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Contracts II
Faulkner Law - Thomas Goode Jones School of Law
See, Brenda

CONTRACTS II OUTLINE
 
I.                    Overreaching (Contract defenses)
a.      Duress
                                                               i.      Definition
1.      Impermissible pressure exerted over one party by another
                                                             ii.      Elements:
1.      Induced
2.      Threat
3.      Improper
4.      No reasonable alternative
                                                          iii.      RS § 174: Physical force makes resultant contract void
                                                          iv.      RS § 175: When duress by threat makes contract voidable                         If a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim
                                                             v.      RS § 176: When threat is improper
1.      A threat is improper if
a.      It is a crime or a tort
b.      Criminal prosecution
c.       Use of civil process and made in bad faith
d.      Breach of duty of good faith and fair dealing
2.      A threat is improper if the resultant exchange is not on fair terms, and
a.      Harm to recipient and not benefit party making the threat
b.      Prior unfair dealing by the party making the threat
c.       Use of power for illegitimate ends 
3.      Threat is not improper if other party believes there is reasonable basis for making threat. For example, if A has committed a crime, threatening criminal prosecution would be reasonable
                                                           vi.      Economic duress
1.      If the immediate possession of needful goods is threatened or if party breaches by withholding goods that cannot be gotten by another source
2.      Elements:
a.       Threat
b.      Threatened party could not obtain goods from another source
c.       Ordinary remedy for breach of contract would not be adequate
3.      A contract is voidable on the ground of duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding free will: Austin Instrument v. Loral Corporation
b.      Pre-existing duty rule
                                                              i.      RS § 73: Performance of legal duty                                                  Performance of a legal duty owed to the promisor which is neither doubtful nor the subject of honest dispute is not consideration
                                                            ii.      In Alaba

reditors cannot sue
c.       Must be more than one creditor
3.      Accord and satisfaction
a.       Accord – where there is a disputed debt and the parties agree on a sum
b.      Satisfaction – when the debt is paid off
c.       UCC 3-311: Accord and Satisfaction
                                                                                                                                      i.      Applies to payment as full satisfaction of a disputed (unliquidated) debt, in which claimant obtained payment
                                                                                                                                     ii.      Claim is discharged if written statement says that payment was full satisfaction
                                                                                                                                  iii.      But claim is not discharged if:
1.      Not sent to designated person 
2.      Payment is returned within 90 days
Claimant must be aware that instrument was payment in full