Busi Law exam 4

Contract may be unenforceable if parties did not genuinely assent because of:

• mistake

• fraudulent misrepresentation

• Undue influence

• duress

Mistakes of ____ might allow a contract to be cancelled

material fact

Unilateral mistake

mistake by 1 of the parties

generally still an enforceable contract

CAN BE DISMISSED IF:

mistake due to a mathematical error

other party knew of the mistake

Bilateral mistake

mutual misunderstanding by both parties about some fact

contract can be rescinded

Mistake of value

mistake about future value or quality

STILL ENFORCEABLE

Fraudulent misrepresentation

innocent party induced to enter a contract by a fraudulent misrepresentation

MAY RESCIND CONTRACT

Required elements of fraudulent misrepresentation to be rescinded

• misrepresentation of material fact

• intent to deceive

• justifiable reliance on misrepresentation

• injury to the innocent party

Intent to deceive term

Scienter- guilty knowledge

Justifiable reliance def

Received party must have justifiable reason for relying on the misrepresentation

Undue Influence

arises from relationships in which a third party can greatly influence one of the contracting parties

Presumption definition

when contract enriches the dominant party, court will often undue influence

Duress def

party enters into a contract under force or threat

threat must be wrongful or illegal

Statute of frauds

requires that certain types of contracts must be in writing and signed by the party against whom enforcement is sought

Contracts that require writing

M- marriage

Y- year

L- land

E- executor

G- goods

S- surety

Surety rules

Primary performance (guarantee): will pay first for the person NO NEED WRITING

Secondary performance: will only pay if the party does not. NEEDS IN WRITING

Exceptions to the writing requirements

Partial performance: court may grant specific performances as an equitable remedy

Promissory estoppel: court may estop a person from denying a contract exists

Custom goods: oral contracts for the sale of custom goods are enforceable (regad

The Parole Evidence Rule

oral representations or promises made prior to the contract formation may NOT be admitted in court

Complete and final statement will always win

Privity to contract definition

only the original parties to a contract have rights and liabilities under the contract

Exception to privity of contracts

delegation

assignment

third party beneficiary contract

Assignments

Transfer of contractual rights

Delegations

Transfer of contractual duties

Assignor def

Party assigning rights to third party

Asignee def

party receiving rights

Obligor def

party delegated to perform

Obligee

party entitled to performance by obligor

Exceptions to assignments

• statute prohibits assignment

• contract is personal

• assignment significantly changes the risks or duties of the obligor

• Contract prohibits assignment

UK rule with notice of assignment

first assignee to give notice wins

US rule with notice of assignment

first assignee in time wins

Delegator def

party delegating the duties

Delegatee def

party to whom the duties are delegated

exceptions to delegations

duties are personal - require a special skill/talent

performance will vary greatly

contract prohibits delegation

“Assignment of all rights” definition

it is both an assignment and a delegation

types of third party beneficiaries

• intended

• incidental

Intended third party beneficiaries

has legal rights and can sue to enforce contract made for their benefit

Incidental third party beneficiaries

no legal rights and cannot sue

A party may be discharged from a valid contract by":

• a condition occurring or not occurring

• full performance or material breach by the other party

• agreement of the parties

• operation of law

Types of conditions in contracts:

• precedent: condition that must be fulfilled before a party performance can be required

• subsequent: condition fulfilled to terminate a party’s absolute promise to perform