Select Page

Contracts II
University of Dayton School of Law
Hallinan, Charles G.

Competency and other limits
· Halbman v. Lemke
o Teenager contracts to buy car fucks it up gives it back and wants his money back
§ Must a minor who disaffirms a contract for the purchase of a non necessity make restitution to the vendor for damage after purchase but before dissafirmance?
· No, the minor may disaffirm at any time and must restore as much of the consideration as remains in his possession but may disaffirm even if has nothing left to return
o New Hampshire rule says vendor of car can deduct value by which kid was enriched from what he has to return to the kid, if the kid returned the car in good condition the vendor could deduct the rental value for the time the kid had the car from how much he has to give back, basically the amount the minor is enriched is deducted from what the vendor must return
· Contracts entered by into infants are enforceable if they are necessities’
o Policy consideration is bc we don’t want to deter people from supplying minors with necessities
· Contracts entered into by mentally incompetent people used to be void but are now generally only considered voidable in most states, only voidable by the incompetent party not the competent party
o Cognitive tests generally considered to be outdated
o 2nd rst: contract is voidable if person is
§ unable to understand in a reasonable manner the nature and consequences of the transaction (basically bat shit crazy and has no idea what is going on) OR
§ unable to act in a reasonable manner AND the other party has reason to know of this condition
o if contract is made on fair terms and other party is without knowledge the power of avoidance terminates to the extent necessary to prevent injustice
o Sometimes a person with a mental deficiency can enter into a contract during a lucid interval, however if the contract seems to be unfair towards the metally deficient party the courts can and often will find it to be unenforceable, especially if the other party was in some type of confidential relationship with the retard
· Ordizzi v. Bloomfield school dist.
o Guy accused of liking dick resigns from being an elementary school teacher after principal and superintendant corner him in his apt. after he has gone through a bunch of shit and threaten legal action if he does not resign
§ Not duress bc no illegal action
§ Court finds homo may have been the victim of the principle and super exerting undue influence or over-persuasion
o Courts will usually find a deal unenforceable if normal influence was used against a retard or excessive force is used against a normal person
· Factors for undue influence
o Discussion occurs at unusual time or place
o Consummation is in an unusual place
o Insistent demand the business be finished at once
o Emphasis on the untoward consequences of delay
o Use of multiple persuaders against a single party
o Absence of third party advisers to the guy getting fucked over
o Emphasis that there is no time to contact third party adviser
· PER review
· Does not apply to oral evidence after the agreement
o However contract may have a “no oral modifications clause” which will be enforced unless the D waived the benefits of the clause
§ D who knew P was doing extra work pursuant to an oral modification and did nothing to stop him cannot refuse to pay for extra work bc of a no modification clause
· Does not exclude evidence pertaining to general validity of contract
o Duress, fraud, mistake, illegality, lack of consideration
· If language is ambiguous outside evidence is always allowed to clear it up, judge determines if language is ambiguous
o Abmbiguities are construed against the drafter
· Evidence that contradicts the writing generally does not come in
· PER only excludes more if the writing is a total integration of the agreement
o Total Integration Includes all details of the agreement
§ No evidence that would contradict or add is admitted
§ Collateral oral agreement supported by separate consideration is still enforceable
· RST 2nd 24 must be related to a subject that would be the natural subject of a separate agreement
· UCC 2-202 is more liberal and allows collateral agreements unless they would have “certainly” would have been in the original agreement
§ Usually oral evidence of a condition as to the enforceability of the contract is allowed
o If only a partial integration then it is only meant to be a final statement as to w

option would lead to an unreasonable and unjust result.
· Long Island trust b. int’l inst. For packaging educ.
o 5 guarantors signed a promissory note only 4 signed the extension, is oral evidence that all 5 had to sign admissible and if it is admissible does it make the note unenforceable
§ yes oral condition to the enforceability of a contract is admissible
§ Contract did not contain any terms that contradicted the oral agreement if it had said it was unconditional evidence would probably not be allowed in
· Lipsit v. Leonard
o P was employed by D who had discussed, in written letters, giving D a stake in the business, P offered D a joint ownership proposal which P found unacceptable. P quit and sued for breach of contract and fraud
§ The written letters are to vague to be considered a contract
§ Evidence to prove fraud may come in but will probably not be successful bc P wants highly speculative damages and NY law only allows out of pocket damages which P cannot prove much of
· Lafazia v. Howe
o D bought a business from P that P said would be profitable but which turned out not to be profitable. D had one very little due diligence. D then is unable to pay the amount still owed on a promissory not to P. P sues to get the money D counterclaims for misrep. And deceit
§ D loses bc contract clearly stated that the D’s were using there own judgment and not relying on anything P said about the business. Disclaimer was not a general boilerplate disclaimer but specific and D had gone over the document with counsel and even made some changes.
§ Even though ruling is somewhat harsh ruling to allow anything else would make it impossible for parties dealing at arms length to agree that the buyer is not relying on the sellers representations in the purchase