L201- Consent

Stephen Wheat Trust case: what 2 things about the property turned out to be false? What were the buyers' 2 choices when they found out?

- The location of the sewer lateral encroached onto the neighboring property. -Additionally, there were three major leaks and one minor leak in the basement of the house. These occurred after the sellers disclosure but they did not update it -The 2 choices they had after discovering the fraud were to rescind the contract after discovering the fraud, or affirm the contract and sue for damages resulting from the fraud. -You cannot rescind the contract and sue for damages because of fraud, you can only do one.

What do concealment and nondisclosure mean? What effect do they have on contract?

-Concealment is the hiding of a fact through some conduct intended to prevent the other party from discovering that fact. -Concealment can be the basis for a claim of misrepresentation or fraud. -Nondisclosure is the failure to volunteer or bring up certain information. It is different from concealment because you are not actively trying to hide a fact. Instead you just don't speak up about information that is not readily available to the other party. -C/Nd make a contract voidable

Fraud - same grounds as misrepresentation but with small differences - what are they?

-Fraud misrepresentation is when a party intentionally makes a false statement, makes a statement they knew they had no basis for making, and if they make a statement without being confident it was true; which leads to another party agreeing to the contract. -Scienter is the legal term for "knowledge of falsity" -Establishing fraud requires proof that the untrue assertion was made with "scienter"

Is rescission for fraud or misrepresentation common, or is it an extraordinary remedy?

-It is a drastic remedy and it only used when a person has been seriously misled about a fact important to the contract by someone they had the right to rely on. -Courts wont grant recession to people who have exercised poor business judgement/common sense or only when minor and unintentional misstatements or unimportant details are made.

What does it mean for a fact to be "material"?

-It means that a fact is likely to play a major role in inducing a reasonable person to enter the contract or if the person asserting the fact knows that the other person is likely to rely or be swayed by a certain fact. -Materiality of fact only needs to be proven if a party wants to rescind a contact that they signed because of "innocent misrepresentation) -if the misrepresentation was fraudulent it does not matter if the asserted fact was material or not

Misrepresentation: what is it? Someone can rescind a contract if what 4 elements are met?

-Misrepresentation is an assertion made that is not in line with the truth -there is innocent(not intentionally deceiving) and fraudulent (deceiving) misrepresentation -Four elements needed to be established or proven by the misled party in order rescind 1)An untrue assertion of fact was made 2)The fact asserted was material or the assertion was fraudulent 3)the complaining party entered the contract because of their reliance on the assertion 4) reliance of the complaining party was reasonable

Mistake - what's the difference between it & misrepresentation?

-Mistake is a belief about a fact that is actually not in accord with the truth. Contracts in which both parties enter based on the belief of an important fact of the agreement that is actually not true(Mutual Mistake) are protected under the "doctrine of mistake" -Doctrine of Mistake lets a party adversely affected by the mistake avoid the contract altogether. -Misrepresentation is different than mistake because one party asserts an untrue fact on purpose which changes the others party's belief and influences them to enter a contract by deception, while with mistake both parties believe an important fact of the agreement is true, even though it isn't -With mistake the false belief is not a result of another parties untrue statements, rather both parties are unaware of an untrue fact.

Mutual mistake - 3 elements

-Mutual mistake is when the mistake, belief in an untrue fact, is made by both parties. (Both parties are mistaken -3 elements that let parties of Mutual Mistake contracts avoid the terms 1) The mistake relates to a basic assumption(main factor that is assumed, like the house for sale exists) on which the contract was made *-A basic assumption on which a contract is based includes assumptions about the identity, existence, quality or quantity of the subject matter of the contract. 2) The Mistake has a material effect on the agreed upon exchange *-Basically requires a person to show that the mistake caused the exchange to be an unbargained advantage for the other party or that it caused an unfair imbalance for one party. 3) The party adversely affected by the mistake "does not" bear the risk of the mistake *- the adversely affected party bears the risk of the mistake when they sign contracts anyways with a conscious awareness that they do not know all the information.

Ratification - what is it & what are some ways it can happen

-Ratification is when the person who had the right to rescind a contract, after finding out it was made without their real consent, elects not to. -It can happen when the party able to rescind delays notifying the other party of their rescission. -Delay communicates that the party has ratified the contract -It happens when the party continues to accept benefits from the other party or behaves in ways inconsistent with their expressed intent to rescind.

Hicks v. Sparks - how soon after the accident did Hicks accept a settlement check? What further problems did she later have? Could she recover payment for those? Why not?

-She waited about half a year -She had a cervical disc herniation that required surgery -She could not recover payment for the future injuries and invalidate the release contract because she could not prove mutual mistake. Hicks had time to consult other doctors and physicians to catch the herniated disc. Instead she agreed to the release and assumed the risk of mistake when she signed without obtaining a more thorough medical examination to fully discover the extent of her injuries related to her remaining neck pain

Sumerel v. Goodyear - what mistake did Goodyear's lawyer make? Was his email with the $550,00 error an "offer"? Why was Goodyear not obligated to pay the amount the plaintiffs sought?

