Defenses to Enforcement

Question 1

The issue is whether there are Defenses to Enforcement

Answer 1

Lack of Capacity
“No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties… .
(2)A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is
(a)under guardianship, or
(b)an infant, or
(c)mentally ill or defective, or
reasonable

Question 2

The issue is whether there is Mental Illness

Answer 2

(1)A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect
(a)he is unable to understand in a reasonable manner the nature and consequences of the transaction, or
(b)he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition.
(2)Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance under Subsection (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires.”

Question 3

Minority

Answer 3

“Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person’s eighteenth birthday”

Question 4

Intoxicated Person

Answer 4

“A person incurs only voidable contractual duties by entering into a transaction if the other party has reason to know that by reason of intoxication
(a)he is unable to understand in a reasonable manner the nature and consequences of the transaction, or
(b)he is unable to act in a reasonable manner in relation to the transaction”

Question 5

Mistake

Answer 5

“The defense of mistake arises when one or both parties fail to realize an important fact about the transaction, despite exercising due care.”

“Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of mistake.
(b)In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise”
“Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performance that is adverse to him, the contract is voidable by him if he does not bear the risk of mistake under the rule stated in § 154, and
(a)the effect of the mistake is such that enforcement of the contract would be unconscionable, or
(b)the other person had reason to know of the mistake or his fault caused the mistake.”
“A party bears the risk of a mistake when
(a)the risk is allocated to him by agreement of the parties, or
(b)he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
(c)the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.”

Question 6

Whether there is an issue of misrepresentation?

Answer 6

“In order to raise the contract defense of misrepresentation, a party must establish three elements:
1.the misrepresentation was fraudulent or material;
2.it induced the recipient to enter into the contract; and
3.the recipient justifiably relied on the misrepresentation”