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18 Cards in this Set
- Front
- Back
Assent may be lacking due to mistake, fraudulent misrepresentation, under influence, or duress. |
Lack of Voluntary consent - A defense to the enforcement of a contract |
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A party who demonstrates he/she did not genuinely agree to the terms of a contract can choose to either (a) carry out the contract or (b) rescind it and cancel the entire transaction. |
General Rule for lack of Voluntary Consent. |
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May allow a contract to be avoided thru rescission |
Mistake of Fact - 2 Types 1. Unilateral Mistake 2. Bilateral (mutual) mistake |
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Will not allow a contract to be avoided through rescission. |
Mistake of Value or Quality |
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When only one party is mistake as to a material fact (a fact important to the contract's subject matter) |
Unilateral Mistake of Fact - Contract is typically enforceable against mistake party (mistaken party cannot rescind) - Unless other party knew or should have known that a mistake of fact was made or a major mathematical mistake was made |
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Ex. Fozzie Bear intends to sell his motor home to Beeker for $18,000. When he learns of Beeker's interest, Fozzie emailed Beeker but, because of a typo, offered him the motor home for $8,000. |
Unilateral Mistake of Fact example |
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Mutual misunderstanding by both parties to the contract concerning an important assumption on which the contract was made. |
Bilateral (Mutual) Mistake of Fact |
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Lack of Voluntary Consent: - Not a basis for Rescission |
Mistake of Value or Quality |
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Grandpa sells an antique suitcase as a garage sale for $250. Neither Grandpa or the buyer believe it is extremely valuable. However, later from watching an antique show a party finds out it is actually worth $30,000. Can Grandpa Rescind the contract? |
Mistake of Value or Quality Example - No, Both parties had knowledge of the value |
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Three Elements needed for Fraud |
1. A misrepresentation if a material fact occurred 2. Intent to deceive 3. Innocent party justifiably relied on the misrepresentation |
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A tort and a defense to the enforcement of a contract. - Affects authenticity of innocent party's consent to a contract |
Fraudulent Misrepresentation - To collect damages, innocent party must have been harmed |
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The innocent (defrauded) party can either (a) rescind the contract and be restored to his/her original position or (b) enforce and carry out the contract and seek damages for any harms resulting from the fraud. |
General Rule for Fraud |
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Lack of Voluntary Consent: Fraud Can occur by words or actions - EX. Customer at art gallery asks to see paintings by a certain painter bit is led by art gallery owner to paintings done by another artist Can occur by conduct: party takes specific action to conceal a material fact - EX. Seller of horse concealed medical condition to the buyer |
First element of Fraud: A Misrepresentation of a material fact occurred - Ordinarily, misrepresentation doesn't occur in these circumstances but it's possible in limited cases. - Statements of Opinion - Misrepresentation of law when party is in profession known to require greater knowledge of the law than average person - Misrepresentation by silence, although neither party typically has a duty to come forward and disclose facts |
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Lack of Voluntary Consent: Fraud - Scienter: knowledge of misrepresenting party that he/she/it has misrepresented facts - A fact is not how it was stated; statement known not to be true - Reckless statement without regarding to whether it is true or false - Statement said or implied that was made on some basis, such as personal knowledge or investigation when it was not. |
Element two of Fraud: Intent to be Deceive - Convict hired for business law professor position at Vermont State College two weeks after his release from prison; his probation officer alerted the college, which immediately fired him; employment contract not upheld |
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Lack of Voluntary Consent: Fraud - Misrepresentation must be an important factor in inducing party to enter into contract - Reliance is not justified if the innocent party (a) knows the true facts or relies on obviously extravagant statements (b) and has a way of finding out the true facts |
Element three of Fraud: Innocent party justifiably relied on the misrepresentation. |
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Lack of Voluntary Consent: - To collect damages caused by fraud, innocent party must have been harmed - To rescind the contract entered into under fraudulent circumstances, innocent party doesn't need to prove harm because parties will be restored to original position - Damages are typically = to value of the property had it been delivered as presented, minus actual price paid for the property - Punitive damages can also be awarded |
Fraud and Proving harm to Innocent Party |
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Lack of Voluntary Consent Threats used to force a party to enter into a contract. A defense to the enforcement of the ensuing contract. |
Duress - Must be proof of illegal/wrongful threat and must render the person incapable of exercising free will - Also grounds for rescission of a contract - threat to exercise a legal right (sue) ordinarily doesn't constitute duress. |
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Lack of Voluntary Consent: Exerted by one party over the other party to a contract is a defense to the enforcement of the ensuing contract. - The party being taken advantage of doesn't have to exercise free will in entering into a contract - Must be clear and convincing evidence that the person didn't act out of their free will. |
Undue Influence - Can occur within context of confidential or fiduciary relationships - Parent-child, husband-wife, attorney-client, doctor-patient etc. |