R5
What situations are contracts void?
- Fraud in execution- signing something that does not look like a contract
- Duress (Physical)
- Illegality
- Adjudication
R5
What are examples of voidable contracts?
- Fraud in inducement - terms of contract missrepresented
- Innocent misrepresentation
- Duress (Economic)
- Undue influence (Financial)
- Mistakes
- Minority
- Intoxication
R5
What are cases for Ordinary Negligence/Gross Negligence/Fraud?
Negligence
- Lack Due Care
- Breach caused injury
- Only intended/foreseen third parties can sue (privity)
- Not needed to rely on information (needed for fraud)
Gross Negligence
- Needed to rely on information (needed for fraud as well)
- Intent to deceive - actual fraud or gross negligence.
- Material misstatement
- Suffered Loss
R5
Statute of frauds: Contracts that require writing:
- Marriage
- Contracts > 1 year
- Involving land transfer
- Executor or similar
- Sale of goods only > $500
- contracts as a surety
R5
What are ways that a contract ends?
● By Performance
● By Agreement
1. Rescission - parties restored to original positions before contract.
2. Accord and satisfaction -substituted duty.
3. Novation - substituted 3rd party.
4. Release - parties cancel remaining obligations.
● By Operation of Law
1. Subject matter becomesillegal.
2. Death or incapacity.
3. Bankruptcy.
4. Impossible to perform after contract formation.
Breach of Contract Remedies?
● Compensatory Damages
* Direct or actual losses.
* Provides enough money to obtain substitute performance.
● Consequential Damages
* Indirect and anticipated losses.
R5
When does an agent’s authority terminate?
Termination of Agent authority
1. Death
2. Incapacity
3. Bankruptcy of principal
4. Failure to acquire license
5. Destruction of subject matter of agency
6. Subsequent illegality
R5
When is Principal Liable?
1) Express or limited actual authority.
2) Apparent authority of agent.
3) If agent does not disclose the principal’s identity, then 3rd party can holder either principal or agent liable if principal is
undisclosed.
R5
When is Agent Liable?
- Agent not liable when agent discloses the principal.
- If agent has authority, then principal is bound.
- If agent does not disclose the principal’s identity, then 3rd party can holder either principal or agent liable if principal is
undisclosed. - Agent is responsible for torts committed, not the principal.
● Exception is that employer is generally liable for torts committed by employees (not be independent contractors).
R5
What are Surety rights against the principal debtor?
Exoneration (Suit) * If the principal doesn’t pay the creditor, the surety may sue them for exoneration.
Subrogation * After paying, the surety can demand repayment from the debtor.
Reimbursement * After paying, the debtor repays the surety
Contribution * Co-Surety sharing liablilty
R5
What needs to be included in Attachment?
(i) Agreement of the parties (authenticated security agreement OR the creditor’s taking possession or control of the collateral)
(ii) the debtor must have rights in the collateral
(iii) the creditor must give value
Attachment = creditor’s rights against debtor.
R5
Perfection requires that:
Occurs after any one of these is met:
1. Filing Financing Statement
2. Automatic perfection (Some cases)
3. Taking possession of collateral
Perfection = creditor’s rights against everyone else.
