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Free Mutual Nondisclosure Agreement

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					Comprehensive Volume, 18th Edition


    Chapter 14: Capacity
    and Genuine Assent
           Contractual Incapacity
          An agreement that otherwise appears to
          be a contract may not be binding because
          one of the parties lacks contractual
          capacity.
          In such a case, the contract is ordinarily
          voidable at the election of that party who
          lacks contractual capacity. In some cases,
Chapter   the contract is void.
14
           Contractual Incapacity
          Contractual incapacity is the inability, for
          mental or physical reasons, to understand
          that a contract is being made and to
          understand its general terms and nature.
          Incapacity may be due to:
            being a minor
            insanity
Chapter     intoxication
14
      Factors Which May Invalidate Contract
                      Lack of          Status Incapacity       Minors
                     Contractual
                      Capacity        Factual Incapacity     Intoxication

                                                                Mental
                                   Unilateral Induced by
                                   or Known to Other Party
                      Mistake
          Possible                      Mutual Mistake
          Grounds
            for
          Avoiding                        Innocent
          Contract                    Misrepresentation

                     Deception          Nondisclosure

                                            Fraud
Chapter


14                    Pressure
                                       Undue Influence

                                           Duress
                                                               Physical

                                                              Economic
             Incapacity of Minors
          Minors can avoid most contracts.
            The minor, on avoiding the contract, must
            return what had been received from the other
            party if the minor still has it.
            When a minor avoids a contract for a
            necessary, (item essential to basic living
            needs) the minor must pay the reasonable
            value of any benefit received.
Chapter


14
          Incapacity Due to Insanity
          The contract of an insane person is
          voidable to much the same extent as the
          contract of a minor.
          An important distinction is that if a
          guardian has been appointed for the
          insane person, a contract made by the
          insane person is void and not merely
Chapter   voidable.
14
          Incapacity Due to Intoxication
            An intoxicated person lacks contractual
            capacity to make a contract if the
            intoxication is such that the person does
            not understand that a contract is being
            made.


Chapter


14
           Involuntary Agreement
          The consent of a party to an agreement is
          not genuine or voluntary in certain cases
          of mistake, deception, or pressure.
          When this occurs, what appears to be a
          contract can be avoided by the victim of
          such circumstances or conduct.

Chapter


14
                        Mistake
          Mistakes that are unknown to the other party
          usually do not affect the binding character of the
          agreement.
          A unilateral mistake of which the other
          contracting party has knowledge or has reason
          to know makes the contract avoidable by the
          victim of the mistake.
          When both parties are mistaken about a basic,
Chapter   material fact of the contract, the adversely
14        affected party may avoid the contract.
                       Deception
          Innocent misrepresentation generally has no
          effect on the agreement, though there is a trend
          to allow it as a ground for avoiding the contract.
          When one party knows of a fact that has a
          bearing on the transaction, the failure to
          volunteer that fact is called nondisclosure.
          When concealment goes beyond silence and
          consists of actively hiding the truth, the conduct
          is fraud rather than nondisclosure.
Chapter     There is a growing trend to hold fine-print clauses

14          not binding on the theory that they are designed to
            hide the truth from the other contracting party.
                       Pressure
          The free will of a person, essential to the
          voluntary character of a contract, is lacking if
          the agreement is obtained by pressure.
          Contracts made under pressure are voidable;
          this includes:
            Undue influence, where the beneficiary of the
            contract is in a position of extreme power over the
            maker of the contract
            Threats of extreme economic loss (economic duress)
Chapter     Threat of physical force that would cause serious
            personal injury or damage to property (physical
14          duress)
          Possible Remedies for Lack of
              Genuine Agreement
                              Deception
            Mistake                          Pressure

                           There is NOT a
                              genuine
                             agreement
                            of the parties

Chapter
            Avoidance or
14           Rescission       Reformation
                                             Damages

				
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