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Business Law Ch 10

Summary of slides for Chapter 10 of Fundamentals of Business Law

QuestionAnswer
What must a contract have? Agreement, Consideration, Capacity, and Legality
If a party demonstrates they did not voluntarily consent to the terms of a contract, what can do they? Void the contract or carry it out
A contract may be unenforceable due to parties not genuinely assenting to its terms because of: mistake, misrepresentation, undue influence, or duress
Is a mistake of fact able to void a contract? Yes
Is a mistake of value able to void a contract? No
Can unilateral mistakes of fact be canceled? Not usually
What exceptions to canceling contracts due to unilateral mistakes of fact? if the other party to the contracts knew or should have known OR if the mistake was due to an inadvertent mathematical mistake and was not gross negligence
What is a bilateral mistake of fact? both parties were mistaken regarding the same material fact
Who can rescind a contract due to a bilateral mistake of fact? Either party
Why does fraudulent misrepresentation make a contract voidable? Because the innocent party did not voluntarily consent to the terms
What elements does fraudulent misrepresentation have? misrepresentation of material fact, intent to deceive, reliance on misrepresentation, injury to the innocent party
What are the elements of undue influence and is undue influence a reason to void a contract? Contract lacks voluntary consent and is voidable. Occurs in relationships of Confidentiality, Fiduciary, or Dependence, clear and convincing evidence standard person did not act under their own free will, generally includes minors and elderly
What is duress? Forcing a party to enter into a contract under fear or threat
Is duress a reason to void a contract? Yes
What must the act be to be considered duress? The threatened act must be wrongful or illegal and render a person incapable of exercising free will
Is the threat of a civil suit considered duress? No
Is an economic need grounds for a duress defense? No
What does the statue of frauds defense require? It requires certain contracts to be in writing and signed to be enforceable
What contracts must be in writing under the Statue of Frauds Sale of goods more than $500, interests in land, contracts that cannot be performed in under a year, contracts containing collateral promises
What is the One-Year Rule A contract that by its terms cannot possibly be performed in a year.
When does the One-Year Rule begin? Starts running the day after contract is signed
What are collateral promises? Contracts to answer the debt of another
What is primary obligations and does it have to be in writing? Direct party contract, no writing needed
What are secondary obligations and does it have to be in writing? Guarantor, agrees to pay debt if debtor does not pay, has to be in writing
What is the "Main Purpose" Rule? Oral promise is covered by Statue of Frauds unless guarantor is seeking a personal benefit?
When are prenuptial agreements "more" enforceable? When consideration is involved
What is the exception to the $500 rule? Customized goods
What are the exceptions to the Statue of Frauds Partial performance, Admissions, Promissory Estoppel/Detrimental Reliance
What is considered "writing" in the sufficiency of writing? memorandum, invoice, fax, check, email
What must happen if the writing is deemed sufficient? must be signed by the part against whom the enforcement is sought
What is the parole evidence rule? Prohibits the introduction at trial of evidence of the parties prior communications that contradicts the written contract
What are integrated contracts? A written contract intended to be a complete and final statement of the terms of agreement
What are the two kinds of integrated contracts? Fully or partially integrated contracts
What are fully integrated contracts are is the parole evidence admissible? Intended to be a complete and final embodiment of the terms of the parties' agreement, not admissible in court
When is a contract not fully integrated and is the parole evidence admissible? Omits an agreed-on term that is consistent with the parties' agreement, parole evidence is admissible
What are exceptions to the parole evidence rule? Evidence of subsequent contract modifications, oral evidence to show contract was void or voidable, ambiguous terms, incomplete contracts "fill in the gaps", prior dealings, condition precedent, clerical error
Created by: fredrickss