Term
| Know the five types of conduct that will make assent to a contract invalid |
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Definition
1. Duress
2. Undue Influence
3. Fraud
4. Nonfraudulent Misrepresentation
5. Mistake |
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Term
Know the two types of duress and the effect of each on a contract made under duress
1. Physical Compulsion |
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Definition
coercion involving physical force
a. Void |
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Term
Know the two types of duress and the effect of each on a contract made under duress
2. Improper Threats – |
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Definition
improper threats or acts, including economic and social coercion
a. Voidable |
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Term
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Definition
taking unfair advantage of a person by reason of a dominant position based on a confidential relationship
o Renders a contract voidable |
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Term
| Fraud in the Inducement – |
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Definition
deceived into entering into the contract
o Renders a contract voidable |
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Term
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Definition
both parties have a common but erroneous belief forming the basis of the contract
o Renders the contract voidable by either party |
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Term
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Definition
courts are unlikely to grant relief unless the error is known or should be known to the nonmistaken party
o Does not ‘un-do’ contract |
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Term
| Be sure to know whether each type of conduct makes a contract void or voidable |
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Definition
• Duress by physical force and fraud in the execution = VOID
• All others = VOIDABLE |
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|
Term
| Know the five types of conduct that will make assent to a contract invalid |
|
Definition
1. Duress
2. Undue Influence
3. Fraud
4. Nonfraudulent Misrepresentation
5. Mistake |
|
|
Term
Know the two types of duress and the effect of each on a contract made under duress
1. Physical Compulsion |
|
Definition
coercion involving physical force
a. Void |
|
|
Term
Know the two types of duress and the effect of each on a contract made under duress
2. Improper Threats – |
|
Definition
improper threats or acts, including economic and social coercion
a. Voidable |
|
|
Term
|
Definition
taking unfair advantage of a person by reason of a dominant position based on a confidential relationship
o Renders a contract voidable |
|
|
Term
| Fraud in the Inducement – |
|
Definition
deceived into entering into the contract
o Renders a contract voidable |
|
|
Term
|
Definition
both parties have a common but erroneous belief forming the basis of the contract
o Renders the contract voidable by either party |
|
|
Term
|
Definition
courts are unlikely to grant relief unless the error is known or should be known to the nonmistaken party
o Does not ‘un-do’ contract |
|
|
Term
| Be sure to know whether each type of conduct makes a contract void or voidable |
|
Definition
• Duress by physical force and fraud in the execution = VOID
• All others = VOIDABLE |
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Term
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Definition
| the benefit to be gained that serves as the inducement to enter into a contract; what a party receives from the contract |
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Term
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Definition
| a legally sufficient, bargained-for exchange; each side agrees to give something of legal value in exchange for something of legal value |
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Term
|
Definition
| normally, a contract is only binding when all parties give and receive consideration |
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Term
|
Definition
| the value to be exchanged must be recognized legally to be enforceable |
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Term
|
Definition
| obtaining something to which one had no prior legal right |
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Term
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Definition
| doing an act one was not legally obligated to do or not doing an act that one has a legal right to do |
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Term
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Definition
| a promise imposes no real obligation on the promisor; pretends to be consideration, but isn’t due to a limitation |
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Term
| The following are NOT illusory: |
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Definition
o Output Contract
o Requirement Contract
o Conditional Promise |
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Term
| Preexisting Public Obligations – |
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Definition
| public duties such as those imposed by a tort or criminal law are neither a legal detriment nor a legal benefit |
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Term
| Preexisting Contractual Obligation – |
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Definition
| performance of a preexisting contractual duty is not consideration |
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Term
| Modification of a Preexisting Contract – |
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Definition
| under the common law a modification must be supported by mutual consideration; under the Code a contract can be modified without new consideration |
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Term
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Definition
| the parties agree to rescind their original contract and enter into a new one; rescission and new contract are supported by consideration |
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Term
| Settlement of an Undisputed Debt – |
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Definition
| payment of a lesser sum of money to discharge an undisputed debt does not constitute legally sufficient consideration |
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Term
| Settlement of a Disputed Debt – |
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Definition
payment of a lesser sum of money to discharge a disputed debt is legally sufficient consideration
o Accord (agreement to pay lesser amount) and Satisfaction (when money is paid) |
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Term
|
Definition
| consideration is required |
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Term
|
Definition
| no consideration is required if modification is made in good faith |
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Term
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Definition
| an act done before the contract is made is not consideration, and generally will not provide a basis for a contract |
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Term
| Promise to Pay Debt Barred by the Statute of Limitations – |
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Definition
| a new promise by the debtor to pay the debt renews the running of the statute for a second statutory period |
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Term
| Promise to Pay Debt Discharged in Bankruptcy – |
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Definition
| may be enforceable without consideration |
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Term
|
Definition
| a new promise to perform a voidable obligation that has been previously avoided is enforceable |
|
|
Term
|
Definition
| the benefit to be gained that serves as the inducement to enter into a contract; what a party receives from the contract |
|
|
Term
|
Definition
| a legally sufficient, bargained-for exchange; each side agrees to give something of legal value in exchange for something of legal value |
|
|
Term
|
Definition
| normally, a contract is only binding when all parties give and receive consideration |
|
|
Term
|
Definition
| the value to be exchanged must be recognized legally to be enforceable |
|
|
Term
|
Definition
| obtaining something to which one had no prior legal right |
|
|
Term
|
Definition
| doing an act one was not legally obligated to do or not doing an act that one has a legal right to do |
|
|
Term
|
Definition
| a promise imposes no real obligation on the promisor; pretends to be consideration, but isn’t due to a limitation |
|
|
Term
| The following are NOT illusory: |
|
Definition
o Output Contract
o Requirement Contract
o Conditional Promise |
|
|
Term
| Preexisting Public Obligations – |
|
Definition
| public duties such as those imposed by a tort or criminal law are neither a legal detriment nor a legal benefit |
|
|
Term
| Preexisting Contractual Obligation – |
|
Definition
| performance of a preexisting contractual duty is not consideration |
|
|
Term
| Modification of a Preexisting Contract – |
|
Definition
| under the common law a modification must be supported by mutual consideration; under the Code a contract can be modified without new consideration |
|
|
Term
|
Definition
| the parties agree to rescind their original contract and enter into a new one; rescission and new contract are supported by consideration |
|
|
Term
| Settlement of an Undisputed Debt – |
|
Definition
| payment of a lesser sum of money to discharge an undisputed debt does not constitute legally sufficient consideration |
|
|
Term
| Settlement of a Disputed Debt – |
|
Definition
payment of a lesser sum of money to discharge a disputed debt is legally sufficient consideration
o Accord (agreement to pay lesser amount) and Satisfaction (when money is paid) |
|
|
Term
|
Definition
| consideration is required |
|
|
Term
|
Definition
| no consideration is required if modification is made in good faith |
|
|
Term
|
Definition
| an act done before the contract is made is not consideration, and generally will not provide a basis for a contract |
|
|
Term
| Promise to Pay Debt Barred by the Statute of Limitations – |
|
Definition
| a new promise by the debtor to pay the debt renews the running of the statute for a second statutory period |
|
|
Term
| Promise to Pay Debt Discharged in Bankruptcy – |
|
Definition
| may be enforceable without consideration |
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|
Term
|
Definition
| a new promise to perform a voidable obligation that has been previously avoided is enforceable |
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