statute of frauds

and
10:51 PM
42 usc 12-101
for mental incapacity
and
ucc 2-302 for unconscionability
Capacity to contract.
§ 12 Capacity to Contract

(1)  No one can be bound by contract who has not legal capacity to incur at least voidable
contractual duties. Capacity to contract may be partial and its existence in respect of a
particular transaction may depend upon the nature of the transaction or upon other
circumstances.
(2)  A natural person who manifests assent to a transaction has full legal capacity to incur
contractual duties thereby unless he is

(a)  under guardianship, or

(b)  an infant, or

(c)  mentally ill or defective, or

(d)  intoxicated.
§ 14 Infants
Unless a statute provides otherwise, a natural person has the capacity to incur only
voidable contractual duties until the beginning of the day before the person's eighteenth
birthday.
§ 15 Mental Illness or Defect

(1)  A person incurs only voidable contractual duties by entering into a transaction if by
reason of mental illness or defect

(a)  he is unable to understand in a reasonable manner the nature and consequences of the
transaction, or

(b)  he is unable to act in a reasonable manner in relation to the transaction and the other
party has reason to know of his condition.
(2)  Where the contract is made on fair terms and the other party is without knowledge of
the mental illness or defect, the power of avoidance under Subsection (1) terminates to
the extent that the contract has been so performed in whole or in part or the circumstances
have so changed that avoidance would be unjust. In such a case a court may grant relief
as justice requires.
§ 16 Intoxicated Persons

A person incurs only voidable contractual duties by entering into a transaction if the other
party has reason to know that by reason of intoxication

(a)  he is unable to understand in a reasonable manner the nature and consequences of the
transaction, or

(b)  he is unable to act in a reasonable manner in relation to the transaction.

§ 86 Promise for a Benefit Received
A promise made in recognition of a benefit previously received by the promisor from
the promisee is binding to the extent necessary to prevent injustice.
A promise is not binding under Subsection (1)
a. If the promisee conferred the benefit as a gift or for other reasons the
promisor has not been unjustly enriched; or
b. To the extent that its value is disproportionate to the benefit

§ 87 Option Contract
(1) An offer is binding as an option contract if it
a. Is in writing and signed by the offeror, recites a purported
consideration for the making of the offer, and proposes an exchange on
fair terms within a reasonable time; or
b. Is made irrevocable by statute
(2) An offer which the offeror should reasonably expect to induce action or
forbearance of a substantial character on the part of the offeree before
acceptance and which does induce such action or forbearance is binding as an
option contract to the extent necessary to avoid injustice

§ 90 Promise Reasonably Inducing Action or Forbearance

(1) A promise which the promisor should reasonably expect to induce action or
forbearance on the part of the promisee of a third person and which does
induce such action of forbearance is binding if injustice can be avoided only
by enforcement of the promise. The remedy granted for breach may be
limited, as justice requires.
(2) A charitable subscription or a marriage settlement is binding under
Subsection (1) without proof that the promise induced action or forbearance

§ 152 When mistake of both parties makes a contract voidable

(1) Where a mistake of both parties at the time a contract was made as to a basic
assumption on which the contract was made has a material effect on the
agreed exchange of performances, the contract is voidable by the adversely
affected party unless he bears the risk of the mistake under the rule stated in
section 154.
 (2) In determining whether the mistake has a material effect on the agreed
exchange of performances, account is taken of any relief by way of
reformation, restitution or otherwise.

