Term
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Definition
Answers the question: was the offer or acceptance voluntarily made?
Do they REALLY intend to make a free and voluntary offer/acceptance? |
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Term
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Definition
Answers the question: was the offer or acceptance voluntarily made?
Do they REALLY intend to make a free and voluntary offer/acceptance? |
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Term
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Definition
Misrepresentation
Fraud
Duress
Undue Influence |
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Term
| If a contract is VOIDABLE |
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Definition
| The protected party (the person being taken advantage of/ forced) has the power to END the contract |
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Term
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Definition
A false statement of fact (in present or past, not future)
Which is material to the contract
On which the other party relied
Does not require that you KNEW the truth
Car example |
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Term
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Definition
Intentional Misrepresentation
Makes it VOIDABLE |
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Term
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Definition
Belief about a FACT
That's not true
"Sell you my house at 2nd and Main for $120,000" but you thought the house was the one on 3rd and Main
Other examples:
Location of House
Year of the Car
Thought something was an original
Makes it VOIDABLE |
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Term
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Definition
Wrongful Coercion
That induces a person to
Enter in to a contract they don't want
Earing and gun example
2 Types:
Physical Compulsion Duress
All other Duress |
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Term
| Physical Compulsion Duress |
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Definition
Take hand and make someone sign something
Contract is VOID |
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Term
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Definition
VOIDABLE
Threatening to shoot you
You have to believe it's going to happen
His belief of his present immediate ability to do it |
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Term
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Definition
Unfair PERSUASION of
Susceptible individual
It is PERSUASION rather than COERCION
If you're guilty of undue influence, the contract if VOIDABLE
Usually have a trusing relationship with someone, business partner, family, etc.
Ex. Grandmother giving house to one grandchild instead of any of the other grandchildren |
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Term
| Determining Undue Influence |
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Definition
Relationship of
Trust (lawyers, pastors, doctors)
Confidence (lawyers, pastors, doctors)
or Dominance (old person living with kid) |
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Term
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Definition
A personal of normal mental ability or legal age
You might have all the other elements of a contract but won't have a contract if you don't have capacity |
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Term
| People who don't have capacity |
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Definition
Minors: Have to be legal age to make valid contract: 18 in most states
Mentally Incapacitated: unable to contract with mental incapacity, affects their ability to make a contract |
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Term
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Definition
If you have a contract with someone under 18, even if you have offer, acceptance, consideration but have capacity issues because of age. Minor rule driven by age, Contract is VOIDABLE if made by a minor. The power belongs with the minor because the minor will be protected. A mior can stay in or get out of the contract as they see fit
17 year old takes $8000 to buy a used car. He signs contract and pays the $8000 and gets the car. He drives the car home. Contract is voidable. The minors parents have the right to stay in the contract or get out of the contract. Parents can make the minor take the car back if they choose to. |
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Term
| Traditional common law rule: |
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Definition
| If you have a contract with a minor, the minor has the right to disaffirm or terminate the contract |
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Term
| When do minors have the right to terminate? |
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Definition
Whenever they want. (reasonable time)
Minor can terminate the contract because the contract was made when the person was a minor prior to age 18 so he can get out of the contract
Minor buys car, drives for six months: can terminate the contract
Minor buys car, drives for 2 years, can terminate the contract |
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Term
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Definition
Car dealership sells minor a car. Instead of paying all the money, the minor buys the car making $400 monthly payments. Minor buys the car on his 17th birthday. He drives the car for 12 months paying the $400 payments every month. He has put 15,000 miles on the car and also put one dent in the car. He takes back the car and wants his money back. He can terminate the contract because he is still a minor one year later.
Minor buys car on 17th birthday, takes the car out and drives 110mph, wrecking the car. Minor now wants money back. (minor will give back the consideration (the wrecked car) he has the car dealer has to give back all the money the minor paid). Car dealer stuck with damages.
Minor gets car, goes to girlfriends. the car gets stolen. Returns to the car dealership the next day and wants his money back. Minor gets his money back.
NOT A QUESTION IF HE CAN GET OUT OF THE CONTRACT BECAUSE HE IS A MINOR. |
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Term
| Does a minor get back all the consideration he/she gave? |
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Definition
Yes.
