Voidability matrix: full picture
Defenses · Nov 9
Floor. ~40 min: nondisclosure (R2d § 161) + Hill v. Jones. The doctrine the capstone assumes you have covered.
Target. ~75 min: Floor + unconscionability substantive prong (Williams) + capacity setup (R2d § 12) + Webster Street preview + synthesis.
(1) If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient.
(2) If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction.
(1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.
(2) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction.
(1) Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare.
(2) If a party's manifestation of assent is induced by undue influence by the other party, the contract is voidable by the victim.
(3) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the undue influence either gives value or relies materially on the transaction.
The default is caveat emptor — a party need not tell the other everything she knows. R2d § 161 lists the only four situations in which nondisclosure of a known fact equals asserting the fact does not exist:
151 Ariz. 81, 725 P.2d 1115 (Ct. App. 1986)
Arizona Court of Appeals
Rule. A seller of residential real estate has a duty to disclose facts materially affecting the value of the property which are known or accessible only to the seller and which the buyer could not reasonably discover. Concealment or nondisclosure of such facts is a misrepresentation that may make the contract voidable.
R2d § 208 and UCC § 2-302 let a court refuse to enforce a contract, or strike a term, that is unconscionable. Courts operationalize the vague word through two prongs, generally both required:
350 F.2d 445 (D.C. Cir. 1965)
Today's focus. Substantive side of the two-prong test. The cross-collateral clause itself. The line between hard terms and unconscionable terms. Callback to the framework introduced in Class 19; full ladder including hypothetical and integration.
The defenses so far asked whether assent was distorted. Capacity asks whether the party could give assent at all. R2d § 12(1): no one is bound by contract who lacks legal capacity to incur at least voidable duties. Section 12(2) sorts incapacity into four groups:
220 Neb. 9, 368 N.W.2d 439 (1985)
Supreme Court of Nebraska
Rule. A contract entered into by a minor is voidable. The minor may disaffirm within a reasonable time after reaching majority. Necessaries are an exception, but housing is not a necessary where the minor could live with parents able and willing to provide for him.
The Blodgetts owe a contractor for renovations. The contractor refuses to release the lien on their house unless they sign a release of all claims against him, including a separate dispute over substandard work. They are about to close on selling the house and cannot afford the lien to remain. They sign.
Q. Is the release voidable for duress under R2d § 175?
Vary one fact. In Hill v. Jones, the buyers ask no questions about termites at all, but the sellers hold years of termite-treatment records. Does R2d § 161 impose a disclosure duty when the buyer asks nothing?
Stretch problems from the chapter.
Rules. R2d § 161 (nondisclosure) · R2d § 208 / UCC § 2-302 (unconscionability) · R2d § 12 (capacity).
Cases. Hill v. Jones · Williams v. Walker-Thomas · Webster Street Partnership v. Sheridan.
Open question. Nondisclosure as misrepresentation is now on the table. But what about a party who lacks capacity to assess any disclosure at all? Class 21 takes up the full capacity doctrine.
Next class: Incapacity
_Defenses_ · Nov 10
Read Webster Street Partnership v. Sheridan and R2d §§ 14, 15, 16. A minor signs a lease, then walks away. The landlord sues. Should the law let a 17-year-old escape a deal an adult would be bound by, and what does the rule cost the people who deal with minors in good faith? Come ready to answer. You may be called.