
Failure to read a k
does nor preclude a misrepresentation k
rescind
innocent party may take affirmative action to rescind agreement for misrepresentation
Absent of consideration
promise was illusory
public policy defense illegality
k is void if subject matter is illegal except
- p is unaware of illegal
- one party is not as culpable as the other
- failure to obtain a license for revenue raising purposes
What if purpose is illegal?
k is voidable by a party who was unaware of the purpose or aware but did not facilitate the purpose and the purpose does not involve serious moral turpitude.
Legal incapacity to contract
infants - however binding when infant becomes an adult unless they disaffirm the k in whole before 18 or right after 18 and must return any benefit she received.
Mental incapacity
one whose mental incapacity is so deficient that he is incapable of understanding the nature and significance of a k may disaffirm when lucid or by a later appointed rep. voidable
Intoxicated person
one who is intoxicated that he does not understand the nature and significance of his promise may be held to have made a voidable promise if the other party had reason to know of his intoxication. quasi k for necessaries.
Duress and undue influence
withholding something someone needs will constitute economic duress if
- the party threatens to commit a wrongful act that would seriously threaten the other contracting party’s property or finances; and
- there are no adequate means available to prevent the threatened loss.
Elements of undue influence
1 undue susceptibility to pressure by one party and
2 excessive pressure by the other party
occurs when dominant party is a confidential or caregiver relationship with the influenced party.
Statute of Frauds
certain agreements by statute must be evidenced by a writing signed by the party sought to be bound.
SOF writing requirement
does not require a formal k. it requires one or more writings that: (i) reasonably identify the subject matter of the k, ii) indicate that a k has been made and iii) state with reasonable certainty the essential terms.
Electronic record
satisfies writing req.
essential terms
identity of parties, description of the subject matter, and the terms necessary to make the contract definite.
Writings in land sale ks
must contain description of the land and price
employment ks
length of employment
UCC
some signed writing indicating a k has been made and specifying the quantity term.
Signature requirement
any mark or symbol with intention to authenticate writings. Under UCC, a party’s initials or letterhead may also be sufficient. Signed only by the party to be charged. see exception with merchants confirmatory memo
exception merchant’s confirmatory memo
In k’s between merchants, if one party within a reasonable time after an oral agreement has been made sends to the other party a written confirmation of the understanding that is sufficient under the SOF to bind the sender, it will also bind the recipient if i) he has reason to know of the confirmation’s contents and ii) he does not object to it in writing within 10 days.
Agreements covered under SOF
MY LEGS Marriage More than one Year Land executor Goods of more than 500 Suretyship
Executor or Administrator Promises
A promise by an executor or administrator to pay the estate’s debts out of his own funds must be evidenced by a writing.
Suretyship promises (promise to pay a debt of another)
A promise to answer for the debt or default of another must be evidenced by a writing.
Promises in consideration of marraige
this applies to promises that induce marriage by offering something of value other than a return promise to marry eg. pre-nups.
Interest in land
not only agreements for real property but also
- leases for more than one year
- easements of more than one year
- mortgages and most other security liens
- Fixtures
- Minerals or structures if they are to be severed by the buyer.
Performance not within one year from date of k
a promise by its terms cannot be performed within one year is subject to the SOF. date runs from the date of the agreement and not from the date of performance.
employ until i die and work until I die
not within SOF person can die at anytime
Goods
a writing is sufficient even if it omits or incorrectly states a term but the k is not enforceable beyond the quantity of goods shown in the writing.
K in goods is enforceable without writing in 4 scenarios
1 specially manufactured goods - made a substantial beginning of performance or commitments for goods not in ordinary course.
2 admissions in pleadings or court
3 payment or delivery of goods.
4. Merchants confirmatory memo - HAVE TO BE BOTH MERCHANTS
Noncomplieance with Statute
k is unenforceable at the option of the party to be charged if statute is not raised as a defense, it is waived.
Land sale ks not in SOF
if the seller conveys to the buyer, he can enforce the buyer’s oral promise to pay. Likewise, the buyer may seek to specifically enforce an oral land sale k under the doctrine of part performance - payment in whole or part, possession, or valuable improvements
Sale of good ks not in the SOF
Part performance takes sale of goods contract out of SOF when: i) the goods have been specially manufactured or ii) the goods have been either paid for or accepted.
Service ks not in SOF
an oral k that cannot be completed within one year but has bee fully performed by one party is enforceable - no SOF defense
Estoppel
estoppel may be applied if it would be inequitable to allow the Statute to defeat a meritorious claim
Remedies if K is within Statute
if a k violates the SOF, in almost all cases a party can sue for the reasonable value of the services or part performance rendered, or the restitution of any other benefit that has been conferred.
Unconscionability
allows a court to refuse to enforce a provision or an entire contract (or to modify the k) to avoid unfair terms, usually due to some unfairness in the bargaining process. Unfair price alone is not enough. It is determined at the time the k Was formed.
common instances of procedural unconscionability
- inconspicuous risk shifting provisions - boilerplate
- Take it or leave it adhesion ks
- exculpatory clause
- Limitation on Remedies