If he paid $400 monthly, he will get it all back
If he paid $8000 for the car, he will get the full amount back |
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Term
| Does a minor have to pay for damages? |
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Definition
No.
Ex. Dealer wants to off-set the amouht of money the minor paid because of damages and wear and tear on the vehicle. No such luck, car dealer is stuck with the damages and the minor must receive all the consideration he gave, or all the money he paid back.
Minor must give back all the consideration he has in whatever shape it is in |
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Term
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Definition
Providing a necessity
A car is NOT a necessity
Food, clothing, and shelter are.
Ex. Minor says he needs a place to live. He signs a contract to rent an apartment. When he signs the contract, the contract is voidable and the minor can get out of the contract before he turns 18 or a reasonable time after turning 18. He will get back all the consideration he paid. Owner can choose to sue for providing a necessity but WON'T get damages. All he'll get is fair market value of the apartment for the time the minor lived there, or the contract amount (whichever is less) |
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Term
| Can am apartment owner sue for breach of contract with a minor? |
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Definition
There technically is no contract
Can sue for providing a necessity |
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Term
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Definition
| Minor goes to buy a car. He swears he is 18. the car dealership asks for ID. The minor brings in a birth certificate showing he is 18 and the drivers license showing he is 18. He buys the car. He shows up back at the car dealership one year later and wants out of the contract. He had lied about his age. The minor can get out of the contract and get all the money he paid back. The car dealership cannot sue the minor for fraud because he is a minor. |
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Term
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Definition
Someone who has a medical condition that affects their ability to understand.
Question becomes, do they have the ability to understand what they are doing? |
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Term
| Is it possible for someone who is mentally incapacitated to make a contract if they understand it? |
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Definition
| Yes. ONLY if they understand it |
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Term
| Rules for making a contract with a 35 year old with the mental capability of a 10 year old. |
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Definition
| Contract has to be made so that a 10 year old can understand |
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Term
| Disaffirming when mentally incapacitated |
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Definition
If it is obvious a person has mental issues, they can terminate contract within a reasonable time after the guardian is aware.
With most mental issues, the person ends up having a guardian. If the guardian is appointed on June 10 and the contract is signed before the guardian is appointed, the guardian can still terminate or disaffirm |
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Term
| Disaffirming in cases of mentally incapacitated persons |
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Definition
Did the person making the contract have reason to believe the person was mentally incapacitated? (apartment)
No: Mentally incapacitated person gets the money paid back and the apartment owner gets paid for damages.
Yes: Apartment owner does not get paid for damages and the mentally incapacitated person gets all the money back
Necessity rules: Food, clothing, shelter: same rules apply as for a minor |
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Term
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Definition
Don't have capacity till 18
Can disaffirm prior to capacity or reasonable time thereafter
If minor disaffirms, he gives back consideration, returns it 'as is'
Person who helped minor can sue for providing necessity- will only get fair market value or contract amount |
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Term
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Definition
Right to disaffirm reasonable timea fter guardian finds out about it
When they disaffirm the mentally incapacitated person returns all consideration they have and they get back all the consideration they gave.
Does the other person get damages?
Depends on if they had reason to believe you were mentally incapacitated, If reason to suspect: Get no damages; if no reason to suspect: they get damages
Same necessity rules as minors |
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Term
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Definition
Is the contract legal?
It is NOT that something illegal happens, it is simply, is the purpose of the contract illegal? |
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Term
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Definition
Violates statute
Violates public policy
Fail to Obtain Licence |
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Term
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Definition
Does contract violate Statute?
Contract who's PURPOSE is to violate statute
Commit murder, tort, etc.
Give you $500 to go to the store and get me beer- if i'm 21 it's perfectly legal; if I'm 19, it's not
MAKES VOID |
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Term
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Definition
Restrain of competition
Price Fixing
Agreement to commit a crime
MAKES VOID |
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Term
| Failure to Obtain a License |
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Definition
MAYBE
Purpose is to protect the public; people have to take a test to know what they're doing
Ex. David offering to take out some kid's appendix. Is he authorized or have license to do it? NO.
