Final

Question 1

6 Formation DEFENSES

Answer 1

1. Statute of Frauds - 4 times
   2 Capacity to Contract - minors
2. Mistake - When a belief is not in accord with the facts
3. Misrepresentation / Fraud - Assertion that is NOT in accord with the facts
4. Duress - Improper threat w/ no reasonable alternative
5. Unconscionability - No meaningful choice + terms unreasonably favorable to one

Question 2

Capacity to Contract - Minors RULE

Answer 2

Basic Rule - Voidable Contract until they turn 18yrs old

Question 3

Capacity to Contract - Minors - what happens if they want out?

Answer 3

1. Restoration - don’t have to make whole, just give back what kid got (even if broken)
2. 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]

Question 4

Capacity to Contract - Minors : How long after turn 18 to (change their mind) disaffirm the contract? How do they affirm?

Answer 4

1) Reasonable time

2) Expressly or otherwise

Question 5

Capacity to Contract - Minors: Effect of Misrepresentation of Age (Lying)?

Answer 5

Does NOT Matter so = NO contract

Could possibly estop from claiming minor status

Question 6

Mistake - what is it? What happens?

Answer 6

1. Def: When a belief is not in accord with the facts

2. Result = makes a contract Voidable

Question 7

RULE: Bilateral Mistake

Answer 7

1. Mistake by both parties

2. about a Material fact something that matters

Question 8

Mistake - who bear the risk?

Answer 8

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

Question 9

RULE: Unilateral Mistake (same +)

Answer 9

1. About something that matters
2. Under circumstances in which it isn’t fair for adversely affected party to bear the risk
   +
3. The other party had reason to know of the cause of the mistake ~and~
4. The effect of the mistake is that enforcement would be unconscionable

Question 10

Misrepresentation / Fraud - what is it?

Answer 10

An Assertion that is NOT in accord with the facts

Question 11

Misrepresentation / Fraud Rule

Answer 11

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

Question 12

UCC / Goods rule for misrepresentation

Answer 12

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

Question 13

Misrepresentation / Fraud - Reliance on Expert Opinion

Answer 13

1. When a person stands in such a relation of trust and confidence it’s reasonable to rely on it
   or
2. reasonably believes that, as compared with himself, the person has special skill
   or
3. party is particularly susceptible to a misrepresentation of the type involved.

Question 14

Misrepresentation / Fraud - What if they conceal a fact?

Answer 14

Actions intended to prevent another from learning a fact is = to an assertion that that fact does not exist

Question 15

Misrepresentation : Non-Disclosure of (or silence about..) a known fact is an assertion in 4 ways -

Answer 15

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

Question 16

Is it Misrepresentation / Fraud b/c there a Duty to Disclose a material fact?

Answer 16

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)

Question 17

Duress or Unique Influence - RULE:

Answer 17

4 Elements:

1. Threat
2. Induces Assent to the contract
3. 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
4. No reasonable Alternative but to give in

Question 18

Unconscionability

Answer 18

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

Question 19

Unconscionability - two ways it can occur?

Answer 19

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

2. Substantive unconscionability: unreasonably one sided in light of the circumstances

Question 20

Unconscionability - Goods / Services (approx same) Results ?

Answer 20

1. refuse to enforce the contract, or
2. enforce the remainder of the contract without the unconscionable clause,
3. 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

Question 21

Performance - What is Parole Evidence?

Answer 21

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

Question 22

Parole Evidence - Key question is …

Answer 22

Did the parties enter into an Integrated Agreement - writing constituting a final expression of one or more terms of an agreement.

Question 23

Parole Evidence - If No Integrated Agreement (just an oral agreement) then …

Answer 23

No Parole Evidence Problem ~ Oral contract doesn’t have parole evidence

Question 24

What Timing matters in a Parole Evidence issue?

Answer 24

Only applies to evidence of Prior Agreements - before integration

Question 25

What is Parole Evidence for?

Answer 25

To prove the content of the parties’ agreement

• can be introduced to show Fraud, Mistake, Lack of consideration, or anything else

Question 26

Why is Parole Evidence being introduced?

Answer 26

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 ~

Question 27

Parole Evidence that contradicts the contract - what happens?

Answer 27

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

Question 28

What is a Fully Integrated agreement term?

Answer 28

A Merger term – “ All previous agreements are null and void.”

Question 29

Parole Evidence UCC Goods - contradicting terms?

Answer 29

Contradicting terms are omitted

Question 30

Parole Evidence - Analysis:

Answer 30

a. Is it consistent? If NO then…

b. Would it have been included?

Question 31

Parole evidence - how to Resolve a tie?

Answer 31

== against the writer - b/c they wrote it and should have included it

Question 32

Good Faith meaning / understanding -

Answer 32

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

Question 33

What are conditions?

Answer 33

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.

Question 34

What if the obligation (condition) is never done?

Answer 34

then the dog never wakes up - and the duty is NOT due

Question 35

Court created conditions + Constructive Conditions must ________ occur for a dependent duty to arise

Answer 35

• substantially

Question 36

Express Condition has to be ______Performance –> failure to satisfy -?

Answer 36

• • Perfect

- -> relieves duty

Question 37

What if one party prevented satisfaction of the condition precedent ?

Answer 37

= treat the condition as though it occurred

Question 38

5 Defenses / Ways Conditions are Excused

Answer 38

a. Waiver
b. Disproportionate forfeiture
c. Hindrance / Prevention
d. Maybe - public policy - insurance
e. Maybe Quantum Meruit

Question 39

Waiver -

a. what is a waiver?
b. who can waive?

Answer 39

a. Voluntary Intentional relinquishment of a known right

b. only the person for who’s benefit the condition exists

Question 40

2 ways can waiver occur

Answer 40

1) Implied waiver = Conduct

2) Express waiver = say it’s waived

Question 41

Hindrance

Answer 41

Ex: White sox not allowing pitcher to play his 30th game so they won’t have to pay
- Obvious when it occurs

Question 42

What is the Order of Performance in Constructive Conditions

Answer 42

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)

Question 43

Quantum Meruit is what ?

Answer 43

Unjust Enrichment

Question 44

RULE - Impracticability [After the contract is made]

Answer 44

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

Question 45

Frustration Rule - (same except #1)

Answer 45

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

Question 46

Parole Evidence Rule -

Answer 46

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.