Professional Documents
Culture Documents
Capacity
The legal ability to
enter into a contract.
The ability to understand the nature
and consequences of a contract.
A Voidable Contract
A contract is valid and enforceable unless
and until the one party with the right to
disaffirm the contract chooses to exercise
that right.
Timing of Disaffirmance
A minor may disaffirm a contract any
time before she reaches 18.
She may also disaffirm within a
reasonable time after turning 18.
Exception: Necessaries
Something essential to the minors life and
welfare
Examples: emergency medical care, food,
basic clothing, and housing
On a contract for necessaries, a minor must
pay for the benefits he obtained under the
contract.
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Exception: Misrepresentation of
Age
If the minor shows a fake i.d. or
otherwise lies about his age
A few states will still permit the minor
to disaffirm, but
Most states will not
Ratification
Any words or action indicating an
intention to be bound by the
contract.
Not effective if the person
attempting to ratify the
contract is still a minor.
Continuing to make payments, or exercising
dominion over the property will usually
ratify the contract.
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Duress
Undue influence
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Fraud or Materiality
A statement is fraudulent if it was made for
the purpose of inducing the other party to
enter the contract, and
either with knowledge of its falsity or no
reasonable basis to believe it is true.
A statement is material if it would be likely
to induce the other party into entering the
contract.
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Justifiable Reliance
The injured party must show that:
1. She actually relied on the false
statement, and
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Hoffman v. Stamper
Summary of facts
Whats the issue?
Rescission Remedy
The protected party has the power to rescind
the contract.
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Silence
Amounts to misrepresentation only where
disclosure:
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Mistake
Under certain circumstances, parties may
avoid their contracts because of mutual or
unilateral mistake.
The doctrine of mistake prevents
unexpected and unbargained for losses.
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Bilateral Mistake
(aka mutual mistake)
Both parties negotiate based on the
same factual error
Contract is voidable by injured party
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$25,995
Duress
Duress occurs when a person is forced to
enter a contract through threats of
physical, emotional, or economic harm.
Requirements for Duress:
1. The contract was induced by
an improper threat.
2. The victim had no reasonable
alternative but to enter the contract.
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Economic Duress
In analyzing a claim of economic duress,
courts look at these factors:
Acts that have no legitimate business
purpose
Greatly unequal bargaining power
An unnaturally large gain for one party
Financial distress to one party
Undue Influence
A situation where one party so dominates the
others thinking that consent is lacking.
The influenced party lacked free will.
Requirements for undue influence:
1. There existed a relationship of trust or
domination between the two parties, and
2. The stronger party engaged in improper
persuasion.
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Sepulveda v. Aviles
What are the facts? Whats the issue?
How did the NY Appellate Court rule?