Contracts: Defenses to Formation Flashcards Preview

REG > Contracts: Defenses to Formation > Flashcards

Flashcards in Contracts: Defenses to Formation Deck (8)
Loading flashcards...
1

5 Defenses to Formation

Mistake
Fraud or misrepresentation
Duress
Undue Influence
Illegality

2

Capacity (voidable) required to form a contract

1. Be of legal age (over 18)
- minors have a right to disaffirm (for reasonable time after 18), show intent, and return consideration (whatever's left).
- Received back any consideration given
- Exception: necessity i.e. food
- Ratification: notifies of intent to honor or continues to perform
2. Be of mental capacity (not intoxicated)
- made before court determined incompetence (voidable) after is void

3

Types of Mistake

Unilateral Mistake
- binding on mistaken party unless
- other party knows/should have
- material and obvious
- error in math, inadvertent, and not gross negligence
Bilateral Mistake
- both parties are mistaken
- mistake involves identity, existence, or quantity or subject matter, unenforceable

4

Innocent Misrepresentation

- deception involving facts or promises of performance
- not sales-puffing
- material
- one party relied
(difference from fraud is intent)
(remedy: rescission)

5

Fraud

- deception involving material fact
- one party relied
- Intent to defraud
(remedy: damages or rescission)
(fraud in the formation = punitive damages)

6

Undue Influence

- special relationship where one party can influence another
- takes advantage of trust
(contracts are voidable)

7

Duress

- during formation, one party is deprived of free will
- Forms: physical force, duress, economic pressure

8

Illegality

- contracts in violation of statutes
- contracts contrary to public policy
- exculpatory clauses (disclaim liability)
- contracts resistant to trade

Decks in REG Class (109):