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Contracts II
University of Toledo School of Law
Davis, Benjamin G.

CONTRACTS II OUTLINE
 
I.                    Should Enforcement be avoided?
 
a.       Minority (at the time of the contract!)
                                                               i.      Unless a statute provides otherwise, before 18th birthday = voidable
                                                             ii.      Even if minor misrepresents their age
 
                                                            iii.      The contract can be disaffirmed (words or conduct) before or reasonable time after 18th birthday…silence is problematic
1.      can ratify after birthday to make contract valid
2.      if doesn’t ratify within a reasonable time = affirmation
 
                                                           iv.      Restitution…minor avoidance requires the minor to return what he/she has
1.      Exceptions for restitution include
a.       Necessities (food, clothing, shelter)
b.      Minor as P
                                                                                                                                       i.      Benefit rule: can rescind, must deduct use (Dodson v. Schrader)
                                                                                                                                     ii.      Depreciation: purchase price offset
c.       Willful or negligent damage
 
b.      Mental Incapacity (at the time the contract is being entered into!)
                                                               i.      Rst 15 Test
1.      Cognitive- unable to understand in a reasonable manner the nature and consequences of a transaction
2.      Vocational- unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition
 
                                                             ii.      Can result from mental illness or defect – e.g., senility, insanity, retardation – or drug or alcohol intoxication.
1.      Intoxication…only if the other party has reason to know they are intoxicated
 
                                                            iii.      Could be enforced if made in good faith with fair terms
1.      Also if other party does not know of the condition… avoidance terminates to the extent the contract has been performed or avoiding would be unjust…court can decide relief as justice requires
                                                           iv.      Can still be liable for necessities
 
 
c.       Duress (at the time of the contract!)
                                                         

                         ii.      Probably based on the nature of relationship between the two
1.      fiduciary relationship
                                                            iii.      Result: voidable by victim
                                                           iv.      Induced by third party…voidable unless that party acted in good faith w/o reason to know of the undue influence, and gives value or relies materially on the transaction
 
                                                            v.      Odorizzi (no need for bad faith if…)
1.      unfair persuasion…in apt, late at night, ganged up on him
2.      weakness of mind/spirit…no sleep for a day
 
                                                          vi.      Pattern of Over-persuasion
1.      discussion of transaction at unusual place
2.      at unusual time
3.      insistent demand it be done at once
4.      told consequences of delay
5.      multiple against one
6.      absent third party to consult
7.      no time to consult atty.