Transcript Chapter 12 Void and Voidable Agreements What makes an agreement void or voidable? because it violates the law as stated in constitutions, statutes, or court.

Chapter 12
Void and Voidable
Agreements
What makes an agreement void
or voidable?
because it violates the law as stated in
constitutions, statutes, or court opinions
 because sometimes one of the parties lacks
capacity to contract or failed to give consideration
 because one of the parties failed to genuinely
assent to the agreement

• genuine assent exists when consent is not clouded by fraud,
duress, undue influence, or mistake
• disaffirmance refusal to carry out or to comply with the terms
of a voidable contract, with out any liability to pay damages
What types of agreements
are illegal?
 agreements to commit crimes or torts
 agreements that obstruct legal procedures
• compounding a crime accepting something of
value for a promise not to prosecute a suspected
criminal
 agreements that injure public service
 agreements made without a required
competency license
 agreements that restrain trade unreasonably
 agreements to pay usurious interest
• maximum rate of interest the highest rate of interest
that state law permits lenders of money to change
• small loan rate of interest a high rate of interest that
the state permits licensed loan companies and
pawnbrokers to charge on small loans
 agreements that involve illegal gambling,
wagers, or lotteries
• wager a bet on the uncertain outcome of an event
 agreements that affect marriage negatively
What is fraud?
 Fraud
false representation or concealment
of a material fact
• all of the following elements must be present for
fraud to exist
– the false representation or concealment of a past
or present fact must be deliberate
– personal opinion are not statements of fact and should
not be taken serious
– the misrepresented or concealed fact must be
material
– material fact fact that influences a decision
– the person making the false representation must
know it is false or make it recklessly without regard
to its possible falsity
– the misrepresentation must be made with the
intention of influencing the other person to act
upon it
– the misrepresentation or concealment must induce
action and cause injury to the other party
What is duress? Undue
influence?
 duress if one person compels another to enter
into it through coercion or by illegal
imprisonment
 undue influence one person insidiously, or by
wrongful persuasion and control over the free
will of another, gets the other to make a
contract that is unfavorable
Two types of mistakes.
 Unilateral mistake
one of the parties has an
erroneous idea about the facts of a contract
 mutual mistake or bilateral mistake both
parties are wrong about some important facts
When can a minor disaffirm a
voidable contract?
 A minor can disaffirm a voidable contract any
time while still a minor or within a reasonable
time after reaching majority
 After reaching majority, a person may ratify a
voidable contract made while a minor
• ratification the approval of a voidable contract in
its entirety
Can minors disaffirm contracts
for necessaries?
Necessaries goods and services that are
reasonably required to maintain one’s life-style
 An article must meet all of the following
requirements for necessaries before a minor for
a minor or parent can be held responsible for
payment

• the item must be reasonably required
• the item must be actually furnished
• the item must be reasonably suitable to the age and
social and economic status of the minor
• the item must not be otherwise furnished