§ 153 When mistake of one party makes a contract voidable

(1) Where a mistake of one party at the time a contract was made as to basic
assumption on which he made the contract has a material effect on the agreed
exchange of performances that is adverse to him, the contract is voidable by
him if he does not bear that rick of the mistake under the rule stated in section
154, and
a. The effect of the mistake is such that enforcement of the contract of
the contract would be unconscionable or,
b. The other party had reason to know of the mistake of his fault caused
the mistake

§ 154 When a Party Bears a Risk of a Mistake

A party bears the risk of a mistake when
a. The risk is allocated to him by agreement of the parties, or
b. He is aware, at the time the contract is made, that he has only limited
knowledge with respect to the facts to which the mistake relates but
treats his limited knowledge as sufficient, or
c. The risk is allocated to him by the court on the ground that it is
reasonable in the circumstances to do so

§ 155 When Mistake of Both Parties as to Written Expression Justifies Reformation

Where a writing that evidences or embodies an agreement in whole or in part fails
to express the agreement because of a mistake of both parties as to the contents of effect
of the writing, the court may at the request of a party reform the writing to express the
agreement, except to the extent that rights of third parties such as good faith purchasers
for value will be unfairly affected

§ 159 Misrepresentation
A misrepresentation is an assertion that is not in accord with the facts

§ 160 When Action is Equivalent to an Assertion (Concealment)

Action intended or known to be likely to prevent another from learning a fact is
equivalent to an assertion that the fact does not exist

§ 161 When Non-disclosure Is Equivalent to an Assertion

A person’s non-disclosure is a fact known to him is equivalent to an assertion that
the fact does not exist in the following cases only:
a. where he knows that disclosure of the fact is necessary to prevent
some previous assertion from being a misrepresentation of from being
fraudulent or material
b. where he knows that disclosure of the fact would correct a mistake of
the other party as to a basic assumption on which that party is making
 the contract and if non-disclosure of the fact amounts to a failure to
act in good faith and in accordance with reasonable standards of fair
dealing
c. where he knows that disclosure of the fact would correct a mistake of
the other party as to the contents of effect of writing, evidencing or
embodying an agreement in whole or in part
d. where the other person is entitled to know the fact because of a
relation of trust and confidence between them

§ 162 When a Misrepresentation Is Fraudulent or Material

(1) A misrepresentation is fraudulent of the maker intends his assertion to induce
a party to manifest his assent and the maker
a. Knows or believes that the assertion is not in accord with the facts, of
b. Does not have the confidence that he states of implies in the truth of
the assertion, or
c. Knows that he does not have that basis that he states or implies for the
assertion
(2) A misrepresentation is material if it would be likely to induce a reasonable
person to manifest his assent, or if the maker knows that it would be likely to
induce the recipient to do so

§ 167 When a Misrepresentation is an Inducing Cause

A misrepresentation induces a party’s manifestation of assent if it substantially
contributes to his decision to manifest his assent

§ 168 Reliance on Assertions of Opinion

(1) An assertion is on of opinion if it expresses only a belief, without certainty, as
to the existence of a fact of expresses only a judgment as to quality, value,
authenticity, or similar matters
(2) If it is reasonable to do so, the recipient of an assertion of a person’s opinion
as to facts not disclosed and not otherwise known to the recipient may
properly interpret it as an assertion
a. That the facts known to that person are not incompatible with his
opinion, or
b. That he knows facts sufficient to justify him in forming it

§ 169 When Reliance on an Assertion of Opinion is Not Justified

To the extent that an assertion is one of opinion only, the recipient is not justified
in relying on it unless the recipient
a. Stands in such a relation of trust and confidence to the person whose
opinion is asserted that the recipient is reasonable in relying on it, or
b. Reasonably believes that, as compared with himself, the person
whose opinion is asserted has special skill, judgment or objectivity
with respect to the subject matter, or
c. Is for some other special reason particularly susceptible to a
misrepresentation of the type involved
§ 170 Reliance on Assertions as to Matters of Law

If an assertion is one as to a matter of law, the same rules that apply in the case of other
assertions determine whether the recipient is justified in relying on it.

§ 171 When Reliance on an Assertion of Intention Is Not Justified

(1)  to the extent that an assertion is one of intention only, the recipient is not justified in
relying on it if in the circumstances a misrepresentation of intention is consistent with
reasonable standards of dealing.
(2)  If it is reasonable to do so, the promisee may properly interpret a promise as an
assertion that the promisor intends to perform the promise.

