IV. Requirement that No Defenses Exist Flashcards
Genearlly
even if valid, may be invalid because of a defense to formation, defect in capacity or because a defense to enforcement of certain terms exists
Defense to Formation
- Absence of Mutal Assent
- Mutual Mistake as to Existing Facts
- Unilateral Mistake
- Mistake by the Intermediary (transmission)
- Ambigous Contract Language
- Misrepresenation
- Absence of Consideration
- Public Policy Defenses to Contract Formation//Illegality
Mutual Mistake as to Existing Facts
If both parties are mistaken about existing facts, contract may be voidable by adversely affected party IF:
- mistake concerns a basic assumption on which contract is made
- mistake has a material effect
- seeking avoidance did not assume risk
- e.g. party in better postion to know risk or knew and ignored
- mistake in vlaue generally not a defense
*
Unilateral Mistake
If only one party is mistaken, mistake will not prevent formation of a cotnract
If the nonmistaken party had reason to know of the mistake, contract voidable
Transmission/Mistake by INtermediary
Mistake in the transsmission of offer or acceptance, message as transmitted is operative unless other party kneow or should have nknown of mistake
Ambiguous K Language
Depends on awareness
- Neither aware–> no k unless same meaning intended
- Both aware–no k unless both intended same meaning
- One aware–binding based on what ignorant party reasonable believed to be the meaning of words
subjective intent taken into accoutn
Misrepresentation
- Fraudulent Misreprentation–Voidable
- induces another by usuing misrepresntation, voidable if innocent party justifiably relied on inducment
- Fraud is in the inducement
- nondisclosure of fact must be material and fraudulent
- need not be written or spoken–can be in condcut
- Nonfraudulent misrepresenation–voidable if material
- if justifabily relied
- material if 1) info would induce a reasonable person to agree or 2) maker of mis rep knew the info would cause a person to agree
Innocent Party May Rescind Agreement and Recover Damages. Does not need to breach and be sued,
- *
Absence of Consdieration
e.g. one is illusory–always voidable
Public Policy Defenses/Illegality
If any party illegal than void EXCEPT
- p unaware of illegality while d knows of it
- parties are not equally culpable
- OR illegality is failure to obain license which is for revenue raising purposes rather than protection the public
If only purpose of K is illiegal, contract is voidable by a party who was 1) unaware of purpose or 2) aware but did not facilitiate purpose and purpose does not involve serious moral trupitude
Defenses based on lack of capacity
- Legal Incapcity to K
- Infants
- Mental Incapcity
- Intoxication
- Duress and Undue Influence
Legal Incapacity to Contract
- Minors: under age 18 unless married which can be 16 or legally emancipated or for student loans
- may choose to disaffirm K anytime before reaching majority–must return anyting that still remains at time of disaffirmance
- no obligation to return consdieration not aforund
- failling to disaffirm within reaonable time after reach majority considered affirmance
- may choose to disaffirm K anytime before reaching majority–must return anyting that still remains at time of disaffirmance
- Mental Incapcity–> incapable of understand nature and signifiacne of contract may disaffirm through rep or when lucid.
- may affirm when lucid or upon recovery
- E.g. contract voidable
- liable for necessities furnished to them in quasi-K
- Intoxicated Persons: understand nature and signifacnce can be voidableif other party had reason to know of intox. May affirm upon recovery
- quasi-k damages available
Duress and Undue Influence
- May be voided and rescinded as long as not affirmed
- IMproper threat
- taking advantage of needs not duress unless witholding someonthing someone wnats or needs if 1) the party threatenes to commit a wrongful act that would harm property or finances and 2) there ar no other adequate means to prevent lsos
- ELements of undue inrleunce
- 1) undue susceptability to prssure
- 2) excessive pressure
Defense to Enforcement
- Statute of Frauds
- Unconciousnability
3.
Statute of Frauds Generally
certain agreements, by stattue, muste be in writing and signed signed by parties sought to be bound
SOF: Writing Requriement
- requires only that there be one or more writing signed by prson sought to be bound that reflect material terms–does not need to be full contract
- electronic record satisfies
- does not need to be full-fledged–can be pieced together
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Signature Requriement
Liberally constured–need not be handwritten–can be printed, typed, handwrittne, e-sig.
Only needs to be signed by the party that is sued
Promises Covered by SofF
- Executor or Administrato Promises to Pay Estate Debts out of own funds
- Promises to Pay Debt of Another unless a pecuniary interest of own is served by doing so (e.g. pay debt of building supplier so contractor can get own supplies)
- Promise to lend money in GA
- Promises in Consdieartion of Marriage (e.g. dowry)
- Interest in Land
- Performances Not within One Year (by its terms)
- Good prices >$500
Interest in Land & SOF
- Includes sale of real prop but also
- Sale of Prop
- Leases for +1yr
- Easments of 1+yr
- Fixtures
- Minerals or the like structures if they are severed by buyer
- MOrtgages
- Items not within statute:
- contracts to building a building
- or find a buyer for a seller (broker)
- Effect of Performance on K
- oral promise okay if the conveyance occurs or part performance occures
- Part Perofmrance in GA is 1) full payment accepted by vendor; 2) possesion of property plus partial payment; OR 3) possession of porperty plus valuable improvements
Performances Not within One Year (by its terms)
date runs from the date of agreement, not performance
Lifetime contract notwithin statute b/c someone could die within year
Goods Prices $500 ore more
- NOt required for:
- specially manufactured goods that are not suitable for sale to others and the maker has had substantial beginning or committements
- admissions in pleadings or court saying there was a contract made
- Payment or Delivery of Goods (not beyond quanity of goods accepted or paid for)
- Omitted or incorrect terms do not void writing, although they are not enforceable beyond the maount in writing
- Merchants–Confirmatory Memo: if agreement b/w merchants with no writing, one snds the other a writtten confirmation, sufficient if he has reason to konw of the confirmation; and does not object within 10 days
Effect of non-compliance with statute
renders the contract unenforceable at the option of party being sued. Waived if not raised
Remedies if Contract is within statute
Usually can sue for reasonable value of services or part performance, OR the restitution of any other benefit
Unconciosunability
court can refuse to enforce a provision or an entire contract (or modify it) to avoid unfair terms due to some unfairness in bargaining process
unfair price alone is insufficent
On MBE usually accompanied by large gap in bargaining power
Common Procedural Unconscionability
- Inconspicous Risk-Shifting Porvisions–fine print, shifts risk usuablly borne by one onto the other. Inconspicous or incomprehsnivle to average person even if they are notified of it
- Contracts of Adhesion: not able to buy wihtout taking provision
- Exculpatory Clauses: intentional wrongful acts.
- Negligenc acts only if they are incspoicous–more likely upheld if they are in contracts for hazardous acts
- Limiations on Remedies–> will not be found unconsiouanble unless is inconspicous
- unless remedy limted to one that failes of its essential purpose (repair something that can’t be repaired)
Unconciosunalibity Timing
as they exitsted at time of formation
Effect of Unconcionable Clause
may
1) refuse to enfoce
2) enforce without clause
3) limit application fo clause to avoid result
