1. MT311 – Business Law I Seminar Presentation UNIT 5 Contracts – Part II
I. Chapter 10, Defenses to Contract Enforceability
II. Chapter 11, Third Party Rights and Discharge

2. Genuineness of Assent
In what types of situations might genuineness of assent to a contract’s terms be lacking?
Mistake
Fraudulent misrepresentation
Undue influence
Duress

3. Mistakes of Fact

4. Mistakes of Quality
What is the difference between a mistake of quality or value and a mistake of fact?
Mistake of quality or value of a deal is an ordinary risk of business for which a court normally will not provide relief.
A mistake concerning a fact important to the subject matter of a contract, however, may provide a basis for relief.

5. Fraudulent Misrepresentation
What elements must exist for fraudulent misrepresentation to occur?
Misrepresentation of a material fact;
Intent to deceive;
Justifiable reliance by innocent party; and
Injury as a result of the misrepresentation.

6. Undue Influence and Duress
Arises from a special relationship of trust.
A stronger party overcomes a weaker party’s free will by exerting psychological influence.
Duress
Threat of physical force or extortion.
Can serve as basis for rescission of contract.
Economic need, by itself, is not duress.

7. Statute of Frauds What contracts must be in writing to be enforceable?
Interests in land
Cannot be performed within one year
Collateral contracts
Pre-nuptial agreements
Contracts for sale of goods at $500 or more

8. One-Year Rule

9. Exceptions to the Statute of Frauds
Partial performance
Purchaser has paid part of purchase price, taken possession and made valuable improvements to property.
Admissions
Party admits in court records contract exists
Promissory Estoppel/Detrimental Reliance
Promisee justifiably relies
Customized Goods

10. Statute of Frauds

11. Sufficiency of Writing
Includes memorandum, invoice, fax, check, , etc.
Essential terms sufficient
Signed by party against whom enforcement is sought (Initials adequate)

12. Parol Evidence Rule

13. Exceptions to the Parol Evidence Rule
Evidence of subsequent contract modifications
Oral evidence to show contract was void or voidable
Show meaning of ambiguous terms
To “fill in the gaps”
Prior dealings, course of performance, usage in trade
Obvious or gross clerical errors

14. Assignments Transfer of contractual rights to a 3rd party (assignee).
The assignee has the right to demand performance from the other original party (Obligor) to the contract.
Cannot assign rights for personal services or when obligor’s performance changes.

15. Delegation Transfer of duties to a 3rd party (Delegatee) by Delegator.
Delegatee owes duty to original party in contract.
Delegator is still liable for performance of duty.

16. Assignment vs. Delegation

17. Intended vs. Incidental Beneficiaries
Intended Beneficiaries
Benefit is intentional
After rights vest, third party can sue
Incidental Beneficiaries
Benefit is unintentional
Third party has no rights

18. Third-Party Beneficiaries

19. Contract Discharge

20. Scenario
Aaron, a college student, signs a one-year lease agreement that runs from September 1 to August 31. The lease agreement specifies that the lease cannot be assigned without the landlord’s consent. In late may, Aaron decides not to go to summer school and assigns the balance of the lease (three months) to a close friend, Erica. The landlord objects to the assignment and denies Erica access to the apartment. Aaron claims that Erica is financially sound and should be allowed the full rights and privileges of an assignee. Discuss fully whether the landlord or Aaron is correct.

21. Questions & Reminders Questions on Unit 5 material?
Next Seminar on Unit 6
Unit 4 Grades Available by Monday
Remember to complete all Assignments
Review (Graded Automatically)
Discussion (See Discussion Board Posting Requirements)
Activity
Case Analysis
Have a great week!