LAW 122 Lecture Notes - Lecture 8: Gamepro, Fiduciary, Headache
30 Apr 2018
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March 28, 2018 LAW122 – Lecture 8
1
CONTRACTUAL DEFECTS: CHAPTER 10
Overview
• Contractual Defects:
1. Misrepresentation
2. incapacity to contract
3. unfairness during bargaining
4. illegality
1. MISREPRESENTATION – TEST
Misrepresentation is a false statement of an existing fact that causes recipient to enter into a
contract
1. a statement of an existing fact…
2. that is false when made…
3. may be actionable if it induced a contract
Remedies for Misrepresentation
General Rule: Contract will not be enforced
• We treat the contract as though it never existed; parties are relieved of all their
obligations
• Usually accompanied by “restitution”: a giving back and a taking back.
Limits on Remedies
No Misrepresentation
• Representee conducted own investigation
o Evidently, was not induced to enter the contract
Misrepresentation, but still no “undoing” the contract
• Affirmed the contract
• Not possible to “undo” the contract
• Third party rights involved
Case Study on Misrepresentation
• Business Decision 9.1
• I can never figure out which way is “up”. Does anyone know how to read these things?
2. INCAPACITY TO CONTRACT
• There can be a problem with incapacity
• Capacity: legal power to give consent
• Voiding a Contract means → Avoiding: escaping the consequences of an otherwise
enforceable contract
find more resources at oneclass.com
find more resources at oneclass.com
March 28, 2018 LAW122 – Lecture 8
2
Three Examples
• There are groups with limited power to give consent
• Examples:
o Minors
o Mentally incapacitated people
o Intoxicated people
Intoxicated
Scenario 1: Impaired, vomiting, cannot walk, sells motorbike, value $30,000, sells for $300
Scenario 2: Impaired, vomiting, cannot walk, sells motorbike, value $30,000, sells for $300,
writes out a bill of sale, acknowledges the deal for the buyer, identifies the motorcycle by SN
• Scenario 1 – not a contract: I’m impaired, I have capacity, I don’t know what I am doing.
• Scenario 2 – contract: If you have capacity, you can’t void it.
Mentally Incapacitated
• No committal and committal
3. UNFAIRNESS DURING BARGAINING
• Contract may be voidable due to unfairness
a) Duress → Problems with the circumstances around the creation of the contract
o Person
o Goods
o Economic
b) Undue influence → Problems with the relationship between the parties
o Fiduciary
o Non – Fiduciary
c) Unconscionable transactions → Problems with the agreement itself
Pro-Tip: What Kind of Unfairness?
• Problems with the circumstances around the creation of the contract: DURESS
• Problems with the relationship between the parties: UNDUE INFLUENCE
• Problems with the agreement itself: UUNCONSCIONABILITY
A) Duress
• Duress: illegitimate threat of harm
• contract voidable at victim’s option
o Duress of person
▪ threat of physical harm to party or loved one
o Duress of goods
▪ threat to detain, damage, or destroy goods
o Economic duress
find more resources at oneclass.com
find more resources at oneclass.com
