Business Law ch 11

Negligent Misrepresentation

"turning a blind eye" An untrue statement made by a person believing it to be true who failed to exercise reasonable care in determining its truthfulness and/or failed to use the skill and competence required by her business or profession. Even though there was no intent to deceive, the party making the false statement is treated in contract law as if the intent were present

Nondisclosure

A failure to provide pertinent information about a projected contract. Until recently, the courts have been hesitant to use _______ as a basis for rescinding a contract because it is a passive form of misleading conduct.

Mistake in Fact

A mistake on the part of both contracting parties as to some material fact. In this case, either party may rescind.

Innocent Misrepresentation

A statement of fact made by a person, believing it to be true, that actually misrepresents some material fact. The person who make the false statement had no knowledge of the falsity of the claim. (we say the person lacked scienter) Permit the party that was misled by the false statement to rescind the contract. However, because the party that made the false statement had no intent to mislead, the aggrieved party cannot sue for damages.

Scienter

Deliberately or knowingly

Mistakes in Value

If the mutual mistake concerns the future market value or some quality of the object of the contract, the contract can normally be enforced by either partu

Concealment

Involves the active hiding of the truth about a material fact. Ex. taking 20,000 miles off your odometer

Fraudulent Misrepresentation

Is a false representation of a material fact that is consciously false and is intended to mislead the other party. Has intent to deceive. If damages are sought, the defrauded party must have even injured by the misrepresentation. Need justifiable reliance by the innocent party on the false statement.

Unilateral Mistake

The result of an error by one party about a material fact, that is, important in the context of the particular contract In general, a ______________ does not void a contract Clerical (mathematical) error is an exception when the other party should have known it was a mistake. Ex. 5 offers for $1M and one offer for $100,000. A mistake made by on of the parties. Generally will not excuse performance of the contract unless: 1. the other party to the contract low or should have known of the mistake; and 2. the mistake is one of mathematics only 3. the mistake results in an "out of pocket" loss to the plaintiff

Bilateral Mistake

When both parties are mistaken about either a current or a past material fact, either party can choose to rescind the contract.