BCOR 3000 1nd Edition Lecture 15 Outline of Last Lecture I. OverviewII. Mistakes1. Unilateral2. BilateralIII. Fraudd1. Inducement2. 6 requirementsIV. Execution/Inception/In factumOutline of Current Lecture V. Undue InfluenceVI. DuressVII. Statues of FraudVIII. When is writing enough?IX. Parol of EvidenceCurrent LectureChapter 12—Defenses to Contract Enforceability CONT’DThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Undue Influence• Must be a pre-existing relationship (family or legal)• Victim has trusted perpetrator• Victim can void contract– Parent trusting child– Client trusting attorney• Merely trusting other party is not enough• Undue influence arises from relationships in which one party can greatly influence another party, thus overcoming the party’s freewill. A contract entered into under excessive or undue influence lacks voluntary consent andis therefore voidable.Undue influence: duty to look after your own interests but you are allowed to believe what the other person says - You have a pre-existing relationship and a second contract (what you are trying to get out of)EXAMPLES:Ex: Your mom is at home and a random stranger knocks on the door and someone asks you to buy your house for $200,000 and she says yes - Your mom was foolish to take the guys word because she needed to figure out what to sell the house for. - Because she didn’t know him there was no reason to trust himEx: Your son comes to you and says “mom to avoid inheritance taxes, you need to sell you your house for $200,000 and put in the contract that you can live in the house for the rest of your life if you sell it to me now.” The house is really worth $350,000. And you say “don’t tell my brothers and sisters about this.”- Few years later your mom passes and then you tell your brothers and sistersthat your mom sold you the house a few years ago - The mother was in a very different situation with her son because she can trust he son under her preexisting relationship- The brothers would be able to undo the contract Ex: Business setting where you have a lawyer-The preexisting is the relationship with the lawyer who is on their side so they should be able to trust the lawyer and what he says Ex: Hire a consulting company to come in and evaluate our IT department and tell us what to do -The consultant says that they should get a new system and the consultant with getthe commission-Ideally the company should do some research but from the outside preexisting relationship you do not have to do your own research because you rely on the consultant who you have paid to do this. Ex: Go into a car dealership and say that you have $10,000 to spend give me the best one. - You cannot get out of this because there is no pre-existing relationship. Only one contract that is the contract for the car.Ex: Repeated individual transaction  you go into the same dealership and ask for a new car every 3 years, while you may go to the same salesperson that is not undue influence. *simply trusting someone does not bring it into undue influence Duress• Physical threat forcing agreement• Victim’s “agreement” is not voluntary• Economic duress can be recognized, but seldom is• Duress can be a defense to the enforcement of a contract and a ground for rescission of a contractStatue of Frauds• Totally separate concept from fraud• Merely a writing requirement• Certain contracts are enforceable only if in writing• Originally designed to prevent the courts from being defrauded• If oral only, unenforceable• Contracts that should be in writing: 1) contracts that last a long time an 2) one you think very little aboutStatue of Frauds Examples:• Land– Part performance exception– All real estate must be in writing  oral contract to sell your house or land is unenforceable. - Ex: shopping for a house during the oil boom when the market was tight anda lot of people were buying houses so you go and look at a house. It was a young couple selling the house for a good deal. I say “I want it” and she saysthat her husband is out of town and we will put it in writing but the house is yours. Later they say “we have decided we won’t sell the house”. There is nothing I can do now because she orally made the contract with you which isunenforceable. - If you had paid some money on the day then you would have been able to maybe make the contract because then you gave up so. Same thing if they would have given you the deed which is ownership even if you haven't paid yet then the oral contract is enforceable. • Cannot be performed in one year– Measure from date contract formed– Lifetime contracts—oral OK– Example: Cannot be performed in one year  I will shovel all the snow on your drive way until April 15  the duration is under a year so it can be oral– If the contact lasted longer than a year then the contract must be in writing– Ex: take a part of the CPA exam in august 2015 and you say I will tutor you for 20 hours – Look at from today October 2014 and august 15 is less then a year so it does not need to be in writing – IF you take it in November 2015 and I will tutor you during thanksgiving break  October 2014 to November 2015 is more than ayear so it must be in writing – I will do something for the rest of my life does not have to be in writing because you could die tomorrow. - Prenuptial agreements: cannot be oral – This is because it will last decades before a marriage goes bad so whowill remember what you said – You think long and hard whether to marry someone and once they decide to get married then the pre-nup doesn’t’t matter because we are not going to get divorced• Collateral (side) Promises– Usually as a guarantor of a debt– Ex: friend has bad credit so we need someone to back your debt. You say that if they don’t pay their car loan back then I will pay it  must be in writing -This is a side promise because you don’t think that your friend will not pay back - I’ll pay her debt totally does not have to be in writing  you know you are going to have to pay the debt - Absolute promise to pay someone's debt does not have to be in writing - Promise to pay someone's debt if they don ’ t pay it has to being writing - If it’s part of a deal where you get the benefit then it does not have to be in writing -