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Remedies • Contract - Equitable Remedies
REM#065
Legal Definition
Defenses to formation include mistake, misrepresentation, coercion, undue influence, lack of capacity, failure of consideration, and illegality.
Plain English Explanation
When two people agree to something, they often create a contract. However, sometimes, one person might say they didn't really agree because something was wrong when the contract was made. These reasons can be:
(1) They made an honest mistake about what they were agreeing to.
(2) Someone lied to them about the details.
(3) They were forced or pressured into agreeing.
(4) Someone took advantage of their weak position or state of mind.
(5) They weren't mentally fit to make the agreement.
(6) They didn't get anything in return for their promise.
(7) The thing they agreed to was illegal.
These reasons are called "defenses to contract formation." They exist to make sure contracts are fair and both parties genuinely agree.
(1) They made an honest mistake about what they were agreeing to.
(2) Someone lied to them about the details.
(3) They were forced or pressured into agreeing.
(4) Someone took advantage of their weak position or state of mind.
(5) They weren't mentally fit to make the agreement.
(6) They didn't get anything in return for their promise.
(7) The thing they agreed to was illegal.
These reasons are called "defenses to contract formation." They exist to make sure contracts are fair and both parties genuinely agree.
Hypothetical
Hypo 1: Bob tells Sam that the car he's selling has never been in an accident. Trusting Bob, Sam buys the car. Later, Sam discovers the car had been in a major accident before. Result: Sam can use the defense of misrepresentation because Bob lied about the car's history. Sam might not have to stick to the contract.
Hypo 2: Bob knows that Sam is desperate for money. Bob offers to buy Sam's valuable painting for a very low price. Feeling pressured and having no other option, Sam agrees. Shortly after, Sam realizes the mistake he has made and seeks to undo the agreement. Result: Sam can use the defense of undue influence because Bob took advantage of Sam's desperate situation. The contract might be voided.
Hypo 3: Bob and Sam agree that Sam will paint Bob's house for $500. Bob will pay $250 up front, and then Sam will paint the house. Upon completion, Bob will pay $250 more. Bob pays $250, but Sam never shows up to paint. Result: Bob can use the defense of failure of consideration because he did his part, but Sam didn't. The contract has been broken by Sam.
Hypo 4: Bob offers Sam a drink, which unknowingly to Sam, contains a substance that affects his judgment. While under the influence, Bob convinces Sam to sell his premium guitar for just $10. Result: Sam can use the defense of lack of capacity because he wasn't in the right state of mind when he agreed. The contract might not be valid.
Hypo 2: Bob knows that Sam is desperate for money. Bob offers to buy Sam's valuable painting for a very low price. Feeling pressured and having no other option, Sam agrees. Shortly after, Sam realizes the mistake he has made and seeks to undo the agreement. Result: Sam can use the defense of undue influence because Bob took advantage of Sam's desperate situation. The contract might be voided.
Hypo 3: Bob and Sam agree that Sam will paint Bob's house for $500. Bob will pay $250 up front, and then Sam will paint the house. Upon completion, Bob will pay $250 more. Bob pays $250, but Sam never shows up to paint. Result: Bob can use the defense of failure of consideration because he did his part, but Sam didn't. The contract has been broken by Sam.
Hypo 4: Bob offers Sam a drink, which unknowingly to Sam, contains a substance that affects his judgment. While under the influence, Bob convinces Sam to sell his premium guitar for just $10. Result: Sam can use the defense of lack of capacity because he wasn't in the right state of mind when he agreed. The contract might not be valid.
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