Defenses to Formation and Policing the Bargain: every key term you need (+ practice quiz)
25 flashcard terms for Contracts Topic 4, written to match the course framework. Study them here, then drill them as interactive flashcards, or test yourself with the 15-question quiz — free, no account needed.
A contract made by a person under eighteen is voidable at that person's election, so the minor may disaffirm during minority or within a reasonable time after reaching majority.
Disaffirmance
The act of avoiding a voidable contract, which generally requires returning whatever of the consideration remains but traditionally does not require paying for depreciation.
Ratification of a voidable contract
Conduct or words after the disability ends that affirm the deal, such as continued use or payment, which extinguishes the power to disaffirm.
Necessaries doctrine
A minor or incapacitated party remains liable in restitution for the reasonable value of food, shelter, clothing and medical care actually furnished under the contract.
Mental incapacity cognitive test
A contract is voidable if a party could not reasonably understand the nature and consequences of the transaction at the time it was made.
Mental incapacity volitional test
A modern supplement voiding a contract where a party could not act reasonably in relation to the transaction and the other party had reason to know of the condition.
Intoxication defense
A contract is voidable only if the other party had reason to know that intoxication prevented understanding of the transaction or reasonable action in relation to it.
Duress by physical compulsion
Where a party is physically forced to manifest assent, no contract forms at all, because the manifestation was not an act of that party's own will.
Duress by improper threat
A contract is voidable when an improper threat left the victim no reasonable alternative, including threats of crime, tort, bad-faith litigation or breach of contract.
Economic duress
A modern branch of duress voiding a deal where a party exploited the other's acute financial vulnerability with a wrongful threat and no adequate market alternative existed.
Undue influence
Unfair persuasion of a party under the domination of, or reposing trust in, the persuader, often shown by unusual timing, place, pressure and absence of independent advice.
Odorizzi v. Bloomfield School District
A teacher's resignation obtained by administrators at his home shortly after arrest illustrated the pattern of overpersuasion that constitutes undue influence.
Fraudulent misrepresentation
An assertion not in accord with the facts, made knowingly or recklessly to induce assent, on which the recipient justifiably relied, rendering the contract voidable.
Material misrepresentation
An innocent or negligent false assertion is still ground for avoidance if it would likely induce a reasonable person to assent, or the maker knew it would induce this recipient.
Concealment and nondisclosure
Active concealment is equivalent to an assertion, and silence becomes actionable where a fiduciary relation, a half-truth, or a duty to correct a prior statement exists.
Fraud in the factum
Deception about the very nature of the document signed, which makes the purported agreement void rather than merely voidable and defeats even a good-faith transferee.
Fraud in the inducement
Deception about facts that motivated assent to a document whose nature the signer understood, making the resulting contract voidable at the victim's election.
Justifiable reliance
The requirement that the recipient's reliance be reasonable in context; reliance on a plain opinion or obvious sales puffery generally will not be protected.
Puffery
Vague commendatory sales talk about quality or value that no reasonable buyer would treat as a factual assertion, and which therefore cannot ground misrepresentation.
Mutual mistake
Where both parties err about a basic assumption materially affecting the exchange, the adversely affected party may avoid unless that party bore the risk of the mistake.
Sherwood v. Walker
The sale of a cow believed barren but actually pregnant was avoided for mutual mistake about a basic assumption going to the essence of the bargain.
Unilateral mistake
One party's error supports avoidance only if enforcement would be unconscionable or the other party knew of or caused the mistake, and the mistaken party was not negligent.
Procedural unconscionability
Defects in the bargaining process such as adhesive fine print, hidden terms, high pressure, or gross disparity in sophistication and bargaining power between the parties.
Substantive unconscionability
Terms so one-sided as to shock the conscience, such as grossly excessive price, remedy-stripping clauses, or a cross-collateral clause reaching every prior purchase.
Williams v. Walker-Thomas Furniture Co.
A cross-collateral instalment clause keeping a balance on every item until all were paid was remanded for unconscionability analysis of absent meaningful choice and unfair terms.