Textbook Note - Chapter 8.pdf

3 Pages
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Department
Management and Organizational Studies
Course Code
Management and Organizational Studies 2275A/B
Professor
Philip King

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Description
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 Legal Capacity: The ability to make binding contracts. Minors Age of Majority: The age at which a person becomes an adult for legal purposes. General rule, minors are not obligated by the contracts they make. Mental Incapacity Both parties must be able to understand the nature and consequences of their agreement. Duress 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 Undue Influence: Unfair manipulation that compromises someone's free will. Traditionally operates in two circumstances: Actual Pressure Example: An elderly person pressured in to signing over an estate in return for care. Presumed Pressure Falls to the more powerful party to prove that no undue influence was present. Unconscionability Unconscionable Contract An unfair contract formed when one party takes advantage of the weakness of another. Proof involves a two-step process: Proof of inequality between the parties. Unsophisticated Poorly educated Lacks language facility Has lower economic standing Proof of an improvident bargain or proof of exploitation. Misrepresentation and Important Mistakes Misrepresentation of Relevant Facts Example Scenarios 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 positions. Ingredient of an Actionable Misrepresentation False 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
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