Defenses to Formation and Enforcement

Question 1

Mutual Mistake

Reformation

Answer 1

Reformation is available if:
* There was a prior agreement (oral or written) between the parties,
* There was an agreement by the parties to put that agreement into writing, and
* As a result of a mistake, there is a difference between the prior agreement and the writing

Question 2

Mutual Mistake

Recission

Answer 2

Voidable if:
* A mistake of fact existed at the time the contract was formed,
* Mistake relates to a basic assumption of the contract,
* Mistake has a material impact on the transaction, and
* Adversely affected party did not assume the risk of the mistake.

Question 3

Unilateral Mistake

Recission

Answer 3

Mistaken party can void if:
* The mistake would make enforcement of the contract unconscionable; or
* Non-mistaken party failed to disclose the mistake or caused the mistake; and
* Absence of serious prejudice to the non-mistaken party

Question 4

Fraudulent Misrepresentation

Fraud in the factum

Answer 4

If a fraudulent misrepresentation prevents a party from knowing the character or essential terms of the transaction, the K is void.

Question 5

Fraudulent Misrepresentation

Fraud in the inducement

Answer 5

If a fraudulent misrepresentation is used to induce another to enter into a contract, the contract is voidable by the adversely affected party if she justifiably relied on the misrepresentation in entering into the agreement.

Question 6

Undue Influence

Answer 6

Occurs when an innocent party is susceptible to persuasion.

Question 7

Duress

Answer 7

Occurs when a party is improperly threatened and feels he has no meaningful choice.
* If physically compelled, K is void.
* If other form of duress, K is voidable.

Question 8

SOF Exception

Contracts that cannot be performed within one year

Answer 8

If full performance has occurred by either party, court will enforce it.

Question 9

SOF Exception

UCC Goods over $500

Answer 9

• If full performance has occurred by the party seeking to enforce the contract, then it is fully enforceable.
• If part performance has occurred, then it is enforceable to the extent that the money has been paid.
• No writing required for specially manufactured goods.

Question 10

SOF Exception

Letter or Memo of Confirmation

Answer 10

A contract is enforceable against the receiving party if:
* Both parties are merchants,
* A party sends a confirmatory memo that meets the SOF, and
* The other party knowingly receives the memo and does not object in writing within 10 days.

Question 11

SOF Exception

Sale of Land

Answer 11

Need two of three:
* Pays part or all of purchase price;
* Takes possession; or
* Substantially improves property

Question 12

Express Warranty

Answer 12

• Any promise or description that is part of the basis of the bargain is an express warranty, unless it is merely the seller’s opinion of the value of the goods.
• Disclaimer: Disclaimer clauses that conflict with an express warranty are ignored.

Question 13

Implied Warranty of Merchantability

Answer 13

Applies whenever the seller is a merchant.

To be merchantable, goods must:
* Be fit for their ordinary purpose, and
* Pass without objection in the trade.

Disclaimer: Can be disclaimed by “as is” or oral statement that uses “merchantability.”

Question 14

Implied warranty of fitness for a particular purpose

Answer 14

Implied if the seller has reason to know:
* The buyer has a particular use for the goods, and
* The buyer is relying upon the seller’s expertise.

Disclaimer: Must be in writing and conspicuous.