Rescission, Reformation, + UCC Statute of Limitations

Question 1

Rescission - Basic Concept

Answer 1

• remedy whereby the original K is considered voidable + rescinded
• parties are left as though K had never been made
• grounds for rescission need to have occurred before or at time contract was formed

Question 2

Grounds for Rescission - List

Answer 2

• mutual mistake of a material fact
• unilateral mistake if other party knew or should’ve known of the mistake
• unilateral mistake if hardship by mistaken party is so extreme it outweighs other party’s expectations under the contract
• misrepresentation of fact or law by either party re material factor in negotiations that was relied upon AND
• other grounds, such as duress, undue influence, illegality, lack of capacity, + failure of consideration

Question 3

Rescission - Defenses

Answer 3

• generally, all equitable defenses (including laches and unclean hands are available
• pl’s negligence is not a defense though

Question 4

Rescission - Additional Relief

Answer 4

• if pl has paid $ to def, they’re entitled to restitution in addition to rescission

Question 5

Reformation - Basic Concept

Answer 5

• remedy whereby writing setting forth the agreement between the parties is changed so it conforms to the original intent of the parties

Question 6

Potential Grounds for Reformation

Answer 6

• mistake
• misrepresentation

Question 7

Reformation - Mistake

Answer 7

To reform a contract because of mistake, there must be:
1) an agreement between the parties
2) an agreement to put the agreement in writing AND
3) a variance between the original agreement and the writing

Question 8

Reformation - Misrepresentation

Answer 8

• if writing inaccurate b/c of misrepresentation, pl can choose between reformation and avoidance
• to qualify for reformation, misrep must relate to content or legal effect of the record
  -> misrep as to subject matter of agreement are NOT grounds for reformation (rescission + damages = proper remedy for that)

Question 9

Negligence + Reformation

Answer 9

• failure to read record of agreement doesn’t preclude a party from obtaining reformation
  -> in nearly every case in which the record doesn’t reflect the agreement, either one or both parties have failed to read it

Question 10

Reformation - Evidentiary Standard

Answer 10

• need to establish variance between antecedent agreement + writing by clear + convincing ev

Question 11

Reformation - Parol Ev Rule + Stat of Frauds

Answer 11

• both DON’T apply for reformation actions
  ->exception: many cts deny reformation if would add land to K w/o complying w/ SOF

Question 12

Reformation - Defenses

Answer 12

• in addition to general equitable defenses, existence of a BFPV = defense to reformation
• also not permitted if rights of third parties would be unfairly affected

Question 13

UCC - Statute of Limitations

Answer 13

• for sales Ks, UCC provides 4-yr stat of lim
• parties may shorten period by agreement to no less than 1 yr, but can’t lengthen it

Question 14

UCC Stat of Lim - Accrual of Action

Answer 14

• stat of lim begins to run when a party can bring suit (i.e. when breach occurs)
• begins to run regardless of whether aggrieved party knows about the breach

Question 15

UCC - Breach of Warranty Actions

Answer 15

• breach occurs + limitations period begins to run upon delivery of the goods
• true even if buyer doesn’t discover breach until much later

Question 16

UCC Stat of Lim - Where Warranty Extends to Future Performance

Answer 16

• if there’s an express warranty that explicitly extends to future performance, 4-yr period doesn’t begin to run until buyer should’ve discovered the breach

Question 17

UCC Stat of Lim - Implied Warranties

Answer 17

• b/c implied warranties cannot explicitly extend to future performance, they are breached, if at all, upon delivery