LGS 200 (Lisenby)

CHAPTER NINE - CONTRACTS

Contract Defenses, Discharge and Remedies

I. Breach of Contract – the failure, without legal excuse, to perform the obligations of a contract.

II. Defenses to Contract Enforceability

A. Genuineness of Assent

1. Unilateral Mistake of Fact – mistake of fact by one party – generally no right to avoid the contract

2. Mutual Mistake of Fact – when both parties are mistaken about a material fact, either party my rescind the contract

3. Fraudulent Misrepresentation

a. material fact

b. intent to deceive

c. justifiable reliance

4. Innocent Misrepresentation – innocent party can cancel the contract. Ex: 215 acres of land vs. 250 acres.

5. Undue Influence – where one party can greatly influence another party. Example: Attorney-Client relationship, guardian-ward relationship

6. Duress – where one party is forced into the agreement.

B. Statute of Frauds – legal requirement that certain contracts be in writing. Example: contracts for the sale of land.

1. Collateral promise – to pay the debts of others, a writing is generally required

2. Contracts made in contemplation of marriage – prenuptial agreements.

III. The Parole Evidence Rules

A. Evidence of the parties’ prior negotiations or oral agreements will generally not be considered if it conflicts with the express written provisions of the contract.

B. There are exceptions. Example: when certain contractual terms are ambiguous.

IV. Contract Discharge

A. Discharge by performance – fulfillment of the terms of the contract

B. Discharge by agreement – Ex: rescission – mutual agreement to terminate the contract

C. Impossibility of performance

V. Damages for Breach of Contract

A. Compensatory – to compensate for injuries or damages actually sustained.

B. Consequential – special damages. Ex: lost profits on good intended to be resold.

C. Punitive – for punishment – generally not recoverable for breach of contract.

VI. Equitable Remedies for Breach of Contract

A. Rescission and Restitution – Ex: where the contract was the result of fraud.

B. Specific Performance – the performance of the act specified by the contract.