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Flashcards in Contracts - Defenses to Formation Deck (15):
1

List the two types of contractual mistakes that can occur.

1.Mutual (bilateral) mistake (defense);
2.Unilateral mistake (not always a defense).

2

Describe a formation mistake.

When mistake is a clerical/computation error so large that other party should have known.

3

Define "undue influence."

Occurrence in which one party induces another party to enter into a contract by overcoming his or her free will through an abuse of a position of confidence.

4

List the elements that constitute a fraud.

1.Intentional Deceit (or negligent misrepresentation);
2.Deceit of a Material Fact;
3.Reliance of the party deceived.

5

When do bilateral mistakes create a binding contract?

When mistake is due to
1.Value, or
2.Quality.

6

List the types of assent defenses that can be used to invalidate the formation of a contract.

1.Mistake;
2.Misrepresentation;
3.Fraud;
4.Duress;
5.Undue influence.

7

Describe the differences between fraud and misrepresentation.

1.Fraud always have malicious intent, Misinterpretation may not have malicious intent to deceive if it happens negligently through a misstatement and/or omission of a material fact(s);
2.Fraud is a civil wrong which entitles a party to claim damages in addition to the right to rescind the contract. Parties to a contract claiming misrepresentation only have the right to rescind the contract and there can be no suit for damages.

8

Define duress.

A forcing of a party to enter into a contract under the fear or threat of violence to that party or member of his or her family, or use of economic pressure to overcome the party's free will.

9

What is the effect of illegal subject matter on a contract?

It makes the contract void.

10

List the remedies for lack of mutual assent.

1.Rescission;
2.Damages;
3.Modification.

11

What types of contracts are enforced against minors?

1.Contracts for necessaries or necessities;
2.Contracts that they ratify after reaching the age of majority.

12

What is the effect of an illegal covenant in a contract?

•The court can declare the covenant void;
•The court can interpret the covenant in order to have it fall within the law.

13

When can a covenant not to compete be enforced?

When it is:
•Part of a contract;
•Necessary to protect one party, such as the buyer of a business;
•Reasonable in geographic scope and time.

14

Under what circumstances can a unilateral mistake become a defense?

When other party knew or should have known of a mistake.

15

List the elements for misrepresentation or fraud.

1.Misrepresentation of statement of fact;
2.Intent to deceive;
3.Reliance on the misrepresentation.