business law chpt 7

What are the two types of misrepresentation?

1. Innocent misrepresentation 2. Fraudulent misrepresentation

List the two types of mutual mistakes:

1. Mistake about subject matter 2. Mistake of law

List the 2 elements of undue influence:

1. Relationship 2. Unfair Persuasion

List the three remedies for fraud:

1. Rescission 2. Actual or compensatory damages- Damages are available for innocent misrepresentation for goods only 3. Punitive damages- to punish the offender

List the 4 examples of when there is duress (threats):

1. Threat of illegal conduct 2. Threat to report crimes 3. Threat to sue 4. Economic Threat

What are the three components of misrepresentation?

1. Untrue statement of fact 2. Material (important) 3. Reasonable Reliance

List the 5 requirements of fraud:

1. Untrue statement of fact 2. Material fact 3. Reasonable reliance 4. Intent (or recklessness) 5. Injury

What is a mutual mistake?

BOTH parties hold an incorrect belief about an important fact (material fact)

If there is a unilateral mistake, the contract is

VALID

If there is a mutual mistake (about subject matter), the contract is

VOID

is a mutual mistake void, valid, or voidable?

VOID

If duress is present, the contract is

VOIDABLE

If fraud exists, the contract is

VOIDABLE

If misrepresentation is present, the contract is

VOIDABLE

If there is a recognized unilateral mistake or induced unilateral mistake, the contract is

VOIDABLE

If undue influence is present, the contract is

VOIDABLE

What is a unilateral mistake?

When ONE party holds an innocent belief about the facts related to the contract (ex. not reading or not carefully reading a contract, signing a contract with unfamiliar languages)

What is fraud?

based on misrepresentation + intent (or recklessness) & injury

What is a recognized unilateral mistake?

if mistakes is big and the other party is aware of the mistakes, recession may be granted to the other party

What is an induced unilateral mistake?

if one party encouraged the other party to make mistake

describe silence

no half truths (drag racing)- when truth is made false by subsequent events (leaky roofs)

What is duress?

one party makes an improper threat or act to obtain an expression of agreement

Rescission must be made ________ and before __________.

promptly and before ratification

describe active concealment

substitute for false statement of fact (ex. painting ceiling to cover water stains)

When there is an economic threat, the courts will look at the _______ and the ________.

threat and the alternatives available to threatened party

If there is no genuine agreement, the contract is

voidable

What is undue influence?

when one party to the contract is in a position of trust and wrongfully dominates the other party

describe mistaken assumption

when party makes assumption that is incorrect