Defenses to Contracts

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  1. What are the major defenses to enforcing a contract

    Mistake; Unconscionability; Fraud; Frauds (Statute of); Incapacity; Illegality; Duress
  2. What general types of contracts must be in writing to conform with the Statue of Frauds?
    1. For the sale of an interest in land (including leases of one year or longer)

    2. Incapable of performance in less than one year (regardless of the subject matter of the contract)

    3. Regardless of value, for the sale of goods with a price of at least $500 (UCC § 2-201);

    4. For the sale of securities

    5. Regardless of cost, for the sale of personal property other than goods with a value of more than $5,000

    6. To answer for another's debt or default (a collateral promise only, not a primary one)

    7. In consideration of marriage

    • SPAM LOG
    • Securities; personal property; another's debt; marriage; land; one year; goods over $500
  3. Under what circumstances will the requirement of a writing be excused under the Statue of Frauds (outside the UCC)?
    A writing will not be required where there is: 

    • 1. Full performance on both sides;
    • 2. Seller conveys property to buyer;
    • 3. Buyer pays all or part of the purchase price AND performs some act explainable only by the contract's existence
    • 4. Promissory estoppel;
    • 5. Waiver
    • 6. Admission in court
  4. Mitchill v. Lath
    • Case
    • Remove the ice house case

    • Rule
    • For a court to enforce an oral agreement collateral to a written agreement but not included in the written agreement, the court must find that…The agreement must in form be a collateral one.It must not contradict express or implied provisions of the written contract.It must be one that the parties would not ordinarily be expected to embody in the writing. (must not be so clearly connected with the principal transaction as to be part and parcel with it)

    • Reasoning
    • The parol evidence rule serves a useful purpose and should not be abandoned.The parol evidence rule does not affect a parol collateral contract distinct and independent of the written agreement.Where, however, one agreement is entered into wholly or partly in consideration for the simultaneous agreement to enter into another, the transactions are bound together.If one agreement is oral and the other written, court must decide if the bond is close enough to prevent proof of the oral agreement.The contract showed a full and complete agreement, setting forth in detail the obligations of each party. If such an agreement were made about the icehouse, it would seem most natural that the inquirer would find it in the contract.The promise to remove the icehouse is collateral in form, but it is closely related to the subject matter dealt with in the written agreement, so closely that it may not be proved.
  5. Masterson v. Sine
    • Case
    • Husband and wife sell a ranch

    • Rule
    • When only part of an agreement is integrated parol evidence may be used to prove elements of the agreement not in the writing.
    • Reasoning
    • The parol testimony should have been admitted since the limitation term would not necessarily be included. When the parties to a written contract have agreed to an integration, which is a complete and final embodiment of the terms of an agreement, parol evidence cannot be used to add or vary the terms. When only part of the agreement is integrated the same rule applies. Evidence of an oral agreement should be excluded when the fact finder is likely to be misled. If additional terms are such that they would certainly have been included in the document in the view of the court then evidence of their alleged making must be kept from the trier of fact.

    • Here, the option clause in the deed does not explicitly provide that it is a complete agreement and the deed is silent on assignability. Nothing in the record indicates that the parties did not have any warning of the disadvantages of failing to put the whole agreement in the deed. Therefore, this case is one in which it can be said that a collateral agreement might naturally be made as a separate agreement. This case is one that would not have included the collateral agreement in the deed. Defendants offered evidence that the parties agreed that the option was not assignable in order to keep the property within the family.
Card Set
Defenses to Contracts
Contracts II Spring 2014
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