Enforceability Of Contracts Flashcards
How does “lack of capacity” affect enforceability of contracts?
“Capacity” - mental capacity / ability to understand and be accountable for making a contract.
Valid contract means all parties must have capacity.
Minors are restricted in their contractual capacity and those lacking mental capacity will be unable to enter enforceable agreements.
How does “duress and undue influence” affect enforceability of contracts?
Contract must be entered under own free will and no one should have been forced to sign.
“Duress” - one party uses illegitimate pressure so other party has no practical choice other than to agree.
“Illegitimate pressure” - threat to life or limb, property or business / trade.
Contracts are voidable - not void.
“Undue Influence” - difference in power or influence in a relationship in which the parties are unequal.
Abuse of dominant influence / relationship - weaker party entering into a transaction that benefits dominant party.
How does “misrepresentation” affect enforceability of contracts?
“Misrepresentation” - untrue statement of fact that induces someone to enter contract.
Wronged party must show that they tried on the false statement when entering contract.
Examples:
1) innocent misrepresentation
2) negligent misrepresentation
3) fraudulent misrepresentation
If proved - contracts can be rescinded (cancelled) or damages.
What is “rescission”?
Allows unwinding of contract.
Puts both parties back in position that they were before entering into the agreement.
What makes a contracts illegal?
1) A particular type of contract that has been forbidden by statute.
2) A contract is carried out in a way that violates a statute.
3) A contract that, if it was upheld, it would be contrary to public policy (common law)
If illegal - contract is not void and court will not enforce it.
Act like it never existed.
If either party breaches - not entitled to remedy.
How does “mistake” affect enforceability of contracts
“Operative mistake” - so serious that it means the contract has no legal effect.
Contract will be void - treated as though it never existed and parties returned to their pre-contract position.
