Defenses to Formation

Question 1

Hurdles to Formation (SEAMMDULL)

Answer 1

Statute of Frauds, Existing Law Prohibiting Performance, Ambiguity in Words, Mistake At Time of the Agreement As to Material Fact, Misrepresentation, Duress, Unconscionability, Lack of Capacity from Promisor, Lack of Consideration

Question 2

Infancy

Answer 2

Lack of Capacity: Child under 18 lacks capacity to enter into contracts.

However, adult to child contracts are binding on adult.

Question 3

Disaffirmance

Answer 3

Lack of Capacity: Infancy: infanct may choose to disaffirm a contract ANY TIME before (or shortly after) reaching 18

If disaffirmed infant must return anything THAT STILL REMAINS at the time of Disaffirmance that infant received under contract.

Question 4

Affirmance

Answer 4

Lack of Capacity: Infancy: Infant may affirm upon reaching 18.

May affirm either expressly or by conduct

(FAILING TO DISAFFIRM within a REASONABLE time after Reaching Age of Majority)

Question 5

Mental Incapacity

Answer 5

Lack of Capacity: Person so deficient that he is incapable of understanding the NATURE AND SIGNIFICANCE of the contract MAY DISAFFIRMED when lucid or by legal representative.

May likewise affirm.

Contract is VOIDABLE

Liable in Quasi-Contracts for necessities furnished to them

Question 6

Intoxicated Persons

Answer 6

lack of capacity: So intoxicated to not understand that substance and nature of the contract.

Voidable promise if other party had reason to know of intoxication

Liable for necessities provided to them during intoxication under Quasi-Contract.

Question 7

Duress and Undue Influence

Answer 7

Duress: Contracts are voidable.

Generally taking advantage of another person’s economic needs IS NOT DURESS

Question 8

Statute of Frauds

Answer 8

Contracts that need to be in writing, signed by the parties intended to be bound.

Question 9

Writing Requirement of SOF

Answer 9

Something written evidencing material terms which is signed by the party intended to be bound.

Question 10

Agreements Covered by SOF

Answer 10

Executor/Administrator Promises to Personally pay Estate Debts, Surety Promises/ Promises in Consideration of Marriage (Pre-Nups), Interests in Land (leases/easment for more than 1 year), Performance Not Within 1 year (excluding lifetime contracts), Goods Priced at $500 or more.

Question 11

Surety Promises

Answer 11

A promise to answer for the debt or default of another

Question 12

Executor/Administrator Promises to Personally to Pay Estate Debts

Answer 12

A promise to pay the estate’s debts OUT OF OWN FUNDS

Question 13

Promises In Consideration for Marriage

Answer 13

Promises that induce marriage by offering something of value, prenups (ect.,)

Question 14

Interests in Land

Answer 14

Leases/Easement more than 1 year, Fixtures, Minerals, Mortgages,

Question 15

Performance Not Within One Year

Answer 15

Promise by its terms CANNOT BE COMPLETED WITHIN ONE YEAR

EFFECTIVE DATE: Date runs from the date of agreement

LIFETIME CONTRACTS: Not within SOF

Question 16

Goods Priced at $500 of more (SWAP)

Answer 16

Must meet SOF,

Exceptions:
Specially Manufactured Goods   
Admission in Pleadings or Court
Payment or Delivery of Goods   
Merchant Confirmatory Memo

Question 17

Specially Manufactured Goods

Answer 17

Sellers made a SUBSTANTIAL BEGINNING in the manufacturing or committments

Question 18

Satisfaction of SOF

Answer 18

Full performance by either party.
Part Performance, but only to the extent of Part Performance.
Part Performance for Real Estate Contracts (2 out of 3)

Question 19

UCC SOF

Answer 19

Contens of the writing, who signed the writing, QUANTITY TERM

Question 20

Merchant’s Confirmatory Memo

Answer 20

Both parties MUST BE MERCHANTS, person who receives a signaled writing WITH QUANTITY TERM, that claims there is not a contract FAILS TO RESPONSE WITHIN 10 days

Question 21

Equal Dignity Rule

Answer 21

One can execute a contract for someone else, however, the authorization MUST BE IN WRITING if the contract to be signed IS WITHIN THE SOF.

Question 22

Contract Modification and the SOF

Answer 22

Look at deal with alleged change AND determine whether the deal with the alleged change would be within the SOF.

IF it is then the modification must be in writing

Question 23

Common Law Modifications and SOF

Answer 23

Contract provision requiring all modifications to be in writing are ignored

Question 24

UCC Contract Modifications and the SOF

Answer 24

Contract provision requiring written modifications are effective unless waived

Question 25

Illegality

Answer 25

Existing Law:

If subject matter is illegal = agreement is void
If subject matter is legal, but purpose is illegal = enforceable
ONLY IF THE PERSON DID NOT KNOW OF THE ILLEGAL PURPOSE

Question 26

Unconscionability

Answer 26

Unfair surprise and oppressive terms as of the time of the agreement.

Question 27

Ambiguity in Words of Agreement

Answer 27

Parties use MATERIAL TERM OPEN TO AT LEAST WO REASONABLE INTERPRETATIONS; AND

each party ATTACHES A DIFFERENT MEANING TO THE TERM; AND

NEITHER PARY KNEW OR HAS REASON TO KNOW THE TERM IS OPEN TO AT LEAST TWO REASONABLE INTERPRETATIONS

Question 28

MISTAKE

Answer 28

Mutual Mistake and Unilateral Mistake

Question 29

Mutual Mistake

Answer 29

If both parties are mistaken AND basic assumption of fact AND materially affects the agree exchange the CONTRACT IS VOID.

VALUE IS NOT A DETERMINATIVE FACTOR

Question 30

Unilateral Mistake

Answer 30

Generally courts don’t allow excuse by unilateral mistake

EXCEPTION: Palpable Mistake:

Other party knew or should have know of the mistake, or Mistake was discovered before significant reliance by the other party.