2: Duress & Capacity Flashcards
(8 cards)
Duress (General)
Unless you agree, I will see that X happens (X is less pleasant than contracting); aggrieve party claims their will was overcome by threat –> not enforceable
R14: Infants
Unless statute provides otherwise, person has capacity to incur only VOIDABLE contractual duties until beginning of day before their 18th birthday (can disaffirm and get out of K as minor, affirm once 18)
R15: Mental Illness or Defect
(1) incurs only VOIDABLE contractual duties if by reason or mental defect (a) he is unable to understand in reasonable manner the nature/consequences of transaction or (b) is unable to act in reasonable manner in relation to transaction AND other party has reason to know of condition; (2) if made on fair terms and other party does not know of mental defect, court may terminate ability to void K if it would be unjust to let K stand
R16: Intoxicated Persons
(1) person incurs only VOIDABLE contractual duties be entering into transaction if other party has reason to know that by reason of intoxication (a) he is unable to understand in reasonable manner the nature and consequences of transaction or (b) is unable to act in a reasonable manner in relation to transaction (must be incapable of exercising judgment and understanding agreement)
R175: When Duress by Threat Makes a Contract Voidable
if manifestation of assent is induced by an improper threat by other party that leaves victim no reasonable alternative, K is voidable by victim (e.g. holding gun to head)
R176: When Threat is Improper
(1) improper if (a) what is threatened is a crime/tort, or threat would be a crime/tort if it resulted in obtaining property, (b) is a criminal prosecution, (c) is use of civil process and threat is made in bad faith, or (d) is breach of duty of good faith and fair dealing under contract; (2) threat improper if resulting exchange is not on fair terms AND (a) threatened act would harm recipient/not significantly benefit party making threat, (b) effectiveness of threat in inducing manifestation of assent is significantly increased by prior unfair dealing by party making threat, or (c) what is threatened is use of power for illegitimate ends
R177: When Undue Influence Makes a Contract Voidable
(1) undue influence is unfair persuasion of party who is under domination of person exercising the persuasion OR who by virtue of relation between them is justified in assuming that person will not act in manner inconsistent w/ his welfare; (2) K is voidable by victim if party’s manifestation of assent is induced by undue influence
Austin Instrument v. Loral Corp: Liquidated Damages Clause
K is voidable on ground of duress when it is established that party making claim was forced to agree by means of wrongful threat precluding exercise of free will; proven where (1) party threatens to breach K, (2) threatened party cannot cover obligation with another source, and (3) ordinary remedy for breach of K is inadequate
