Defenses to K formation Flashcards

1
Q

General Rule for incapacity:

A

An incapacitated D has the RIGHT to disaffirm a K. Includes minors, intoxicated, and mentally incompetent individuals.

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2
Q

Minors:

A

Persons under 18 can disaffirms Ks any time before (or shortly after) reaching age of majority. K must be disaffirmed in whole. Upon reaching the age of majority, a minor may affirm the K either (1) expressly or (2) by failing to disaffirm it w/in reasonable time. Exceptions: (1) Necessaries (minor liable in restitution in most states), and (2) Reaching age of majority (minor can affirm)

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3
Q

Mental incapacity:

A

One whose mental capacity is so deficient that he is incapable of understanding the nature/significance of the K may disaffirm when lucid or by a later appointed legal rep. He may also affirm while lucid.

Exception: May be liable for necessaries in quasi-K

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4
Q

Intoxicated individuals

A

An intoxicated individual may void a K if (1) he’s so intoxicated he didn’t understand the nature/significance of his promise, and (2) the other party had reason to know of the intoxication. Intoxicated person can affirm upon recover. May be liable in quasi-K for necessaries.

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5
Q

Ambiguity/misunderstanding

A

Where BOTH parties or neither party is aware of the ambiguity = no K. If one party is aware of the ambiguity = K.

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6
Q

Mutual mistake

A

If both parties are mistaken about an existing fact to the K, K may be voidable by the adversely affected if (1) mistake has a material effect the agreed-upon SM, and (2) the party seeking avoidance did not assume the risk of the mistake.

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7
Q

Unilateral mistake

A

If one party is mistaken about facts relating to the K, it’s generally not voidable unless the non-mistaken party knew or had reason to know of the mistake. Mistake must materially effect the SM.

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8
Q

Fraud and misrepresentation

A

Fraudulent misrep: If a party fraudulently induces another to enter a K, the K is voidable by the innocent party if she justifiably relied on the misrep. This include concealment and nondisclosure. The misrep generally must be material.

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9
Q

Illegality (+ illegal purpose, pari delictor, failure to get a license)

A

If the consideration or SM of the K is illegal, the K is void.

If the purpose of the K is illegal, K is voidable by a party who (1) was unaware of the purpose or (2) was aware but did not facilitate the purpose and the purpose does not involve serious moral turpitude.

Parties not in pari delictor: a party not as culpable as the other may recover.

If illegality is failure to get a license: if license is for protecting the public, the K is unenforceable. If license is for revenue-raising purposes, K is enforceable.

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10
Q

Duress and undue influence (physical, improper threat, economic duress)

A

Ks induced by duress or undue influence are voidable and may be rescinded if not affirmed.
If physical: K is void
Improper threat: K is voidable by victim if he didn’t have any reasonable alternative.
Economic: Generally, taking advantage of one’s economic needs is not duress; but withholding something someone wants/needs is duress if (1) the party threatens to commit a wrongful act that would seriously threaten the other contracting party’s property/finances, and (2) there are no adequate means available to prevent the threatened loss.

Undue influence: requires (1) undue susceptibility to pressure by one party, and (2) excessive pressure by the other.

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11
Q

Unconscionability

A

Enables a court to refuse to enforce all or part of a K. 2 basic tests: (1) Unfair surprise, and (2) oppressive terms tested at the time the K was formed (e.g. Ks of adhesion, take it or leave it).

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12
Q

Statute of Frauds: General Rule

A

Oral Ks are generally valid. However, certain Ks, by statute, must be evidenced in writing, signed by the party to be bound (MYLEGS).

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13
Q

Writing requirement: CL

A

Writing must (1) be signed by the party to bound, (2) indicate that a K has been made between the parties, and (3) state with reasonable certainty the essential terms. Writing and signature are liberally construed.

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14
Q

Marriage: promises in consideration of marriage

A

Ks in consideration of marriage are subject to the SOF (not promises TO marry), e.g. If you marry my son, I’ll buy you a house.

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15
Q

Year-long Ks

A

Ks that cannot possibly be completed in 1 year are subject to the SOF. The date runs from the date of the K, not from the date of performance.

Notes: Full performance will remove K from SOF. Lifetime Ks need not be in writing bc the person could die tomorrow.

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16
Q

Land-sale Ks / Transfers of real property

A

A promise creating an interest in land must be in writing. This not only includes Ks for the sale of real property, but also (1) leases for more than 1 year, (2) easements for more than 1 year, (3) mortgages and most other security liens, (4) fixtures, and (5) minerals / structures if they are to be severed by the buyer.

17
Q

Executor / administrator promises personally to pay estate debts

A

A promise by an executor or administrator to pay the estate’s debts out of his own funds must be evidenced in writing.

18
Q

Goods priced at $500 or more

A

Ks for sales of goods for a price of $500 or more are subject to the SOF EXCEPT:

(1) Specially manufactured goods
(2) Admissions in pleadings or court that a K was made
(3) Payment or delivery of goods
(4) Merchant’s Confirmatory Memo

19
Q

Exception: Specially manufactured goods

A

If goods are (1) specially manufactured for B and (2) are not suitable for sale to others by S in the ordinary course of biz, the K is enforceable if the S has made a substantial beginning in their manufacture or commitments for their purchase before repudiation was received.

20
Q

Exception: payment or delivery of goods

A

If goods are either (1) accepted or (2) paid for, the K is enforceable. BUT the K is not enforceable beyond the quantity accepted/paid for (if only some goods called for in the oral K are accepted/paid for, the K is only partially enforceable).

If partial payment is made for an indivisible item, most courts hold that the SOF is satisfied for the whole item.

21
Q

Writing requirement: UCC

A

Must be signed by the party to be enforced and contain the quantity. It’s OK if it omits or incorrectly states a term.

22
Q

Merchants Confirmatory Memo

A

If (1) both parties are merchants, and (2) one of the parties within a reasonable time after an oral K has been made sends to the other party a written confirmation sufficient to bind himself, then (3) it will also bind the recipient if he does not object in 10 days.

23
Q

Surety Ks (promise to pay debt of another)

A

A promise to pay the debt or default of another must be in writing. The promise must be collateral to another person’s promise to pay, and not a primary promise to pay (e.g. If he does not pay, I will). If the main purpose of the promisor is to serve his own pecuniary interest, K is not within the SOF (no writing required).

24
Q

Exceptions to the SOF:

A

(1) Land sale Ks where either (a) S conveys to the B or (b) B partially performs. Partial performance requires 2 out of 3: (i) Payment in full or part, (ii) possession, and (iii) valuable improvements.
(2) Sales of goods (3 + merchants confirmatory memo)
(3) Service Ks - full performance satisfies SOF even if not in writing; part performance does not.

25
Q

Remedy for SOF violations

A

Generally, sue for reasonable value of performance rendered or restitution