Contracts Part B Created by Pamela S Evers Assoc Prof UNCW for 1 Educational Purposes 2001 w updates CONTRACT FORMULA Capacity Lawful Purpose Offer Acceptance Genuine Assent Consideration CLPOAGAC CONTRACT Clearly Live People On A Gate Are Crazy 3 Cute Little Penguins Often Attack Giant Arctic Cats Breach of Contract To state a claim of breach of contract the plaintiff must establish 1 the formation of a contract between the plaintiff and defendant 2 performance by the plaintiff 3 failure by the defendant to perform and 4 resulting damages Genuine Assent Contract may be unenforceable if the parties have not genuinely assented to its terms because of Mistake Misrepresentation Undue Influence Duress Unilateral Mistake One party mistaken as to some material fact Unilateral mistake alters effect of contract if other party to contract knows or should have known that a mistake of fact was made and benefits from the mistake mistake due to inadvertent mathematical error in addition summation subtraction division or multiplication Bilateral Mistake If mutual mistake as to some material fact contract can be rescinded by either party or voided by both e g Dept Store ordered 100 Dior white leather suits and Dior sent 100 black leather suits but mistake of value is not sufficient to avoid contract Morgana thought the antique painting was worth 1 000 and wanted to return it because it was worth only the 50 she paid Misrepresentation 2 Types Negligent misrepresentation may affect contract depending on the state and the circumstances Intentional misrepresentation fraud intent to deceive and reliance required contract voidable by innocent party misrepresentation of law future facts and statements of opinion aren t fraud unless person is an expert May be express or implied including silence Rodi v Southern New England School of Law Facts 1997 Rodi went to Southern New England School of Law SNESL which claimed that ABA accreditation committee recommended SNESL for provisional accreditation Catalogue had disclaimer about accreditation Same disclaimer as is currently on their webpage Rodi intended to take New Jersey bar exam and the law requires bar applicants to hold law degrees from ABA accredited law schools Accreditation critically important to Rodi Rodi v Southern New England School of Law Facts ABA denied accreditation during Rodi s first year Dean urged Rodi to remain Rodi graduated SNESL remained unaccredited and Rodi was ineligible to sit for the New Jersey bar examination Rodi filed suit against SNESL and others alleging fraudulent misrepresentation Court granted SNESL motion to dismiss Rodi v Southern New England School of Law Issue and Legal Reasoning Had Rodi failed to state a claim Despite catalogue disclaimer if SNESL representatives knew of non accreditation probability then positive statements about the likelihood of SNESL s accreditation were actionably misleading Reversed and remanded in favor of Rodi Law school website 1 7 09 states The Law School makes no representation to any applicant that it will be approved by the American Bar Association prior to the graduation of any matriculating student Pressure to Contract Claims of pressure are fact dependent Undue influence possible in relationships in which one party in a confidential relationship dominates the other if undue influence proven the contract is voidable Duress physical or economic must be serious to void a contract but may occur if party enters contract to avoid illegal threatened danger however hard bargains or statement of legal remedies do not constitute duress Adhesion contracts take it or leave it offers where bargaining is not really arms length generally are not voidable merely because it benefits one party more Thought Question Your landlord tells you that you will be evicted from your apartment or your rent must increase by 75 per month because your neighbors complain about your dog If you agree to the increase would the contract be void or voidable under the theory of duress SPECIAL DOCTRINES The Statute of Frauds The Parol Evidence Rule 15 The Statute of Frauds To be enforceable the following contracts must be in writing and signed Contracts involving interest in land Contracts subject to One year rule Collateral or Secondary Contracts Promise made in consideration of marriage Contracts for the sale of goods priced at 500 or more The One Year Rule A contract that cannot by its own terms be performed within one year from the date it was formed must be in writing to be enforceable Test Whether performance is possible even though unlikely within one year Waiting for contract performance The CISG a Writing The Convention on the International Sale of Goods does not require that a contract be in writing to be enforceable A contract need not take any particular form and can be proven by any means Cyberlaw Electronic Signatures in Global and National Commerce Act E Sign of 2000 provides that in interstate commerce transactions an electronic signature has the same legal effect as a handwritten signature and an electronic contract has the same legal effect as a traditionally printed contract In cyberspace clicking a submit button equates to your signature Parol Evidence Rule Rule If the court finds that the parties intended their written contract to be a complete and final embodiment of their agreement a party cannot introduce evidence of any oral agreement or promise made before the contract s formation or at the time the contract was created Parol Evidence Rule Exception evidence allowed if there are ambiguous terms clear errors or one party alleges deception by the other party E g contract states 50 sacks so industry practice may be used to help clarify the type of sack intended by the parties E g fraud Parol Evidence Rule THIRD PARTY RIGHTS Rule only Parties to a contract have rights and liabilities under the contract Exception to rule Third parties not party to a contract have rights in an Assignment or Delegation Third parties also have rights in a third party beneficiary TPB contract Elements of TPB When a contract is intended to benefit a 3rd party not promisor or promisee the third party is a third party beneficiary TPB contract between Abe Betty an intent either expressed by parties or in the contract that the contract benefit Carl if Abe or Betty breaches contract then damages to Carl Non breaching party Carl may sue Beneficiaries Intended Beneficiary Promisee intended to confer benefit on the beneficiary
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