§ 172 When Fault Makes Reliance Unjustified

A recipient's fault in not knowing or discovering the facts before making the contract
does not make his reliance unjustified unless it amounts to a failure to act in good faith
and in accordance with reasonable standards of fair dealing.

§ 173 When Abuse of a Fiduciary Relation Makes a Contract Voidable

If a fiduciary makes a contract with his beneficiary relating to matters within the scope of
the fiduciary relation, the contract is voidable by the beneficiary, unless

(a)  it is on fair terms, and

(b)  all parties beneficially interested manifest assent with full understanding of their
legal rights and of all relevant facts that the fiduciary knows or should know.ent.
§ 174 When Duress by Physical Compulsion Prevents Formation of a Contract

If conduct that appears to be a manifestation of assent by a party who does not intend to
engage in that conduct is physically compelled by duress, the conduct is not effective as a
manifestation of ass
§ 175 When Duress by Threat Makes a Contract Voidable

(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.

§ 176 When a Threat Is Improper

(1)  A threat is improper if

(a)  what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if
it resulted in obtaining property,

(b)  what is threatened is a criminal prosecution,

(c)  what is threatened is the use of civil process and the threat is made in bad faith, or

(d)  the threat is a breach of the duty of good faith and fair dealing under a contract with
the recipient.
(2)  A threat is improper if the resulting exchange is not on fair terms, and

(a)  the threatened act would harm the recipient and would not significantly benefit the
party making the threat,

(b)  the effectiveness of the threat in inducing the manifestation of assent is significantly

increased by prior unfair dealing by the party making the threat, or

(c)  what is threatened is otherwise a use of power for illegitimate ends.

§ 177 When Undue Influence Makes a Contract Voidable

(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.
§ 179 Bases of Public Policies Against Enforcement

A public policy against the enforcement of promises or other terms may be derived by the
court from

(a)  legislation relevant to such a policy, or

(b)  the need to protect some aspect of the public welfare, as is the case for the judicial
policies against, for example, 

(i)  restraint of trade (§§ 186-188),

(ii)  impairment of family relations (§§ 189-191), and

(iii)  interference with other protected interests (§§ 192-196, 356).

§ 186 Promise in Restraint of Trade

(1)  A promise is unenforceable on grounds of public policy if it is unreasonably in

restraint of trade.
(2)  A promise is in restraint of trade if its performance would limit competition in any
business or restrict the promisor in the exercise of a gainful occupation.
§ 187 Non-Ancillary Restraints on Competition

A promise to refrain from competition that imposes a restraint that is not ancillary to an
otherwise valid transaction or relationship is unreasonably in restraint of trade.

§ 188 Ancillary Restraints on Competition

(1)  A promise to refrain from competition that imposes a restraint that is ancillary to an
otherwise valid transaction or relationship is unreasonably in restraint of trade if

(a)  the restraint is greater than is needed to protect the promisee's legitimate interest, or

(b)  the promisee's need is outweighed by the hardship to the promisor and the likely
injury to the public.
(2)  Promises imposing restraints that are ancillary to a valid transaction or relationship
include the following:

(a)  a promise by the seller of a business not to compete with the buyer in such a way as
to injure the value of the business sold;

(b)  a promise by an employee or other agent not to compete with his employer or other
principal;
(c)  a promise by a partner not to compete with the partnership.
§ 189 Promise in Restraint of Marriage

A promise is unenforceable on grounds of public policy if it is unreasonably in restraint

of marriage.

§ 2-302. Unconscionable contract or Clause.

(1) If the court as a matter of law finds the contract or any clause of the contract to have
been unconscionable at the time it was made the court may refuse to enforce the contract,
or it may enforce the remainder of the contract without the unconscionable clause, or it
may so limit the application of any unconscionable clause as to avoid any unconscionable
result.
(2) When it is claimed or appears to the court that the contract or any clause thereof may
be unconscionable the parties shall be afforded a reasonable opportunity to present
evidence as to its commercial setting, purpose and effect to aid the court in making the
determination.