What Provisions of the Contract Could You Cite to Support an Argument That It Is Not in Big Banks Best Interest to Rescind the Contract

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Under what circumstances can a contract be rescinded by either party?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 What is the result of a contract that is rescinded?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...