Legal Ch. 12

Examples of situations where duress occurs

-One party threatens physical harm or extortion/ blackmail to gain consent to a contract -One party threatens to file a criminal (frivolous) lawsuit unless consent is given to the terms of the contract; initiate investigation, police report -One party threatens the other's economic interests (economic duress)

Can a contract with a Mutual Mistake be rescinded (is it voidable) and if so, why?

-Yes, there is No meeting of the minds maeaninging it is VOIDABLE and can be rescinded. -Rescinding such a contract is fair because any agreement between the parties was an illusion: An ambiguity in some key fact prevented the parties from being in actual agreement

Fraudulent Misrepresentation

-a false representation of a material fact that is consciously false and is intended to mislead the other party. -Intentional representation, here scienter is clear.

Courts will find nondisclosure as having the same legal effect as an actual false assertion under what certain circumstances:

1. A relationship of trust exists between the parties to the contract. The relationship provides a reasonable basis for one person's expectation that the other would never act to defraud him or her 2. There is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement. Courts are starting to look at it as fraudulent misrepresentation in certain cases

What are the element of fraduelent misrepresentation.

1. False Assertion of the Fact (concealment/ nondisclosure) 2. Intent to Deceive 3. Justifiable Reliance on the False Assertion

what are the three types of misrepresentation

1. Innocent Misrepresentation 2. Negligent Misrepresentation 3. Fraudulent Misrepresentation

Four major obstacle to genuine assent

1. Mistake 2. Misrepresentation: one of the parties told a lie 3. Undue influence 4. Duress

For a mutual mistake to interfere with legal consent (makign the contract voidable), These three things must be met:

1.) A basic assumption about the subject matter of the contract; quality, quantity, or existence of the items 2.) A material effect on the agreement; must involve the essence of the agreement. It cannot be something small, it must be something that matters. 3.)An adverse effect on a party that did not agree to bear the risk of mistake at the time of the agreement

What are the requirements for fradulent misrepresentation?

1.) A false statement about a past or existing fact that is material to the contract 2.) Intent to deceive can be inferred. 3.) Justifiable reliance on the false statement by the innocent party to the agreement 4.) (If damages are sought) The defrauded party must have been injured by the misrepresentation

what conditions would permit a court to invalidate a contract on grounds of unilateral mistake; thus, making it voidable

1.) One party made a mistake about a material fact and the other party either knew or had reason to know about the mistake 2.) The mistake was caused by a clerical error (typing error) that did not result from gross negligence 3.)The mistake was so serious that the contract is unconscionable (super unfair), that is, so unreasonable that it is outrageous VERY VERY VERY one sided or unfair

What are the two types of False Assertion of the fact

1.) concealemt 2.) nondisclosure

Nondisclosure

A failure to provide pertinent information about a projected contract; PASSIVE

Duress

Any lawful act or threat exercised on a person whereby the person is forced to enter into an agreement or to perform some other act against his or her will; contract is VOIDABLE. Looking for a wrongful act.

Foe fradulent misrepresntation to be the basis for a contract recision, what is needed

False assertion of fact- the statement of fact need not be an actual assertion.

Who can resciend the contract in a case of innocent misrepresenation

Innocent misrepresentations permit the party that was misled by the false statement to rescind the contract.

Case about Fradulent misrepresentation. Manderville v. PCG&S Group, Inc case:

Manderville v. PCG&S Group, Inc case: A plaintiff's negligence in failing to investigate a defendant's intentional misstatement is not sufficient to eliminate the possibility that a plaintiff's reliance on the statement was reasonable; involved an exculpatory clause against public policy

Is Undue Influence easy to prove

May be easy to SEE but NOT easy to PROVE. This can be very subtle but can cause there to be a lack or genuine assent.

What two elements are seen with undue influence

One person is in a DOMINANT position while the other is in a SUBMISSIVE one. Mostly seen with care takers or because of ones age, health, or wealth.

Court case about mutual mistake Ruffles v. Wikklehouse:

Ruffles v. Wikklehouse: about shipping cotton on a ship and its shipped onto the wrong ship because two ships had the same name: contract voidable because both parties have an error

Court case about mutual mistake Simkin v. Blank case

Simkin v. Blank case (2006):The court decided that the husband had time before the agreement to cash in his funds when the agreement was made, so there was no mistake. (2008) There has to be a misunderstanding of a material fact at the time of the agreement meaning the contract is not voidable in this case.

Court case where duress occurs and the decision made in the case. Telekenex IXC, Inc v. Charlotte Russe, Inc. case

Telekenex IXC, Inc v. Charlotte Russe, Inc. case: Decision: There WAS an immediate and substantial economic loss, court sent to trial to determine duress. There was enough evidence to prove such.

Concealment

The ACTIVE hiding of the truth about a material. Fraudulent misrepresentation (even if you don't say anything)

Is a contract where misrepresntation occured voidable? If so who can resind or disaffirm the contract?

Yes these contarcts are usually voidabe and only the party who has been lied to can rescind or disaffirm the contract. Giving them their consideration back

Is a contract with negligent misrepresentation voidable? if so, who can rescind the contract.

Yes, it is voidable. Only the person who was lied to can rescind the contract.

What is innocent misrepresentation?

a false statement about a fact material to an agreement that the person who made the statement believed to be true. lacks scienter

Negligent Misrepresentation

a false statement of material fact made by a party who thinks it is true but who would have known the truth about the fact that he or she used reasonable care to discover or reveal it. Treated as if there was intent.

What is required for agreement of a contract

a meeting of the mind= genuine assent

Define Mistake

an erroneous belief about the facts of a contract at the time the contract is concluded (the time the agreement is made). This is NOT because someone told you a lie.

Misrepresentation

an untruthful assertion by one of the parties about a material fact; one party said something that prevented the parties from having the mental agreement necessary for a legal contract.

What is scienter

intent or knowledge

Does a uilateral contract typically void a contract

no

Can the aggrieved party sure for damaged in a case of innocent misrepresentation

no because the person lacked intent.

Is legal assent there when a legal mistake occurs

no, legal assent is absent

Intent to decive

present when the party making the false statement claims or implies that he or she has personal knowledge of the accuracy of the assertion. (Any resulting assent is not legal because the injured party was not allowed to join the mind of the deceiving party There has to be justifiable or reasonable reliance on the lie)

If there is no genuine assent and the contract is rescinded, what must be returned?

the consideration from both parties

Mutual Mistake

the result of an error by BOTH PARTIES about a material fact, that is, one that is important in the context of a particular contract

Unilateral Mistake

the result of an error by ONE PARTY about a material fact, that is, one that is important in the context of a particular contract

Undue Influence

the situation in which one person has taken advantage of his or her dominant position in a relationship to persuade the other person unduly to the extent that the dominant person's persuasive efforts have interfered with the other person's ability to make his or her own decision

In a case of fraudulent misrepresentaion is the contract voidable, and if so by who?

yes the party who was misled can sue

In a case of fraudulent misrepresentaion, can the party sue for damages.

yes, can sue under intentional tort of fraudulent misrepresentation

Can the party sue for damages when negligent misrepresentation occurs

yes, they can sue for damages: damages here are the same as fraudulent misrepresentation

Justifiable Reliance on the False Assertion

your reliance has to be reasonable