No licence= VOID
Sometimes the purpose of the license is to MAKE MONEY
No license= NO EFFECT
Doesn't matter, if the purpose is to make money, contract coulds till be void. |
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Term
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Definition
Every state has it's own SOF
Certain types of contracts HAVE to be in writing
Ex. David's daughter just graduates from college, buys new car, has job at McDonalds, went to bank and entered into a new contract. Salesman lies and says that if she doesn't end up paying, that her dad will. CANNOT BE DONE b/c it has to be in writing. |
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Term
| Collateral (2nd) Contract |
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Definition
NOT A COSIGNER
a person promises to PERSONALLY perform the contract of another; "I'll pay my daughter's bill" |
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Term
| Contracts for the sale of interest in real estate |
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Definition
No oral contracts
Either buy it or lease it for longer than a year
Must be in writing |
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Term
| Contract for the "sale of goods" for $500 or mroe (UCC) |
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Definition
| Have to know that there is a statute of frauds dealing with the sale of goods, dont have to know what it is |
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Term
| Contract where executor or administrator agrees to be PERSONALLY liable for a debt of the estate |
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Definition
| Father passes away, 6 months before his death, goes out and buys a 10,000 watch and is making payments, debt now owned by estate. IF family agrees to pay dad's bill, have to get it in writing. |
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Term
| Contract in which the consideration is marriage (pre-nup) |
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Definition
Does not mean that all, wedding proposals have to be written down
Wife dies, goes to Vegas to meet Bambi the Showgirl, being aware of his money, she says she loves him and wants to get married--how does he protect himself? Prenup
Should be signed before the marriage, doesn't have to be but it's harder to get them to sign after |
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Term
| Bilateral contract that cannot be performed within one year |
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Definition
Must be in writing
Pay megan $350,000/year for 5 years to sing at his club
Has to be in writing, if not in writing, she can't sue him and win b/c there is no written contacts
Bob and Sam make a bilateral contract on 6/14/05 for Bob to work for sam through 6/14/06 in which Sam gets weekly wages... Will it be done in 1 year? NO. NEEDS to be in WRITING. |
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Term
| Writing Requirement: What's good enough? |
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Definition
Any writing will do; doesn't have to be drawn up by a lawyer
Have to know the identity of parties in the agreement (doesn't have to state names, but must be able to identify them.)
Have to know what the subject matter is
Have to know financial terms (what he's going to pay for it and when is it due?)
Must be signed by person who is raising the defense |
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Term
| Third Party Beneficiaries |
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Definition
| People who are not part of the original contract but claim to have a benefit from the contract |
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Term
| What are the 3 kinds of people who can benefit from a contract? |
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Definition
Incidental Beneficiary
Creditor Beneficiary
Donee Beneficiary |
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Term
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Definition
Not intended to benefit from the contract
Cannot Sue
No recover under contract |
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Term
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Definition
A second contract by which party benefits.
Beneficiary can recover under the assigned contract |
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Term
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Definition
Gift
Contracting party recovers
He gest to sue (get nominal damages-low damages)
Beneficiary Recovers the value of receiving the item not the actual value of the item
Rose example |
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Term
| A Post-Determination Contract |
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Definition
Situation where the person is declared mentally incompetent and they LATER make a contract.
The contract is VOID since they had already been found to be incompetent and there is not a contract.
Even if the person's guardian did want to keep the contract and fullfill it, they cannot because it is void |
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Term
| Pre-Determination Contract |
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Definition
Situation when the person makes a contract and then later is declared incompetent.
If Court also determines that person was incompetent BACK ON THE DAY THEY MADE THE CONTRACT, the contract is VOIDABLE, meaning the person can stay in the contract or get out (disaffirm) as they choose
IF they disaffirm, they get back all the money they paid. Question is now whether they must pay for use/damages of the item before they disaffirmed....
If the other person had reason to believe the person was incompetent, the incompetent person DOES NOT have to pay and only has to return the item as is.
If the other person did NOT have any reason to suspect the person was incompetent, then the incompetent person must pay for use/damages. |
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Term
| Fraud is ALWAYS/NEVER misrepresentation, misrepresentation IS/NOT always fraud. |
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Definition
Fraud is ALWAYS misrepresentation, misrepresentation is NOT always fraud.
Fraud, you get more damages |
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