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Chapter 11:

Defenses to Enforcement of Contracts

 

A. MISTAKES

1. Unilateral mistakes occur when only one party is mistaken

about a material fact regarding the subject matter of the

contract.

a. General rule is that the mistaken party is not

b. If the other party knew or should have known of the

2. Mutual mistakes occur when both parties are mistaken

about the contract.

a. Mistake of fact concerns the essence or object of the

b. Mistake of value regards the value of the essence or

B. FRAUDULENT MISREPRESENTATION, also called

fraud or deceit, occurs when a person intentionally makes an

assertion that is not in accord with the facts.

1. Elements

a. false representation of a material fact

b. intent to deceive

c. justifiable reliance on the false representation

d. damages

The innocent party may rescind and obtain restitution or may enforce the contract and sue for damages.

 

 

2. Types of fraud include:

a. fraud in the inception occurs when the innocent

b. fraud in the inducement occurs when the party is

c. fraud by concealment occurs when the other party

d. silence as misrepresentation occurs if the party is

e. misrepresentation of law occurs when a less

3. Innocent misrepresentation contains all of the elements of

fraud except intent. The remedy is rescission, but no

damages.

C. UNDUE INFLUENCE occurs when one person takes

advantage of another's mental, emotional, or physical weakness

and unduly persuades that person to enter into a contract.

1. Undue influence has two elements:

a. A fiduciary or confidential relationship existed

b. The dominant party unduly used their influence to

Presumption: If a dominant party enters into a contract

2. Duress occurs when one party threatens to do some

wrongful act against the other party unless the other party

enters into a contract. Some examples of duress include:

a. physical duress

b. extortion

c. economic duress

 

D. STATUTE OF FRAUDS. By statute, certain contracts are

required to be in writing to be enforceable.

1. Requirement of writing

a. Transfer of interests in real property include the sale

b. Contracts that cannot be performed within one year

c. Collateral contracts to answer for the debts of

d. Promises in consideration of marriage.

e. Contracts for the sale of goods costing $500 or

2. Promissory estoppel prevents the application of the

Statute of Frauds to prevent injury or unjust enrichment.

This is the same equitable doctrine which prevents a

promisor, in certain situations, from revoking a promise

unsupported by consideration.

 

E. SUFFICIENCY OF THE WRITING

1. Sufficiency of writing

a. Does not have to be formal or drafted by a lawyer.

b. It must be signed, but only by the party against

c. Several writing may be combined to constitute the

2. Parol evidence rule provides that if a written contract is a

complete integration of the agreement of the parties, then

any prior or contemporaneous statements (oral or written)

are inadmissible as evidence to alter or contradict the

terms of the written contract.

 

a. Parol evidence may be used to:

(1) prove mistake, fraud, misrepresentation,

(2) explain ambiguous language.

(3) explain a prior course of dealings or course of

(4) fill in the gaps in a contract.

(5) correct obvious clerical or typographical

3. Interpretation of contracts is sometimes necessary because

of disagreement over the meaning of words used. The

courts have developed rules for interpreting contracts as

follows:

a. Ordinary words are given their usual dictionary

b. Technical words are given their technical meaning,

c. Specific terms are presumed to qualify general

d. Typed words prevail over preprinted words;

e. Ambiguities in the contract are resolved against the

f. Unless otherwise agreed, words will be given their

g. Words will be interpreted to promote the principal