Final Flashcards
6 Formation DEFENSES
- Statute of Frauds - 4 times
2 Capacity to Contract - minors - Mistake - When a belief is not in accord with the facts
- Misrepresentation / Fraud - Assertion that is NOT in accord with the facts
- Duress - Improper threat w/ no reasonable alternative
- Unconscionability - No meaningful choice + terms unreasonably favorable to one
Capacity to Contract - Minors RULE
Basic Rule - Voidable Contract until they turn 18yrs old
Capacity to Contract - Minors - what happens if they want out?
- Restoration - don’t have to make whole, just give back what kid got (even if broken)
- BUT Might enforce the contract if a Necessity, basics of support and comfort by use of minor, Has to be a reasonable price / contract
{ex: A lease or car might not be a necessity]
Capacity to Contract - Minors : How long after turn 18 to (change their mind) disaffirm the contract? How do they affirm?
1) Reasonable time
2) Expressly or otherwise
Capacity to Contract - Minors: Effect of Misrepresentation of Age (Lying)?
Does NOT Matter so = NO contract
Could possibly estop from claiming minor status
Mistake - what is it? What happens?
- Def: When a belief is not in accord with the facts
2. Result = makes a contract Voidable
RULE: Bilateral Mistake
- Mistake by both parties
2. about a Material fact something that matters
Mistake - who bear the risk?
A party to whom
i) risk is allocated to him by agreement of the parties,
or
ii) 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
iii) it is reasonable in the circumstances to do so
RULE: Unilateral Mistake (same +)
- About something that matters
- Under circumstances in which it isn’t fair for adversely affected party to bear the risk
+ - The other party had reason to know of the cause of the mistake ~and~
- The effect of the mistake is that enforcement would be unconscionable
Misrepresentation / Fraud - what is it?
An Assertion that is NOT in accord with the facts
Misrepresentation / Fraud Rule
Voidable by Victim (recipient) of the misrepresentation when
a. Misrepresentation by one party that is MATERIAL
b. Misrepresentation INDUCES the other party’s manifestation of Assent
c. The induced party suffered DAMAGES as a result of relying on the representation
UCC / Goods rule for misrepresentation
Same Rule:
a. Misrepresentation by one party that is MARTERIAL
b. Misrepresentation INDUCES the other party’s manifestation of Assent
c. The induced party suffered DAMAGES as a result of relying on the representation
Misrepresentation / Fraud - Reliance on Expert Opinion
- When a person stands in such a relation of trust and confidence it’s reasonable to rely on it
or - reasonably believes that, as compared with himself, the person has special skill
or - party is particularly susceptible to a misrepresentation of the type involved.
Misrepresentation / Fraud - What if they conceal a fact?
Actions intended to prevent another from learning a fact is = to an assertion that that fact does not exist
Misrepresentation : Non-Disclosure of (or silence about..) a known fact is an assertion in 4 ways -
When it’s Necessary to
a. prevent a previous assertion
b. to correct a mistake of the other
c. to correct a mistake as to a writing
d. Relationship of trust requires disclosure
Is it Misrepresentation / Fraud b/c there a Duty to Disclose a material fact?
Have a Duty to Disclose a material fact -
When a reasonable person would attach importance to the fact in determining his decision to manifest his assent (enter the contract)
Duress or Unique Influence - RULE:
4 Elements:
- Threat
- Induces Assent to the contract
- Improper (threat must be improper)
a) Ex: crime, tort, criminal punishment, bad faith civil suit
b) Breach is not necessarily improper but bad faith is w/o a reason - No reasonable Alternative but to give in
Unconscionability
Due to the Circumstances under which agreement was made ** At the time the contract was made**
Generally the Unfairness of contract = a one sided contract / lop sided
Unconscionability - two ways it can occur?
1 Procedural unconscionability: anything w/ the agreement
a. Sophistication of the parties
b. Advantage of knowledge
c. Power imbalance
d. Contract form print
e. Time to read
- Substantive unconscionability: unreasonably one sided in light of the circumstances
Unconscionability - Goods / Services (approx same) Results ?
- refuse to enforce the contract, or
- enforce the remainder of the contract without the unconscionable clause,
- may so limit the application of any unconscionable clause as to avoid any unconscionable result.
