Contracts Quiz 8 Unfinished

What reasons do Courts have for not enforcing an agreement?

1. SOF

2. Fraud, misrepresentation, and nondisclosure

3. Lack of capacity

4. Duress

5. Undue influence

6. Illegality

7. Public Policy

8. Unconscionability

9. Mistake

Misrepresentation

1. An assertion not in accord with the facts.

2. That is either material or fraudulent

3. Actual reliance

4. Justifiable Reliance

When does Duress by Physical Compulsion Prevent Formation of a Contract? R2 § 174.

A manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent.

When Does Duress by Threat Makes a Contract Voidable? R2 § 175.

A contract may be avoided based on duress where one party has obtained the assent of the other party

1. By an improper threat that

2. Leaves the recipient with no reasonable alternative except to assent, and

3. In fact induces assent.

When a Threat is Improper? R2 § 176.

Threat is improper if

(a)what is threatened is a crime or a tort

(b) what is threatened is a criminal prosecution

(d) the threat is a breach of the duty of good faith and fair dealing under an existing K with the recipient.

When Undue Influence Makes a Contract Voidable?

1) Undue susceptibility of one party (Either because he is under the domination of the other, or because of a relationship of trust) and

2. Over persuasion by the other party.

Often confidential relationship between parties such as parent and child, husband and wife, priest and parishioner, and dr. and patient.

Agreements That Violate Public Policy

1. Family that affect family relationships. Ex: Surrogacy Ks

2. Exculpatory Ks

3. Covenants not to compete

Covenants Not to Compete

To be enforceable, non-compete agreements must:

1. Be Ancillary (eg, incident to an employment agreement or K for sale of a business)

2. Protect a legitimate interest of the promisee (as opposed to prohibiting ordinary competition)

3. Be reasonable in scope - time, territory and prohibited activities, and

4. Be such that the promisee's need outweighs the hardship to promisor and any injury to the public

Legitimate protectable interests may include:

1. valuable confidential information

2. relationships with customers, patients, or
   clients (retaining customer base)

3. customer, patient, or client goodwill

4. extraordinary or specialized training

What are the 3 approaches Court’s use for unreasonable non-competes

1. Blue pencil

2. All-or-nothing

3. Reform the covenant to a reasonable restraint

§ 376.Restitution When Contract Is Voidable

A party who has avoided a contract on the ground of lack of capacity, mistake, misrepresentation, duress, undue influence or abuse of a fiduciary relation is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance.