1. Capacity And Genuine Agreement

2. 6 parts to a Contract Offer Acceptance Capacity Genuine Agreement Consideration Legality

3. Genuine Agreement A valid offer has been made by the offeror, and a valid acceptance has been exercised by the offeree

4. Mistake Unilateral Mistake – An error on the part of one of the parties – Cannot get out of contract – Types: Nature of the Agreement –Signing a contract you don’t understand or have not read –This applies to signing a contract in a language you don’t understand Identity of a Party –Bound by contract with face to face meetings –May be able to void a contract made NOT face to face

5. Bilateral Mistake (Mutual Mistake) – Both parties are mistaken – Types: Possibility of Performance – Contract is impossible to perform Either party can void contract Subject Matter –Either party can void contract

6. Fraud Deliberate deception for an unfair or unlawful gain – Deliberate: Done with or marked by full consciousness of the nature and effects; Deception: The fact or state of being deceived – Gain: To secure as profit or reward In order to prove fraud, you must prove the above 3 definitions

7. Proving Fraud: 1. False Representation of Fact 1. Must be a material (important) fact 2. Concealment (nondisclosure) may be considered false representation 2. Representation Known to be False 3. False Representation Intended to be Relied Upon 4. False Representation Actually Relied Upon 5. Resulting Loss

8. Innocent Misrepresentation Make an innocent statement of supposed fact that turns out to be false Injured party has the right to rescind (take back) the offer No rights to damages

9. Duress Overcoming a person’s will by use of force or by threat of force or bodily harm Economic Duress – Threats to a person’s business or income Actual physical harm will void the contract Threat of physical harm will make contract voidable A threat of exercising one’s legal right is NOT duress Ex Threatening to sue someone and you have right to sue, is NOT duress

10. Undue Influence Unfair and improper persuasive pressure within a relationship of trust

11. Match the column on left with who they have undue influence over in the right column? 1. Doctor 2. Lawyer 3. Parents 4. Teacher 1. Student 2. Children 3. Client 4. Patient Answers: 1-4, 2-3, 3-2, 4-1

12. Capacity to Contract  Capacity – legal ability to enter a contract  Majority – age of legal adulthood  Minor – not yet reached legal age (minority)  NC Age of Majority = 18 years old  Voidable Contracts – minors may disaffirm or avoid their contracts if they so choose  Infancy = minority = minor = under 18 yrs old

13. Capacity to Contract  Returning Merchandise – must be returned if disaffirming a contract  Tender – offer to return  Misrepresenting Age – fraud - if contract disaffirmed, you may be sued for fraud

14. Capacity to Contract  Disaffirming the Whole Contract - can’t disaffirm parts of a contract -- must disaffirm all or none  Disaffirming Contracts made with Minors – both can disaffirm contact

15. Ratification of Contracts with Minors  Ratify – approve contract - after reaching majority age, a minor can ratify a contract made while he or she was a minor - ratification ends all rights given to a minor  Contracts for Necessaries – necessities – food, clothing, shelter, and medical care - responsible for the fair value of item

16. Ratification of Contracts with Minors  Special Statutory Rules – minors have capacity to buy car/life insurance - married = adult - limited capacity if you own a business - renting apartment is a necessity

17. Other Contractual Capacity Rules  Mentally impaired persons – if declared insane:  Prior to guardian being appointed – Contract is voidable  After guardian appointed - all contracts are void  Intoxicated person – must not understand the purpose, nature, or effect of the transaction - fair value of necessities

18. Other Capacity Limitations  Convicts have certain limitations  Aliens – people who live in U.S. but own allegiance to a different country - limited capacity ex: war