Roy Outline 2 - Contracts II Outline Knapp, Crystal, and...

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Contracts II Outline Knapp, Crystal, and Prince – 5 th Edition Spring 2005 Professor Roy Chapter 7 – Avoiding Enforcement I. Minority and Mental Incapacity A. Minority Rule – a.k.a. the Infancy Doctrine. 1. Classical Approach – minors are incapable of creating an enforceable K. If the seller never check age and minor tries to rescind the K, it’s tough shit for the seller. 2. Modern Approach – Minor should not be able to recover full purchase price once he has already paid for/used the merchandise, absent any showing of fraud or imposition by the seller. 3. Recision (Ex Ante Position)– a K with a minor is VOIDABLE. The minor can demand recision, (which means to put the parties back in the Ex Ante Position) -- to put the parties back into the situation they were in before the agreement. Problem – what if the value has decreases? 4. 2 Modern Rules: a. Benefit Rule – recovery of full purchase price is subject to a deduction for minors USE of the merchandise. b. Use Rule – minors recovery of full purchase price is subject to a deduction for the depreciation in value of merchandise. *Both pretty much same thing. 5. Exceptions to the Modern Approach: a. If the minor lies, or misrepresent his/her age – no minority defense. b. Necessaries – Items one needs to Live – child is liable for these. **Classical approach would say the K is still voidable if the child misrepresents his age, but there would be a separate action in tort. 6. When will minor not be able to recover? a. Minor Misrepresents his/her age. b. Once he/she has reached majority, must disaffirm the K w/n reasonable time or lose that option. B. Mental Incapacity 1. Distinguished from Minority Doctrine: a. Minors can disaffirm even if restoration cannot be made. b. Mentally incapacitated person must still make restoration to other party, UNLESS special circumstances are present (e.g., bad faith). 1
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2. Two Tests Under Rest. § 15 a. Cognitive Test – § 15(1)(a) -- Can the person understand the nature and consequences of the K. b. Volitional Test -- § 15(1)(b) – party is unable to act in a reasonable manner in relation to the transaction and other party has reason to know. c. § 15(2) -- Where a K is made on fair terms and the other party is without knowledge of mental illness or defect , if recision would be unjust, won’t allow II. Duress and Undue Influence A. Duress 1. Physical Duress a. Contracts made under physical duress are void. 2. Economic Duress (Rest. § 175) a. Three Factors : i. Wrongful or improper threat (1) Essential element of economic duress (2) “Wrongful” doesn’t have to be illegal (3) Threat must be made in bad faith. ii. Lack of a Reasonable Alternative
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This note was uploaded on 04/10/2011 for the course LAW 501 taught by Professor Roy during the Fall '08 term at University of Mississippi School of Law.

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Roy Outline 2 - Contracts II Outline Knapp, Crystal, and...

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