Contracts-Classifying Defenses

Defective Formation:
1. ambiguity
2. mistake
3. want of consideration (pre-existing duty, past consideration, illusory promise) (real)

Capacity:
1. minors (K is not void but voidable; common law age=21; misrepresentation of age is irrelevant; restitution generally required upon disaffirmance; necessaries; ratification by new adults words/deeds).
2. mental infirmity or disability - voidable.
3. ultra vires contracts of corporate entities: extremely limited. If corporation contracts beyond limits of statutory law, void. If corp contracts beyond limits of articles of incorporation, contract is effective unless other party was aware of the contract being ultra vires the articles.

Policy Objections:
1. illegality:
a. timing:
i. illegal at time of offer: bargain is void (real).
ii. illegal while offer is outstanding: offer is revoked by operation of law
iii. illegal subsequent to formation, prior to performance: both parties excused by impossibility.
b. UCC: if means or manner of payment fails because of gov't regulation, seller may withdraw unless buyer can provide commercially equivalent and legal substitute means of payment.
c. nature of the illegality:
i. malum in se: court will afford no remedy or assistance.
ii. malum prohibitum: quasi-contract relief available (market value of goods/services provided) unless: in pari delicto and not member of class to be protected by the prohibition.
2. Substantive unconscionability:
a. stipulated remedies that are punative rather than compensatory in nature.
b. attempts to limit award of consequential damages (strong presumption under ucc)
c. attempted disclaimer of implied warranties of merchantability and fitness for purpose (ucc allows disclaimer but many states do not).
CAN BE BLUE PENCILED OUT.
3. Offensive to public policy:
a. over-broad non-competes.
b. encouragement or promotion of tortious interference with non-contracting party
c. contingent fees for obtaining passage of special legislation, etc.
CAN BE BLUE PENCILED.

Deceptive or Coercive Formulation Tactics:
1. Fraud:
a. fraud in the factum-- victim doesn't even know a contract is in contemplation. (real)
b. fraud in the inducement-- victim is induced to contract by lies or deliberate half-truths.
c. fraud in the execution-- oral contract reduced to an unfaithful writing by other party. (self-protect by reading documents before you sign them? split in the courts).
2. Duress:
a. physical duress
b. economic duress: only when victim can prove illicit act by the aggressor which created the desperate situation or actively intermeddled in it to make it worse. (charging a lot for gas in the desert, not econ. duress; emptying tank and then charging a lot for gas in the desert, yes econ. duress).
3. Undue Influence:
a. "overly-persuasive" tactics
4. Procedural Unconscionability:
a. grotesque imbalance of bargaining strength or sophistication AND oppressive terms.
b. oppression: grossly out of line with market expectations
c. adhesion contracts are not per se unconscionable but may be found unconscionable if oppressive or containing uncommon and not clearly disclosed terms.

Form of the Bargain:
1. Statute of Frauds
2. Parol Evidence