-The lawyer made an error in calculating damages to plaintiffs and awarded 550K more than they were obligated to pay -It wasn't an offer because it just showed calculations of the payments and the lawyer asked for a call back not an acceptance. -They were not obligated because the contract/situation was consistent with the rules to avoid a contract developed by unilateral mistake Good year showed that: -The mistake related to a basic assumption(the amount of money in damages) -The mistake had a material effect on the agreed upon exchange(Good year would have paid 500K extra which creates an imbalance) -Goodyear did not bear the risk of the mistake(The lawyer didn't consciously make the error, he made it in the hopes that the plaintiffs would respond with an explanation or discussion on the discrepancy) -The agreement was unconscionable to Good Year -The plaintiffs tried to exploit Goodyear's obvious mathematical error so even though they didn't have a reason to know about the error, they knew it and didn't act in good faith

Timothy v. Keetch-what was the lie? How could the Timothy's have discovered it? Did the court find that they had a duty to discovery it?

-The lie was that the keetches told the timothy's that the horse they owned wasn't already serving as collateral to another obligation or that the their ownership of the horse wasn't subject to any debts or obligations(encumbered) -The timothy's could have discovered that the horse was encumbered by checking Uniform Commercial Code filings (UCC) for a financing statement on the horse -No they found that they did not have a duty to discovering the untrue assertion of fact. -It is only when facts make it apparent to one of his knowledge and intelligence, and when the complaining party discovers something that should serve as a warning that they are being deceived, that a plaintiff or complaining party is required to make their own investigation of the facts.

What's the difference between Duress and Undue Influence? In what type of relationship is undue influence often found?

-They both involve wrongful pressure exerted on a person during a bargaining or contract pressure but in Undue Influence the pressure is exerted through persuasion rather than through coercion(Physical force/Threat) -In undue influence persons are unfairly persuaded to enter into a contract while in a position of weakness that makes them particularly vulnerable to being preyed upon by those they trust or fear. -Undue Influence cases usually see 2 of the following 1)The relationship between the parties is either one of trust and confidence or one in which the person exercising the persuasion dominates the person being persuaded. *-Involve relationships of trust and confidence in which the person bein influenced believes that the other party is looking out for their interests or wouldn't screw them over. Example include parent/child, husband/wife, lawyer/client 2) The Persuasion is unfair- *- The weaker person enters the contract because they were subjected to unfair methods of persuasion. For example, was the contract process rushed? was the weaker party isolated or did they have access to outside advice? was the contract obviously lopsided and unfair that the weaker party would most likely not agree to it without influence from the other party?

Untrue Assertion of Fact

-This is needed to have misrepresentation. An untrue assertion of fact must be distinguishable from an opinion, promise, or prediction about something in the future. -The fact asserted must be a past or existing fact

Five elements of proof needed for fraud

1) false representation made by the defendant 2)knowledge by the defendant that the representation was false when made 3)intent to induce the plaintiff to act or refrain from acting 4)justifiable reliance by the plaintiff 5)damage to the plaintiff

Rescind/rescission - what does it mean?

Contracts induced by misrepresentation, fraud, mistake, duress and undue influence lack real consent from one party. The party whose consent was not real has the power to rescind(cancel) the contract. When contract is rescinded both parties must return anything the other gave them.

The 2 elements of Duress

Duress is wrongful persuasion using just threats or physical force that induces a person to enter or modify a contract. -A contract that is a result of duress is considered voidable -2 elements need to be proven to rescind a contract because of Duress 1)The contract was induced by an improper threat -*The threat used doesn't need to be wrongful or illegal but instead "improper" in that it was wrong to use that threat as leverage to induce a contract 2)The victim had no reasonable alternative but to enter or modify the contract. -*The coercion or persuasion has to be sufficient enough to overcome the will of a person of ordinary courage

What does it mean for a party to bear the risk of a mistake?

It means that the person that is harmed by the mutual mistake contract cannot avoid the contract because they either signed the contract with a conscious awareness that they did not know all the information about the assumed fact that resulted in an imbalance of benefit in the contract, or they signed the contract knowing they accepted the risk that their assumption about something in the contract may be wrong and thus that could hurt them.

Unilateral mistake - same elements as mutual mistake plus 1 more Is it easier to get out of a contract when only 1 party is mistaken or when both are mistaken?

Unilateral Mistake- When one party is makes a mistake about a basic assumption on which they made the contract. -It is harder or less likely to get out of a contract when only party is mistaken -4 things needed to avoid a unilateral mistake contract 1) the three criteria for avoiding a mutual mistake contract 2) In addition they have to show one of the two following : *-The non mistaken party caused or knew about the mistake or had reason to know of/realize the mistake because it was so obvious. The reason behind this rule is that non-mistaken parties can prevent the loss by not taking advantage of the mistakes of others by acting in good faith *-It would be unconscionable or f*cked up/unreasonable to enforce the contract. To show Add to dictionary the mistaken party would have to convince the court that the consequences of the mistake were severe enough to make the contract unreasonably harsh or oppressive for that party.