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MS 331 Ch10

Business Law: Ch 10 Contracts: Defenses to Contract Enforceability

QuestionAnswer
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Describe a Bilateral (mutual mistake) of fact: concerns the same material fact, and can be rescinded by either party
T or F: in a bilateral mistake of fact, the contract can only be rescinded by one party False; either party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