Defenses to Contract Formation Flashcards
What are 6 possible defenses to an otherwise valid K?
- incapacity
- statute of frauds
- illegality
- misreprentation/fraud
- duress
- unconscionability
Who lacks capacity to contract?
infants and mentally incompetent persons
What about intoxication?
Intoxicated persons may lack capacity to contract if the other party has reason to know of intoxication
What are the legal consequences of incapacity?
- right to disaffirm
2. implied affirmation (ratification)
What is the right to disaffirm?
person who lacked capacity to contract (i.e. infant) may disaffirm the K, which renders it void
What is implied affirmation or ratification?
A K can be enforced against an infant at the time of K formation if she has since gained capacity and retained the benefits of the K
- Look for:
1) agr entered into before capacity
2) capacity has since been gained
3) benefits have been retained
What are infants obligated to pay for?
Necessities. Food, clothes, medical care; but note, liability is based on quasi-K, so infant can’t be sued for breach
What contracts fall within the SOF?
- marriage
- service K incapable of being performed w/n a year
- land-related K (transfers of property interests, including leases for terms greater than 1 year)
- executor promises
- guarantees (promises to pay the debts of another)
- sales of goods of $500 or more
Under the UCC, a signed writing is not required if:
a. both parties are merchants, AND
b. the party asserting SoF defense received a signed writing memorializing the agr and failed to respond within 10 days of receipt
Under a service contract, performance may satisfy the SOF only if:
it is full performance
In a sale of goods K, what satisfies the SOF?
Delivery of the goods. Note: if it’s a custom good, the SOF is satisfied once seller makes a substantial beginning towards the performance
In real estate, part performance by the buyer satisfies SOF if buyer has done 2/3:
- full or part payment
- possession of property
- improvements to property
If the K contains illegal subject matter, the K is
unenforceable.
If the K contains legal subject matter but for an illegal purpose, the K is only enforceable against
the one who did not know about its illegal purpose
A K will be void for misrepresentation if
A induces B into a K by misrepresentation and B relies on the misrepresentation.
Ks induced by physical duress are
void.
K induced by non-physical coercion or threats are
voidable.
When does unconscionability arise?
Ks of adhesion, exculpatory clauses fo intentional acts,etc.
What is a misunderstanding in a K?
Ambiguity concerning terms of K.
If neither party was aware of the ambiguity then…
No K formed unless both parties intended the same meaning
If one party was aware of the ambiguity then…
K formed.
K enforced according to the intention of the party unaware of the ambiguity
If both parties were aware of the ambiguity then
no K formed unless both parties intended the same thing
What is a mutual mistake of fact?
Both parties are mistaken about an underlying factual assumption at the time of K formation.
A K is voidable by an adversely affected party if:
- both parties are mistaken
- mistake concerns a basic assumption of fact
- mistake materially affects the agreed-upon exchange
- adversely affected party did not assume the risk of mistake
If there is a unilateral mistake concerning the facts of an agr
Unilateral mistake will not prevent K form
When can a unilateral mistake make an agr voidable?
when the mistake is material and the non-mistaken party knew/should have known of mistkae
