Contracts Outline Spring 2009
“Policing the Bargain”
A minor who disaffirms a contract is entitled to recover all consideration he has conferred incident to the transactionàIn return the minor is expected to restore as much of the consideration as, at the TIME of the disaffirmance remains in the minors possession.
A disaffirming minor is only liable for necessities
A minor is not liable for necessaries furnished on someone else’s credit.
A minor’s right to disaffirm survives for a reasonable time after reaching the age of majority.
Nature and quality of what is going on
With the understanding of significances and consequences
Makes a K voidable
Incompetence to contract also exists when a contract is entered into under the compulsion of a mental disease but for which the K would not have been made.
Restatement Sec 15 Mental Illness or Defect. Fight is about section 15(2).
Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that the avoidance would be unjust.
In other words, any benefits still retained by the incompetent must be restored or paid for. If the other party knew of the incompetence at the time of contracting and took advantage then consideration not received by the incompetent without benefit to him need be restored.
Competence is something more than a transient surge of lucidity.
General Themes of undue influence pattern(Ganging up themes)
A K 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 the exercise of his free will
Threaten to breach by withholding AND
The threatened party could not get the goods from another supplier AND
An action for breach would not be adequate.
Consent to such demand, under such circumstances, if given, was, in our opinion, without consideration, b/c it was based on fishermans agreement to render the exact services, and none other that they were already under K.
When a party merely does what he has already obligated himself to do, he cannot demand an additional compensation by taking advantage of his adversary and obtain a promise for more, the law will regard it as a bare agreement, and it will not help the wrong.
Parties to a mutual K can rescind it by mutual consent. They can proceed to make a new K in which their mutual promises are consideration for each other.
When a subsequent agreement imposes upon the one seeking greater compensation, an additional obligation, or burden not previously assumed, the agreement, supported by consideration is valid.
When a K has not anticipated burdens, and promisor offers to pay more, it is a new K and enforceable.
Contractual Duty owed to a third person
The performance of a condition containing a provision requiring modification to be in writing may be excused by an oral agreement of the promisor that the condition need not be performed, if the agreement is given while the performance of the condition is possible, and in reliance on the agreement the promisee materially changes his position
Thus the effectiveness of a non-written modification in spite of a K provision that modifications must be written depends upon whether enforcement of the condition or is not barred by equitable consideration.
Waiver-the intentional relinquishment of a right. Can be expressed or implied
The essential elements of a waiver are
The existence of a right
Actual or constructive knowledge of it
An intention to give it up
No consideration is required nor is prejudice necessary
Finalizing Contract Disputes
Duress (NOT the same as acting in bad faith)
Duress is tested by the state of mind induced thereby in the victim
Also remember it can be economic duress
Exists when one party by the unlawful act of another is induced to make a K under circumstances which deprive him of the exercise of free will, BUT
Where the party threatens nothing which he has not a legal right to perform, there is no duress
Even if you fail on duress can still come back and win under a bad faith argument
Created for the purpose of securing priority of payment of the price of work performed and materials furnished in erecting a structure
An accord and satisfaction of a single claim is not avoided merely because the amount paid and accepted is only that which the debtor concedes to be due
When a bona fide dispute arises and a check is tendered in full payment of an unliquidated claim (the amount is uncertain) the creditor may not disregard the condition attached
Mistake, Misrepresentation, Warranty, and Non-Disclosure
Courts cannot relieve one of the consequences of a K merely because it was unwise. But where inadequacy of price is such as to shock their conscience equity will provide relief in cases of fraud, actual or constructive.
Sherwood the barren cow that was not so barren
A party who has given apparent consent to a contract of sale may refuse to execute it, or he may avoid it after it has been completed if the K was made upon a material mistake.
What did the parties think the contract was about?
Elsinore-school board trying to screw over this guy makes clerical error
It would be unconscionable to require the company to perform for the amount of the bid when the city had suffered no damage or prejudice
Clerical Errors and math errors are usually given a free pass because
ould be measured by the amount of the contract work done. Which at the time of the destruction of the structure, had become so far identified with it as that but for the destruction would have taken effect to him as contemplated by the K.
Subcontractor is responsible for the satisfaction of the final customer
Kel-Kim Corp-rollerskating rink, had notice of cancellation, therefore this was not an unforeseen consequence to come under DOCTRINE OF IMPOSSIBILITY
Impossibility excuses a parties performance only when the destruction of the subject matter of the K or the means of performance make performance objectively impossible
The impossibility must be produced by an unanticipated event that could not have been foreseen or guarded by the K
Frustration of Purpose (companion to doctrine of impossibility)
Where after a contract was made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event of which was a basic assumption on which the K was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.
See also UCC 2-615 (identical to commercial impractibality)
Bunge Corp.-beans were destroyed by winter weather
Since the beans were not identified other than by kind and amount, we agree with the trial judge that the destruction by weather did not constitute an Act of God which would excuse performance. Farmer could have fulfilled his performance by acquiring the beans from another source since it was not specifically mentioned they had to come from that particular farm.
The act of god defense the contract must refer to specific goods or a particular location and they must have been destroyed.
Snipes-Rationalize the potato case with BUNGE
If the parties contemplate a sale of the crop of a particular tract of land, and by reason of drought or other fortuitious event, without the fault of the promisor, the crop of that land fails or is destroyed, nonperformance is to that extent excused; the contract, in the absence of an express provision controlling the matter, being considered to an implied condition in this regard.
Mere increase in cost alone is not sufficient excuse for non-performance. Think Suez Canal