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Contracts II
University of Dayton School of Law
Morris, Jeffrey B.

Contracts Outline

“Policing the Bargain”

Minority

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.

Mental Capacity

Comprehend the:

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.

Undue Influence

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.

Alaska Packers

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 o

ived upon the buyer
Understood to be an assertion not opinion.

In determining whether the aggrieved party is entitled to some kind of relief in mistaken assumption cases look at several factors.

Bilateral or Unilateral Mistake?
Palatable?
Was one of the parties unjustly enriched?
Was the risk assumed by one of the parties?
Was the mistake related to present facts or future expectations?

Rising concept of Implied Warranty (and diminishing of caveat emptor)

If a man makes a statement in regard to a matter upon which his hearer may reasonably suppose he has means of info…and the statement is made as part of a business transaction he should be held liable for reliance upon his misstatement
The general rule for measurement of damages upon breach of warranty is to award the prevailing party such compensation as will place him in the same position as he would have enjoyed had the property been as warranted
Classifying Misrepresentation

Intentional
Negligent
Innocent

Cushman-Bad Water in Vermont

When one has full info available and only discloses part on purpose and the other party thinks it’s a full disclosure then this is fraud
Silence alone is insufficient to establish fraud unless there is a duty to speak

Fraud Damages Rule

Party seeking damages is entitled to recover such damages as will compensate him for the loss or injury actually sustained AND place him in the same position that he would have occupied had be been defrauded.