Contracts II Outline

CONTRACTS II OUTLINE

DEFENSES

Defenses can be a shield or a sword – they can void or make it voidable

A void contract is not a contract at all
A voidable contract can be voided at the instance of the wronged party against a person who engaged in wrongful behavior

ONLY THE WRONGED PARTY CAN ASSERT A DEFENSE

Unless the wrong is so aggressive against the merchant, however the merchant will have another way out of the contract

ILLEGALITY AND PUBLIC POLICY
ILLEGALITY – the contract is unenforceable because the contract is illegal

extent of intentional violation of statute
purpose of statute and application to behavior
mitigating circumstances
forfeiture – how great is the forfeiture (hardship) that the individual will suffer

Relevant Factors

The relative fault or innocence of the two parties
Whether the transaction was illegal
The degree of harm caused by the violation of a statutory scheme
Whether the entire contract was illegal or only one part of it
Whether one party will be harmed in a way that is disproportionate to the harm that is done by volatizing the statute (balancing test)
Whether enforcing the contract will encourage people to violate the law
Whether refusing to enforce the contract will deter illegal conduct

Baby M Case

issues of social change; how court deals with changes in human relationships because of technological changes in society
Trial Court – J. Surkow

2 general principles

1. parens patriae – benefit of the child
2. contract law
o surrogacy contracts are enforceable but with limits
1. contract of adhesion – absence of bargaining power
2. unconscionability – absence of bargaining power and disproportionately favorable to one side; unfair amount of leverage
3. illusory – consideration in regards to sperm and egg is absurd
4. fraud – in regards to infertility , multiple sclerosis and psychological evaluation
a. material misrepresentation
b. reliance

Appellate Court – J. Wilenz

2 general principles

1. surrogacy – laws that apply; conflict with statute
a. deems it an adoption case – wife of biological father adopts the baby
b. cannot pay for adoption – baby selling is illegal
c. cannot be bound in advance to give up a child
2. against public policy
a. parents cannot decide in advance that parent will have custody
b. when there is a biological mother, there has to be counseling involved, prior to giving up child
c. cannot place children without having a proper evaluation
d. not everything should be comodified
e. voluntariness does not mean that an exchange is beyond regulation or recognition

PUBLIC POLICY
Ways to reason around public policy:

statutes/case law
principles
public opinion/cultural values
religious beliefs

· sexual orientation is not sufficient alone for parental rights; de facto parent may give rise to parental status
o Court does not want to sever close ties A.C. v. C.B.

If Legislation does not take action to bar a certain contract, the contract will be deemed legal DeMuth v. Miller

CAPACITY
INFANCY

A minor may disaffirm a contract or rescind a contract i.e. sword (claim) or shield (defense)

o Contract becomes voidable

Must ask yourself if it is possible to bring a claim for restitution
Must give property back
Restitution can mean 2 things:

1. infant is liable for deprecation of property between time of contract entered into and dissafirmance
2. return of the property

Various Approaches:

statutorily must pay restitution
if misrepresentation, restitution; if no misrepresentation, obligated to return property
obligated to pay due to destruction of property
restitution for deprecation
benefit theory: benefit enjoyed by minor
give proceeds to vendor

· Policy Argument: protect minors from foolishly squandering wealth by crafty adults that will take advantage of them in marketplace
o ALSO: from crafty minors bilking merchants out of property or proceeds
o EXCEPTION: necessities
· 2 statutory regimes for children as sources of income
1. protect children from exploitation
2. privacy statutes
· Common Law: an infant can dis