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Question 1

If an unlicensed person contracts to perform services, like a doctor or attorney, how does that affect the contract?

Answer 1

Depends on the purpose of the contract:

• to protect the public from unqualified people: contract illegal and unlicensed person cannot recover for his services
• fiscal regulation/tax purposes: contract is enforceable even though there was no license

Question 2

If a contract has an illegal purpose, where the subject matter is fine, but the reason for contracting is prohibited by law, what is the result?

Answer 2

Contract is voidable by the innocent party that didn’t realize the legal purpose

Question 3

If a contract will indirectly aid an illegal act, does that make it illegal?

Answer 3

No

Question 4

If a lender loaned money that he knew would be used for illegal gambling, but he didn’t take any part in the gambling, can he recover under that contract?

Answer 4

Yes

Question 5

What is duress?

Answer 5

Taking away someone’s free will and forcing them to do something they don’t want to

Question 6

Is a threat to breach a contract considered duress?

Answer 6

Only if the breach would result in irreparable injury because of the absence of any adequate remedy
- R2: that is breach of duty of good faith and fair dealing which makes the agreement voidable by the victim who can ratify after duress is removed

Question 7

What are the two major types of duress?

Answer 7

Personal and economic

Question 8

What are examples of personal duress?

Answer 8

Physical, psychological, threats to family, superior position relationship (Psychiatrist)

Question 9

What is the result of a contract that involves personal duress?

Answer 9

There is a voidable obligation by the party subjected to it

Question 10

What is economic duress?

Answer 10

The party that caused duress must have caused the economic problem, not just took advantage of someone’s situation

Question 11

If someone owes you money and they know you need it right now, so they offer less, and you take it, is that duress?

Answer 11

No, because they weren’t the reason you felt pressure

Question 12

What is the UCC rule about duress?

Answer 12

If there is coercion, the party can agree, but at the same time indicate it is under protest, and that preserves his right to set aside the agreement

Question 13

What are problems to enforcement of a contract that relate to capacity of the parties?

Answer 13

• infancy
• illegality
• duress
• undue influence

Question 14

What is undue influence?

Answer 14

Improperly using power in a way that deprives a person of free will

Question 15

What is the consequence of undue influence?

Answer 15

Makes the contract voidable

Question 16

How can ratification happen in an undue influence situation?

Answer 16

Once the party has the power to avoid, knows the facts, and is away from the other’s influence, he can ratify the transaction

Question 17

Is persuasion enough to be considered undue influence?

Answer 17

No, the actor’s free agency must’ve been destroyed and subverted so that he was expressing the will of the person exerting the influence

Question 18

What are the three major areas of undue influence cases?

Answer 18

• party using dominant physical position
• party using position of trust
• attorney-client cases

Question 19

What are situations where undue influence can happen when one party uses a dominant physical position to induce the subservient party to consent to an agreement?

Answer 19

• illness
• old age
• immaturity
• recent death of a spouse
• excessive use of alcohol/drugs

Question 20

If undue influence happens by one party using a position of trust or confidence to unfairly persuade another, how is that proven and who has the burden?

Answer 20

Proved by circumstantial evidence:

• susceptibility of the influenced party
• confidential relationship

The burden is on the party benefited to show the transaction wasn’t by undue influence through clear and convincing evidence

Question 21

If a lawyer contracts with his client about things unrelated to legal services, can that be undue influence?

Answer 21

Yes, because of the fiduciary relationship. He must be very careful in these situations because these contracts are strongly construed against the lawyer

Question 22

In order for a lawyer to show there was no undue influence, what must he prove?

Answer 22

• transaction was equitably conducted
• client was fully informed of the nature and consequences
• attorney fully revealed his own interest
• client got independent advice or the attorney gave it himself as a disinterested party

Question 23

Many courts say that if an attorney got the better end of the deal in an agreement with his client, what happens?

Answer 23

The agreement is invalidated unless attorney can show he didn’t exploit the client

Question 24

What are things to consider if undue influence is an issue?

Answer 24

• discussion at inappropriate times/places
• demand that business be finished immediately
• emphasis on bad consequences of delay
• use of multiple persuaders against a single party
• no third-party advisers to subservient party
• saying there is no time to consult with advisers or attorneys

Question 25

What are remedies for undue influence?

Answer 25

• cancellation
• avoidance
• restoration of status quo
• specific performance