Saturday, October 27, 2007

Fraud & Misrepresentation

1. intentional miss statement of a material fact
2. the person making the statement knows, or should know it to be false
3. the person to whom the statement is made justifiably relies on it
4. the person who relies upon the statement suffers damages

Mistakes

Unilateral
Where 1 of the parties is mistaken to a material fact, the agreement is never-the-less binding unless the nonmistaken party knew of the error or enforcing the contract would be unconscionable.

Caveat emptor - buyer beware

Unilateral mistake of law

ignorance of the law is no excuse

Mutual mistakes -
where both parties are operating under the same material mistake of fact or law the contract is voidable

Capacity

-An individuals ability (in the eyes of the law) to enter into a legally binding relationship

-some people do not have the requisite intent to enter into an agreement ie.
    Minors
    Mentally impaired

this is because they don't have the understanding necessary to enter into a binding agreement

In common law, people used to have to be 21 to have capacity to contract, but now the majority is 18

Void - never came into existance

Voidable - Valid, but subject to cancellation

in common law the exception to this rule was contracts for necessaries like food, shelter, or clothing.

deal with a minor at your own risk

Mentally incompetent vs officially mentally incompetent

If a court has officially determined that an individual is incompetent then all contracts are void
if something is void in the law it can never be contracted

a mentally incompetent has a reasonable time once they become competent to void a contract

Minors can Ratify an agreement
ratify means recognize and acknowledges the existence of the agreement

upon reaching the age of majority any minor recognizes and acknowledges the existence of the agreement it can not be voided and has therefore been ratified.

Consideration

A bargained for exchange between the offeror and oferee. Defined as either conferring a benefit or suffering a detriment. Consideration is the essence of what transitions a moral or ethical obligation into that which the law deems to be a legal obligation
or
What you get or give

Is the person willing to or looking to act based on the word of the other individual
In common law consideration could be nominal but now it has to be something of value and it must be reasonable

Preexisting duties and past consideration -
where 1 has a preexisting duty to perform in a manner a contract can not be made later with that as part of the bargain

Past Consideration
Son applied for college, made all arrangements, and then went to college decided he was short. paying is not an obligation because the son did not depend on it

Preclude a promisor from going back on a promise during the executory phase of an agreement
executory - to be executed
executed - already executed

Quasi Contract

Farmer leased land for 2 harvests. at the end of the 2nd harvest the farmer prepared land for next years planting. At the end of he prep work, farmer and bank could not agree on terms of the following years lease & farmer leaves the land. The bank is obligated to pay the farmer for the prep-work he completed because they had a quasi contract.

-typically unilateral

Promissory Estoppel

Family's house had a flood. The insurance company assures everything is covered & supervises family's actions to move on in life. When family submits itemized list to insurance company they are obligated to cover everything even if contract had lapsed before the accident due to Promisory Estoppel.

-Precludes a promisor from going back on a promise during the executory phase of an agreement

-typically consideration

- occurs where a promisor makes a promise to a promisee that induces the promisee to take substantial action in reliance on the promise to his or her detriment.

if consideration occurs on both sides, dont look at this

Elements
A promise that causes substantial action to be taken by the promisee
-justifiably relies on the promise
-Detriment

Express Contract

A producer asks a star to act in his movie next month for $2M & she agrees