Mistakes, Fraud and Voluntary Consent; The Writing Requirement and Electronic Records; & Third Party Rights Chapters 15, 16, 17

Genuineness of Assent A party who demonstrates that he or she did not genuinely assent to the terms of a contract may avoid the contract. Genuine assent may be lacking due to mistake, fraudulent misrepresentation, undue influence, or duress.

Mistake Unilateral Mistake A mistake made by one of the contracting parties. Generally, a unilateral mistake will not excuse performance of the contract unless other party knew of the mistake OR substantial mathematical error

Mistake Mutual Mistake A mistake on the part of both contracting parties. In this case, either party may rescind.

Fraud When an innocent party consents to a contract with fraudulent terms, he or she may usually avoid the contract, because he or she did not genuinely assent to the fraudulent terms.

Fraud Elements: misrepresentation of material fact made with the intent to deceive (scienter) justifiable reliance damages

Undue Influence Contract lacks voluntary consent and is voidable. Undue Influence or Persuasion is presumed if weak party talked into doing something not beneficial to him or herself.

Duress Party who enters into a contract under fear or threat makes the contract voidable. Threatened act must be wrongful or illegal and render person incapable of exercising free will. Threat of civil suit is not unlawful.

The Statute of Frauds A statute which requires certain types of contracts to be in writing in order to be enforceable. Some contracts considered important enough that their terms must be memorialized in writing to ensure reliable evidence of their existence and their terms

The Statute of Frauds Agreements in consideration of marriage-Prenuptial agreements Not performable within one year Involving an interest in land For sale of goods over $500 ($5,000 under UCC) Collateral agreements

The Statute of Frauds: Exceptions Admissions Partial Performance Custom Orders of Goods Acceptance of Delivery

The Statute of Frauds: Sufficiency of the Writing A writing signed by the party against whom enforcement is sought. A confirmation, invoice, sales slip, check, or fax, or any combination thereof. Several documents which, in combination, provide the terms for an agreement.

Privity Of Contract As a general rule, only the parties to a contract owe any duties and enjoy any rights arising from the contract.

Privity Of Contract Exceptions: Assignment - a party to the contract (the assignor) transfers his or her rights to some third party (the assignee). Delegation - a party to the contract frees himself or herself from duties by having some third party perform those duties.

Assignment of Rights Generally, all contracts may be assigned, BUT Some assignments may be prohibited by law or by contract. Not allowed if for contract is personal in nature. Not allowed if it would materially alter duties of party.

Assignments Effect of an Assignment: Obligor: person who is obligated to perform the duty. When rights of assignor are unconditionally assigned, her rights are extinguished.

Assignments Effect of an Assignment: The third party (assignee) has right to demand performance from original party to contract.

Delegations Contractual duties in a bilateral contract that are delegated to a third party.

Delegations Effect of a Delegation. Delegator remains liable. Delegatee is liable if delegation contract creates a third party beneficiary relationship in the obligee.

Delegation of Duty Duties that may not be delegated Performance depends on the skill of the obligor. Special trust has been placed in the obligor. Performance by a third party will alter the expectation of the duty contract. Contract expressly prohibits delegation.

Privity Of Contract Exceptions: Third-Party Beneficiary The law distinguishes between intended and incidental third-party beneficiaries. Only intended beneficiaries acquire actionable legal rights in a contract.

Third-Party Beneficiaries Intended Beneficiary A third party for whose benefit a contract is formed. Example: life insurance.

Third-Party Beneficiaries Incidental Beneficiary A third party who benefits from the performance of a contract, but whose benefit was not the reason the contract was formed. Example: include construction contracts.

Third Party Beneficiaries Intended v. Incidental. Factors: Performance is rendered directly to TPB. TPB’s right to control contract details. TPB expressly designated as beneficiary.

Mistakes, Fraud and Voluntary Consent; The Writing Requirement and Electronic Records; & Third Party Rights Chapters 15, 16, 17