1. what are the defenses to the formation of a contract?
    • indefiniteness
    • mistake
    • misrepresentation
    • nondisclosure
    • duress
    • undue influence
    • unconscionability
    • statute of frauds
    • lack of capacity
    • illegality
  2. indefiniteness
    • definate so that:evidence that the party concluded a deal ( beyond negotiations)
    • enable the court to determine the terms ( price, quantity)

    but the court will try to fill gaps if there are implications, the U.C.C. has a lot more fillers... such as fair market value.

    • ex. to aquire title is sufficient, because implied " marketable title"
    • to paint a house with no time frame is fine, because implied time is reasonable time

    • but:plans to build a house need to be definite because there is no "reasonable plan"
    • but, will be definate if part of a tract house... because there is a set example.

    • partial peformance might negate the indefinateness of terms.

    • price... modern, if silent with respect to the price, then a reasonable price can be determined if..there is a fair market value and there is a intent to be in a contract. and the courts can be the ones to determine the price. but be careful, lack of price can show negotiations.
    • time:reasonable time is inferrable

    • special cases: employment contracts:then termination at will by either party. and stating per year, doens not mean contract will be for the year. even, permenant, for life, and for as long as the employee chooses, will be terminated at will by either party. EXCEPT:1. limits to the employer to terminate, 2. circumstances clearly indicating parties did intend permenance.
    • employee handbook:are enforceable majority rule.
    • can override the lack of a contract if there is evidence of the contrary, express oral promise... but will generaly be seen as an "at will"
    • distributorship and franchise for the duration sufficient for financial recovery of investment if A is exclusive dealer to B

    • part performance may be enforceable by the beginning of peformance. because parties acted as if they believed they had a contract.
    • modern trend towards liberal contracting.
    • bargains capable of being made certain:so when a term is not declared, but has a remedy and an objective standard in the contract, then is enforcable.' requirements" and "output" are objectively determined. also.. as such and such or as per the exchange.

    • also, reference to a local custom is sufficient ( ex. an offer to convey " in the usual form" is enforcable because the custom is local and tracable.
    • " agree to agree" then unenforcable if the term is material untill they reach an agreement..
    • courts will not make a contract for the parties.
    • THERE IS A DIFFERENCE BETWEEN TO BE AGREED UPON AND OMISSION of terms. omission might be filled, where as the agreement will not be enforced/( traditional rule) unless term is a minor one.

  3. mistake
    • false impression. five basic catagories:
    • mutual mistake. both shared basic assumption of fact... adverselt affected entitled to recision unless he bore the risk of mistake.(voidable)
    • unilateral mistake mental machinery, computation. if nonmistaken party knew or should have known and "palpable" possible to recover by reliance even if not palpable. so, be degree of relaince instead of expectaion damages.
    • mistranscription oral into writing mistake. writing will be corrected by means of reformation.
    • misunderstanding: mistaken impression with unambiguous language when it was ambiguous, each party interpreted language differently. if each interptretation is reasonable, neither party is liable. but if one interpretation is more reasonable then the other, contract formed on the more reasonable interpretation.
    • mistake in transmission intermediary like telegraph company mistypes offer or an ecceptance. if the recieveing party knew or should have known of the error, then no contract.... if no knowledge or reasonable knowledge, then contract is formed using the imediary transmission.
    • intermediary may be liable for negligence for any loss suffered by either party.if offeree knew. there is no contract. if not, split authority
  4. misrepresentation
    • a misprepresentation is fradulent if the misrepresenting party intendesher assertion to induce another party to enter an agreement and she
    • 1. knows or believes it untrue
    • 2. llacks confidence in the truth but presents it as fact
    • 3.says or implies there is a basis for the assertion such as personal knoweldge or investigation, when the basis does not exsist.
    • if the misrepresentation is relied upon, then contract is voidable.
  5. material misrepresentation
    • voidable by party who relies on it
    • 1. assertion probibly will get the easonable person to agree.
    • 2. misrepresentating party knows the agreeing party will agree
  6. duress
    witholding or contracting only under favorable terms is valid... but economic duress is a defense where:

    • 1. threatens to commit wrongful act ( breach) and will cause serious threat to finances or personal property
    • AND
    • 2. no adequate means to avoid or prevent, other then entering the contract.

    example of late notice of high contingency fee for tax services.( pg 159)
  7. undue influence
    where one person has influence over another such that the person will not act against the welfare of that person.elderly aunt sells land to nephew at super low price because she feels ( justified) he would not do wrong by her welfare.
  8. unconscionability
    • a UCC..concept.
    • procedural and substantive
  9. procedural conscionability
    • "unfair surprise" will slip into the contract a term...
    • 1. reason to believe other person would not reasonably expect this term.
    • 2. not notice the term.
Card Set
defenses to contracts