Non-Enforcement of Contracts
The Importance of Enforcing Contracts
Voidable: A contract that, in certain circumstances, an aggrieved party can choose to keep in
force or bring to an end.
Void Contract: A contract involving a defect so substantial it is of no force or effect.
Contracts Based on Unequal Relationships
Legal Capacity: The ability to make binding contracts.
Age of Majority: The age at which a person becomes an adult for legal
General rule, minors are not obligated by the contracts they make.
Both parties must be able to understand the nature and consequences of their
Contracts that are made as a result of one of the parties being threatened with physical
harm are obviously not enforceable.
Economic Duress: The threat of economic harm that coerces the will of the other party and
results in a contract.
Undue Influence: Unfair manipulation that compromises someone's free will.
Traditionally operates in two circumstances:
Example: An elderly person pressured in to signing over an estate in return
Falls to the more powerful party to prove that no undue influence was present.
An unfair contract formed when one party takes advantage of the weakness of
Proof involves a two-step process:
Proof of inequality between the parties.
Lacks language facility
Has lower economic standing Proof of an improvident bargain or proof of exploitation.
Misrepresentation and Important Mistakes
Misrepresentation of Relevant Facts
One party provides only partial information to the other side.
One party actively conceals the truth.
One party neglects to correct an earlier assertion that, when stated, was correct but
now no longer is so.
The parties are in a relationship requiring utmost good faith.
A statute imposes a positive obligation to disclose information.
Misrepresentation: A false statement of fact that causes someone to enter a contract.
Rescission: The remedy that results in the parties being returned to their pre-contractual
Ingredient of an Actionable Misrepresentation
Clear and unambiguous
Material to the contract; that is, it must be significant to the decision of whether or not
to enter into the contract.
One that actually induces the aggrieved par