** Used to STOP the enforcement of a contract —NOT money back or restitution **
~ Will enforce to the extent that it’s conscionable
~ so the amount paid already is the deal
Performance - What is Parole Evidence?
Anything OUTSIDE the written agreement
Ex: Typical Situation - 1 party of claiming the parties agreed to a term that isn’t found in the written agreement // and // the other party says that if they agreed to the term, it would have been in writing + urges the court to just look at the written agreement
Parole Evidence - Key question is …
Did the parties enter into an Integrated Agreement - writing constituting a final expression of one or more terms of an agreement.
Parole Evidence - If No Integrated Agreement (just an oral agreement) then …
No Parole Evidence Problem ~ Oral contract doesn’t have parole evidence
What Timing matters in a Parole Evidence issue?
Only applies to evidence of Prior Agreements - before integration
What is Parole Evidence for?
To prove the content of the parties’ agreement
- can be introduced to show Fraud, Mistake, Lack of consideration, or anything else
Why is Parole Evidence being introduced?
a. The PER only applied to prove the content of the parties’ agreement
b. Parole Evidence can be introduced to show Fraud, Mistake, Lack of consideration, or anything else e/o triggering the PER
~ It’s an extra term to the existing agreement ~
Parole Evidence that contradicts the contract - what happens?
If it does, it WILL NOT be included in agreement
–It must NOT contradict the writing-
- oral agreement must be something that the parties would not ordinarily be expected to put in writing
Ex: 2 coats of paint instead of 1
What is a Fully Integrated agreement term?
A Merger term – “ All previous agreements are null and void.”
Parole Evidence UCC Goods - contradicting terms?
Contradicting terms are omitted
Parole Evidence - Analysis:
a. Is it consistent? If NO then…
b. Would it have been included?
Parole evidence - how to Resolve a tie?
== against the writer - b/c they wrote it and should have included it
Good Faith meaning / understanding -
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.
What are conditions?
Conditions = the thing that causes a duty to come due
a. Duty = the sleeping dog = the duty of party to pay up
= A condition is an (ANY) event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.
What if the obligation (condition) is never done?
then the dog never wakes up - and the duty is NOT due
Court created conditions + Constructive Conditions must ________ occur for a dependent duty to arise
- substantially
Express Condition has to be ______Performance –> failure to satisfy -?
- Perfect
- -> relieves duty
What if one party prevented satisfaction of the condition precedent ?
= treat the condition as though it occurred
5 Defenses / Ways Conditions are Excused
a. Waiver
b. Disproportionate forfeiture
c. Hindrance / Prevention
d. Maybe - public policy - insurance
e. Maybe Quantum Meruit
Waiver -
a. what is a waiver?
b. who can waive?
a. Voluntary Intentional relinquishment of a known right
b. only the person for who’s benefit the condition exists
2 ways can waiver occur
1) Implied waiver = Conduct
2) Express waiver = say it’s waived
Hindrance
Ex: White sox not allowing pitcher to play his 30th game so they won’t have to pay
- Obvious when it occurs
What is the Order of Performance in Constructive Conditions
1) Dates in agreement
2) If it can be rendered simultaneously, then assume that the parties intended concurrent performance
3) If one performance takes time, then that one goes first (parties can agree to switch)
Quantum Meruit is what ?
Unjust Enrichment
RULE - Impracticability [After the contract is made]
a. Party’s Performance is made Impracticable (b/c of extreme and unreasonable difficulty to one party)
b. w/o his fault (even negligent fault)
c. By the occurrence of the non-occurrence of which was a basic assumption on which the contract was made (a core assumption of the state of affairs)
d. Duty to perform is discharged = no damages unless language or circumstances indicate the contrary
Frustration Rule - (same except #1)
a. Party’s principal purpose under contract is frustrated
- - it’s so basic to the contract that both parties understand
- - BUT if you can use it for some other legitimate purpose then might have duty to perform
b. w/o his fault (even negligent fault)
c. By the occurrence of the non-occurrence of which was a basic assumption on which the contract was made (a core assumption of the state of affairs)
d. Duty to perform is discharged = no damages unless language or circumstances indicate the contrary
Parole Evidence Rule -
Evidence of a prior agreement can never be admitted to contradict an integrated writing and may not even supplement an integration intended to be complete.
