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MS 331 Ch10
Business Law: Ch 10 Contracts: Defenses to Contract Enforceability
| Question | Answer |
|---|---|
| Generally, a party who demonstrates they did not voluntarily consent to the terms of a contract can choose to either ________ or ______ | rescind (cancel/void) the contract; carry it out |
| A contract may be unenforceable if the parties have not genuinely assented to its terms by: [4 things] | 1.Mistake 2.Misrepresentation 3.Undue Influence 4.Duress |
| Only a mistake of ___ allows a contract to be voided | fact |
| what are the two categories of mistakes? | fact and value |
| Describe a Unilateral Mistake: | One party is mistake |
| Describe a Unilateral Mistake of fact: | Other party to the contract knows or should have known, OR mistake was due to an inadvertent mathematical mistake and was not gross negligence |
| Describe a Bilateral (mutual mistake): | both parties are mistaken |
| Describe a Bilateral (mutual mistake) of fact: | concerns the same material fact, and can be rescinded by either party |
| T or F: in a bilateral mistake of fact, the contract can only be rescinded by one party | False; either party |
| Describe Fraudulent Misrepresentation | Contract is Voidable by Innocent Party because they did not voluntarily consent to the terms |
| What are the elements that fraudulent misrepresentation of material fact consists of? | 1.Conduct 2.Law 3.Silence 4.Intent to decieve 5.reliance on misrepresentation 6.injury to the innocent party |
| Is Puffery a misrepresentation for material fact? | No, it is a statement of opinion |
| [Fraudulent Misrepresentation] describe conduct | action prevents one from finding out material facts |
| [Fraudulent Misrepresentation] describe law | people assumed to know state and local laws but one party cannot misrepresent law |
| [Fraudulent Misrepresentation] describe silence | No duty to disclose facts not asked unless defect is “latent” –not readily ascertainable |
| [Fraudulent Misrepresentation] describe Intent to Deceive | made when a false fact knowingly stated as truth or recklessly |
| [Fraudulent Misrepresentation] describe Reliance on Misrepresentation | no way for one party to find them out, relies on other party |
| [Fraudulent Misrepresentation] describe Injury to the Innocent Party | Injury not usually required for rescission; Proof of injury required for recovery under fraud |
| Define rescission: | returns parties to the way they were |
| Describe Undue influence: | Contract lacks voluntary consent and is voidable |
| [Voluntary Consent - Undue Influence] Often occurs in relationships of ____, _____, or _____ | Confidentiality, Fiduciary, or Relationship of Dependence |
| [Voluntary Consent - Undue Influence] ______________standard person did not act out of own free will | Clear and convincing evidence |
| [Voluntary Consent] Define duress | Forcing a party to enter into a contract under fear or threat makes the contract voidable |
| [Voluntary Consent] what must be present to qualify as duress? | Threatened act must be wrongful or illegal and render person incapable of exercising free will |
| [Voluntary Consent] Is threat of a civil suit duress? | Nope |
| [Voluntary Consent] Is economic need grounds for duress? | Generally, no |
| ____________ requires certain contracts to be in writing (or electronic) and signed to be enforceable | Statute of Frauds |
| What are examples of contracts that need to be in writing? | 1.Contracts involving interests in land 2.Collateral promises 3.Promises made in consideration of marriage 4.Contracts for sale of goods over $500 |
| What is the 1-year rule? | A contract that by its terms cannot possibly be performed within 1 year of execution |
| When does the 1-year rule begin? | the day after the contract is signed |
| Define collateral promises | Contracts to answer for the debt of another |
| [collateral promises] Describe primary obligations | direct party to contract –buying flowers for delivery to another –no writing needed |
| [collateral promises] Describe secondary obligations | Guarantor, agrees to pay debt if debtor doesn’t pay –writing needed |
| What is an exception to collateral promises? | the "main purpose rule": oral promise is covered by Statute of Frauds unless guarantor is seeking a personal benefit |
| What is an example of a promise made in consideration of marriage? | Prenuptial agreements -- more enforceable if consideration is involved |
| What is an exception to the $500 rule of contracts for the sale of goods? | customized goods |
| What are the exceptions to the statue of frauds? | 1.Partial performance 2.Admissions 3.Promissory Estoppel/Detrimental Reliance |
| [Statute of Frauds] Describe partial performance | Purchaser has paid part of purchase price, taken possession and made valuable improvements to property |
| [Statute of Frauds] Describe admissions | Party admits in court records contract exists. |
| [Statute of Frauds] Describe promissory estoppel/detrimental reliance | Promisee justifiably relies |
| Sufficiency of the writing --- what is included in writing? | memorandum, invoice, fax, check, e-mail |
| What prohibits the introduction at trial of evidence of the parties prior communications that contradicts the written contract | Parol Evidence Rule |
| Define Integrated Contracts: | the written contract intended to be a complete and final statement of the terms of the agreement |
| In an integrated contract, courts exclude an parol evidence that ____________ | contradicts the writing |
| What are exceptions that allow parol evidence? | 1.Evidence of subsequent modifications 2. Oral evidence contract was voidv/oidable 3.Show meaning of ambiguous terms 4.to "fill in the gaps" 5.Prior dealings,court performance,usage in trade 6.Conditions precedent 7.Obvious clerical error |
Created by:
savelae
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