BLAW3080: Contracts BLAW 3080
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This 3 page Class Notes was uploaded by Madison Morman on Saturday March 5, 2016. The Class Notes belongs to BLAW 3080 at University of Cincinnati taught by Peter Burrell in Summer 2015. Since its upload, it has received 46 views. For similar materials see Legal Environment of Business in Business Law at University of Cincinnati.
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Date Created: 03/05/16
Week 2 notes (class 19 and 20, 21) Preexisting Duty not Sufficient Consideration: A promise to perform an existing duty is not sufficient (employee non-‐compete) • If employee says they will quite and employer offers same amount of money to work longer, that is not adequate. Defenses of Contract: • Fraud: In most fraud cases, party is aware they are making a contract but terms are misrepresented o Misrepresentation of Fact o Intent to Deceive o Actual and justifiable reliance by victim o Damages • Duress: Forcing a party to enter into a contract under fear or threat makes the contract voidable; threatened act must be wrongful/illegal and render a person incapable of exercising free will. (civil suit threat is not duress) • Undue Influence: Contract lacks voluntary consent and is voidable; o Confidentiality, fiduciary, or relationship of dependence o Persuasion is presumed if a weaker party talked into doing something not beneficial to him/herself. • Illegality: A contract must be formed for a legal purpose o Any contract prohibited by laws is void; tortious act is illegal o Contracts for Usury Statute prohibits excessive rate of interest o Contracts contrary to public policy or restraint of trade are void o EXCEPTION: Non-‐Compete in connection with sale of business AND covenant no tot compete in employment o The agreement not to compete preserves goodwill that buyer has purchased; typically five years agreement to not compete o Courts are more likely to scrutinize non-‐competes in the employment area than in sale of business • Licensing statutes • Contracts violate public privacy Valid contract: Offer, acceptance, and consideration Exculpatory Clauses: Release a party from liability in the event of monetary/physical injury (doesn’t matter who’s at fault) • Enforceable when they’re not against public policy • Protects commercial enterprises form liability for consequences of conduct that would be negligent • Sign these clauses for activities such as sky diving, skiing etc Contractual Capacity • Intoxication-‐ Lack of capacity at the time the contract is being made; has to be extremely intoxicated for the court to term the contract invalid Impaired person can do 2 things 1. Disaffirmance (voidable) 2. Ratification: After sobering up Statute of Limitation: Provides a legal action must be commenced within a certain period of time (4-‐6 years/8 years in OH for written contracts) Statute of Frauds: General rule is that contracts don’t need to be in writing • Two types of contracts that MUST be in writing to be enforceable • Involving Interest of Land • Sales of Goods over $500 • Contracts involving land must be evidenced by a Writing • EXCEPTION-‐ Leases for less than a year AND full or partial performances Contract for Sale of Goods: Provides evidence of the material terms of the contract that is signed by the person being sued. Contract for Sale of Goods must have quantity term and a signature. Effect of Non-‐Compliance: Failure to satisfy the Statute of Frauds doesn’t prevent formation of a contract AND makes it unenforceable Mental Incompetence: • Void: Person is mentally incompetent by a court of law and a guardian has been appointed • Voidable: Person doesn’t know they are entering contract/lacks mental capacity to comprehend its nature, purpose, and consequences • Valid: Person is able to understand nature and effect of contract but may lack capacity to engage in other activities Impossibility: After the parties enter contract and an event occurs, that will make performance of contract impossible 1. Destruction of Subject Matter: Before acceptance of offer, terminates 2. Death or Incompetence of Offerer/Offeree: Automatically terminates unless it’s an irrevocable offer Novation: Occurs when a new contract substitutes a NEW party for an old party in an existing contract (all parties must agree to release). Contingency 1. Sale Contingency-‐ purchase depends on inspection/ sale of other house 2. Appraisal-‐ Purchase of real estate is contingent on contract price being below or at a fair market Parol Evidence Rule: • Prohibits a party in a lawsuit involving a fully integrated contract • Prohibits a party from introducing evidence at trial of 1. Oral or written statements prior to written/oral statements made with written contract 2. That seeks to vary terms of written contract. Three categories of damages 1. Compensatory-‐ Compensates non-‐breaching party for loss of the bargain a. Standard Measure: Cost of substitute performance versus the contract price (Build home addition, sell lemons, lease) 2. Consequential 3. Punitive – Not generally awarded; even if one of the parties to the contract was mean Duty to Mitigate Damages: Want to lower damages before suing • Final Note: Attorney’s fees in action for breach of contract • Pay attorney fees, which can outweigh benefits of suing (American Rule) Limits on duty to mitigate • When you have real estate • Or a very unique good
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