Defenses

Question 1

Defenses to contract formation

Answer 1

1. Incapacity
2. Misrepresention
3. Public policy
4. Duress
5. Undue Influence
6. Unconscionability

Question 2

Incapacity

Answer 2

1. Infancy
2. Mental incompentence

Question 3

Infancy

Answer 3

Minors may not enter into a contract,

BUT,

the contract is voidable at the option of the minor

Question 4

Mental incompetence

Answer 4

A party need not be “insane” to invoke the doctrine to establish mental incapacity

If a party is adjudicated incompetent and a guardian is appointed, then this adjudication will be sufficient to establish mental incompetence for contract cases

Question 5

Legal consequences of mental incompentency

Answer 5

a contract entered into by an incompetent person is voidable. This means that the contract is enforceable at the option of the incompetent party

Question 6

What is a misrepresentation?

Answer 6

An untrue statement or assertion that relates to a material, existing fact

It can be “sword,” as the basis for affirmative relief

It can be a “shield,” a defense to enforcement

Question 7

Types of misrepresentation

Answer 7

Question 8

Remedy for mispresentation

Answer 8

1. Avoidance; or
2. Rescission and reliance damages.

Question 9

Common law Elements of Duress

Answer 9

1. physical compulsion; and
2. unlawful threat

Question 10

Modern Law Duress

Answer 10

1. a threat (a manifestation of intent to inflict harm on the other person, made in words or by conduct);
2. that is wrongful in nature; and
3. that leaves the aggrieved party with no reasonable choice but to succumb to the threat.

Question 11

What is economic duress?

Answer 11

When the threat that is threatened is a bad faith breach of contract

Question 12

Elements of undue influence

Answer 12

1. unfair persuasion was used; and
2. the other party was vulnerable to such persuasion.

Question 13

Elements of Unconscionability

Answer 13

1. procedural unconscionability; and
2. substantive unconscionability.

Question 14

Procedural unconscionability

Answer 14

where the bargaining process that produced the contract in question created an absence of meaningful choice for the aggrieved party

Question 15

Substantive unconscionability

Answer 15

when the contract terms are unreasonably unfavorable to the aggrieved party

Question 16

When may public policy be raised as a defense?

Answer 16

1. where the subject matter of the contract itself is specifically prohibited by law;
2. where a contract is formed for the purpose of committing a crime or violating a legal regulation;
3. where the contract performance would not constitute a crime, but would constitute a tort; or
4. where the contract performance would violate certain values and freedoms designated by the state or jurisdiction.