Submitted by: Submitted by janice9856
Views: 1253
Words: 768
Pages: 4
Category: Business and Industry
Date Submitted: 01/25/2012 06:29 AM
1. Can Big Bank's President rescind the contract?
A: No. Rescission requires that the parties must be able to be returned to the position they were in before the contract was made. Here, one parties has substantially performed 5/6ths of the contract. Therefore, rescission will not be permitted.
Under what circumstances can a contract be rescinded by either party?
A: Unilateral rescission is affirmatively permitted upon clear and convincing evidence of fraud, mistake, illegality, coercion, duress, and as a defense upon a preponderance of evidence that the contract is adhesive or unconscionable.
What facts have to be alleged and proven? What is the result of a contract that is rescinded?
A:
• Fraud: material misrepresentation intended to induce justifiable, detrimental reliance and causing damages.
• Mistake: material error of fact by one party, where the other party knew or reasonably should have known of the first party's mistake.
• Illegality: contract violates public policy (constitutional, statute or regulation).
• Coercion: One party removes the other party's voluntary assent though actual or threatened force or intimidation.
• Duress: One party's voluntary assent is lost due to extrinsic circumstances (e.g., intoxication, illness, injury).
• Adhesion: contracting circumstances provide no opportunity to negotiate and the only option is to accept or reject.
• Unconscionableness: Overwhelmingly greater bargaining power combined with unreasonably favorable terms.
2. Big Bank's President also threatens legal action. What potential causes of action could you foresee him bringing in court?
A: Breach of contract for failure to perform the express contract terms.
Would he be successful?
A: No, because (1) bank prevented Systems from obtaining a good faith modification necessary to performance by not having a key person available to approve the change, and (2) Systems suffered an unforeseeable external delay which discharges or...