Mistakes
of Value
Generally, contract is
enforceable by either party.
Exception: Mistake of
value because of a mistake of material fact.
Friday, 22 March 2013
Mistakes of Fact
Mistakes
of Fact
Only a Mistake of Fact
allows a contract to be canceled.
Bilateral (Mutual)
Mistakes can be rescinded by either party.
Unilateral Mistakes cannot
be canceled unless:
If other party to the contract
knows or should have known that a mistake of fact was made.
If mistake was due to
mathematical mistake in addition, summation, subtraction, division, or
multiplication and was made inadvertently and without gross negligence.
Contracts: Genuineness of Assent
Contracts:
Genuineness of Assent
Introduction
Contract may be unenforceable if
the parties have not genuinely assented to its terms by:
§ Mistake.
§ Misrepresentation.
§ Undue Influence.
§ Duress.
Exceptions to the General Rule
Exceptions
to the General Rule
- . Justifiable Ignorance of the Facts.
- Members of Protected Classes.
- Withdrawal from an Illegal Agreement.
- Contract Illegal through Fraud, Duress, or Undue Influence.
- Sever able or Divisible Contracts.
Contracts Contrary to Public Policy
Contracts
Contrary to Public Policy
Contracts contrary to public
policy are void.
Unconscionable Contracts or
Clauses.
Procedural or Substantive
Unconscionability.
Exculpatory Clauses.
Discriminatory Contracts.
Contracts for the Commission of a
Tort.
Contracts in
Restraint of Trade
Anti-Competitive Agreements are
void.
•
Exception:
Covenant not to Compete and Sale of Business.
•
Exception:
Covenant not to Compete in Employment.
Unconscionable Contracts/Clauses.
§ Exculpatory
clauses.
Case 12.4: Beaver v. Grand Prix Karting (2001).
Contracts Contrary to Statute
Contracts
Contrary to Statute
- Usury.
- Gambling.
- Sabbath Laws
- Licensing Statutes.
5.Contracts to
Commit a Crime.
Legality
Legality
A contract to do something
prohibited by federal or state statutory law is illegal and therefore void
(never existed).
§ Contract that
calls for for a tortious act.
§ Contract that
calls for an act contrary to public policy.
Mentally Incompetent Persons
Mentally
Incompetent Persons
Void.
§ If a person has
been adjudged mentally incompetent by a court of law and a guardian has been
appointed.
Voidable.
§ If the person
does not know he or she is entering into the contract or lacks the mental
capacity to comprehend its nature, purpose, and consequences.
Valid.
§ If person is
able to understand the nature and effect of entering into a contract yet lack
capacity to engage in other activities.
§ Lucid Interval.
Intoxication
Intoxication
Lack of contractual capacity at
the time the contract is being made.
Contract can be either voidable
or valid.
§ Courts look at
objective indications to determine if contract is voidable.
If voidable:
§ Person has the
option to disaffirm, or
§ Person may
ratify the contract expressly or impliedly.
Parent’s Liability
Parent’s
Liability
Contracts.
§ Parents not
liable (This is why parents are usually required to sign any contract made with
a minor).
Torts (Statutes
Vary):
§ Minors are
personally liable for their own torts.
§ Liability
imposed on parents only for willful acts of their minor children.
§ Liability
imposed on parents for their children negligent acts that result from their
parents’ negligence.
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