FYLSX Defenses to Contract Enforceability 2 — Questions and Answers
Question 1: Alice, age 16, signs a contract to purchase a car for $8,000. After turning 18, she continues to make monthly payments for three months. What is the legal effect of her continued payments?
- The contract is void ab initio because she was a minor when she signed
- Her continued payments after reaching majority constitute ratification, making the contract enforceable (Correct answer)
- She must formally disaffirm in writing within 30 days of turning 18
- The contract remains voidable indefinitely because it was signed during minority
Correct answer: Her continued payments after reaching majority constitute ratification, making the contract enforceable
A minor who continues to perform or accept benefits under a contract after reaching the age of majority ratifies the contract, making it fully enforceable.
Question 2: A contract for the sale of land is made orally between Buyer and Seller. Buyer then makes significant improvements to the land in reliance on the oral agreement. Seller seeks to invoke the Statute of Frauds to avoid the contract. Which doctrine most likely prevents Seller from succeeding?
- Promissory estoppel
- Part performance (Correct answer)
- Quantum meruit
- Unjust enrichment
Correct answer: Part performance
The part performance doctrine takes an oral land contract out of the Statute of Frauds when the buyer pays part of the price, takes possession, and/or makes improvements.
Question 3: Both parties to a contract believed they were contracting for the sale of a specific painting thought to be an original. After signing, both discover it is a reproduction worth far less. This is best characterized as:
- Fraudulent misrepresentation by the seller
- Unilateral mistake that does not void the contract
- Mutual mistake of material fact that may void the contract (Correct answer)
- Failure of consideration that renders the contract unenforceable
Correct answer: Mutual mistake of material fact that may void the contract
A mutual mistake about a material fact existing at the time of contracting allows the adversely affected party to void the contract.
Question 4: Dan signs a contract after Vera threatens to report his tax irregularities to the IRS unless he agrees. This defense to contract enforceability is called:
- Undue influence
- Economic duress (Correct answer)
- Fraud in the inducement
- Illegality
Correct answer: Economic duress
Threatening to expose someone's wrongdoing to coerce them into signing a contract constitutes economic duress (or duress by threat), making the contract voidable.
Question 5: An elderly widow with diminished mental capacity signs a contract with a financial advisor who is also her sole caregiver. The contract gives the advisor a large commission far above market rate. This scenario raises a presumption of:
- Mutual mistake
- Unconscionability only
- Undue influence (Correct answer)
- Fraud in the execution
Correct answer: Undue influence
Undue influence is presumed when a dominant party in a confidential relationship procures a grossly unfair contract from a vulnerable person.
Question 6: Which of the following contracts is MOST likely to be unenforceable based on the Statute of Frauds?
- An oral contract to mow a neighbor's lawn weekly for six months
- An oral contract to sell a house for $300,000 (Correct answer)
- An oral contract to buy 50 custom-made widgets for $200
- An oral employment contract for an indefinite term
Correct answer: An oral contract to sell a house for $300,000
The Statute of Frauds requires contracts for the sale of real estate to be in writing to be enforceable.
Question 7: A party argues that a contract should not be enforced because the terms are so one-sided that no reasonable person would have agreed to them, and the other party lacked meaningful choice. This describes:
- Duress
- Illegality
- Unconscionability (Correct answer)
- Frustration of purpose
Correct answer: Unconscionability
Unconscionability requires both procedural unconscionability (unfair bargaining process) and substantive unconscionability (oppressively unfair terms).
FYLSX Defenses to Contract Enforceability 2
Alice, age 16, signs a contract to purchase a car for $8,000.
After turning 18, she continues to make monthly payments for three months.
What is the legal effect of her continued payments?