Flashcards in Contracts - Defenses to Formation Deck (15):
List the two types of contractual mistakes that can occur.
1.Mutual (bilateral) mistake (defense);
2.Unilateral mistake (not always a defense).
Describe a formation mistake.
When mistake is a clerical/computation error so large that other party should have known.
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.
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.
When do bilateral mistakes create a binding contract?
When mistake is due to
List the types of assent defenses that can be used to invalidate the formation of a contract.
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.
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.
What is the effect of illegal subject matter on a contract?
It makes the contract void.
List the remedies for lack of mutual assent.
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.
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.
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.
Under what circumstances can a unilateral mistake become a defense?
When other party knew or should have known of a mistake.