Defenses to Contract Enforcement

Question 1

Misunderstanding

Answer 1

Arises when each party attaches a different meaning to the same words

For this defense you must show
1) The parties used a material term that is open to reasonable interpretation

2) Each side attaches a different meaning to the term

3) Neither party knows or should know of the confusion

Question 2

Incapacity

Answer 2

1. A contract with a Minor is voidable by the minor except for contracts for necessities
2. A contract with a mentally ill person is void
3. A contract with a very intoxicated person and the other side knows or should know is intoxicated is

Question 3

Mutual Mistake

Answer 3

Allows the adversely affected party to rescind if

1) There is a mistake of fact at the time of the deal

2) The mistake relates to a basic assumption the contract is made

3) The impacted party does not bear the risk

Question 4

Unilateral Mistake

Answer 4

Allows the adversely affected party to rescind if

1) She can prove all elements of mutual mistake

2) The mistake would make the contract unconscionable; or

3) The other side knew/had reason to know/or caused the mistake

Question 5

Misrepresentation

Answer 5

A statement made at the time of the contract that is not true

To assert this defense, the party must show

1) A misrepresentation of fact
2) That is material or fraudulent
3) That is made under circumstances which is justifiable to rely on the representation

Question 6

Fraud in the execution

Answer 6

Tricking someone into singing a contract when they dont know its a contract

Question 7

Non disclosure

Answer 7

The other party does not learn the truth about something it should have via 1) a special relationship or 2) active concealment

Question 8

Duress

Answer 8

An improper threat that deprives a party from making a meaningful choice to contract

Economic Duress- arises when one party makes a threat to induce another party to contract/modify

Undue influence- taking advantage of a weak minded person

Question 9

Illegality

Answer 9

Illegal contracts are unenforceable. However, a contract entered into in furtherance of an illegal act, that is not itself illegal is enforceable

Question 10

Unconscionability

Answer 10

1) Procedural - A defect in bargaining process

2) Substantive- a rip off

Question 11

In Virginia unilateral mistake is

Answer 11

Not a basis for equitable relief

Question 12

In Virginia, Fraud in the inducement

Answer 12

Is grounds for both recession of the contract and action for damages

Question 13

Fraud in the inducement is

Answer 13

When a fraudulent misrepresentation is used to induce another party to enter into a contract

Question 14

In Virginia, when a plea of infancy is made

Answer 14

The court must follow a 3 question test to determine whether the defense applies to the case

1. Are the things supplied necessities ?
2. Where the things in fact necessary ?
3. Where the things supplied actually necessary to the position and condition of the infant

Question 15

In Virginia, an unconscionable bargain is that one that

Answer 15

“no man in his senses and not under a delusion would make and accept”

Question 16

In Virginia, Pre injury releases are

Answer 16

Void as against pubic policy. However, an indemnity clause is valid.

Question 17

In Virginia, a noncompete will not be valid if

Answer 17

1) It is greater than necessary to protect a legit business interest

2) It unduly restricts the employees ability to earn a living

3) or if it violates public policy