Contract Law: Defenses To Formation

Defenses to Formation of Contract

Lack of capacity: Contracts are voidable by Minors Voidable only by minor-(for reasonable time after majority) May ratify at majority Must give restitution when he avoids the contract (to the extend he can) The party contracting with the minor can get quasi-contract for “necessities” Mental Voidable by nut only Void if certifiable Tests Cognitive (traditional) Volitional (modern) Make restitution of all benefits

Fraud & misrepresentation Fraudulent or material assertion not in accord with present or past facts Must justifiably rely on the assertion Voidable by injured party Restitution

Public policy Blue pencil rule

Duress Physical Voidable Restitution Economic “Hold-up game” No alternative but to accept (See pre-existing duty)

Undue influence Confidential relationship & unreasonable advantage OR-high pressure sufficient to overcome will-preys on weakness But-“hard to bargains” OK

Illegal contracts Void if illegal at outset Unless severable Not in pari-dilecto-less guilty party gets quasi-contact But-reporter may get Quasi-contract

Unconscionable Prevent oppression & unfair surprise Court can refuse to enforce or limit contract Adhesion K Limitation of remedies for personal injury in consumer contracts is per se unconscionable Limitation of remedy that fails of essential purpose

Mistake: Mutual Mistake Basic element of transaction and has material effect Unless party bears the risk (After formation, see impossibility) Unilateral Mistake: Contract enforceable Unless other party knew or should have known Unless enforcement is unconscionable

Statute of frauds: certain contracts In order to be enforceable must be in writing for a conract to be enforcebale Must be in writing In consideration of marriage-NOT contracts to marry Contracts that can not be performed within one year; Surety contracts Between lender & surety But-main purpose rule Transfer of interest in land (Not growing crops) Estate debts-paid by administrator out of own pocket Goods over $500 under the UCC But not if goods accepted, paid for, or white elephants; Personal property over $5000 UCC-NOT goods Must Contain: Common law: parties, subject terms UCC-intent to contract quantity “Signed” by party to be charged Merchants must object to confirmation within 10 days Contract voidable-defense must be raised-not by court or 3rd party May be estopped from raising waiver of defense or promise to put in writing Can still get quasi-contract some courts MAY allow Reliance where no benefit conferred-Monarco “Tacking” ok-signature still required.

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