Business Law Chapter 15

Intent to Deceive: Scienter is ______ Party knows that a "fact" is ______, or makes a _______ _______ without regard for the ______, or implies that ________ is based on ________ _______ or _________

- (Guilty Knowledge) is an intent to deceive) - Party knows that a "fact" is not true, or makes a reckless statement without regard for the truth, or implies that a statement is based on personal knowledge or investigation

Undue Influence: Contract lacks ______ consent and is ______ Undue Influence or Persuasion is _____ if _____ party is talked into doing something not _______ to him or herself

- Contract lacks voluntary consent and is voidable - Undue Influence or Persuasion is presumed if weak party is talked into doing something not beneficial to him or herself

Intent to Deceive: Reliance on Misrepresentation: Deceived party must have ________ relied on _____ Reliance is not _____ if the ____ party knows the ______ facts or relies on ________ _______

- Deceived party must have justifiably relied on representation. - Reliance is not justifiable if the innocent party knows the true facts or relies on extravagant statements

Contracts can assent to terms by: M_______ M______ U_____ I______ D______

- Mistake - Misrepresentation - Undue Influence - Duress (Know these things)

Intent to Deceive: Injury to the Innocent Party: No ______ of injury is ______ when the action is to _____ contract. Proof of injury is ________ required to ________ _______.

- No proof of injury is required when the action is to rescind contract. - Proof of injury is universally required to recover damages.

Adhesion Contracts and Unconscionability: Standard-Form (Adhesion) Contracts: One-sided "______-it-or-_____-it" contracts where one side has ______ superior bargaining _____.

- One-sided "Take-it-or-Leave-It" contracts where one side has substantially superior bargaining power

Intent to Deceive: Innocent Misrepresentation: Person makes ______ he believes to be ______ but actually ______ facts. Innocent party can ______ contract, but usually cannot ______ ______

- Person makes statement he believes to be true but actually misrepresents facts. - Innocent party can rescind contract, but usually cannot seek damages

Adhesion Contracts and Unconscionability: Standard-Form (Adhesion) Contracts: Preprinted contract in which the _____ party has no _____ to ______ the _____ of the contract

- Preprinted contract in which the adhering party has no opportunity to negotiate the terms of the contract

Fraudulent Misrepresentation: Statement of Fact vs. Statement of Opinion: Statement of Opinions are _______ Opinions from Experts can be _____, and _____ party can seek ______ or ______

- Statement of Opinions are not actionable - Opinions from Experts can be actionable, and injured party can seek rescission or reformation

Fraudulent Misrepresentation: Misrepresentation by Silence: Ordinarily neither party has ______ to ______ _______. However, seller will be _____ if she knows of ______ _______ that cannot be ______ ______ by ______.

- duty to disclose facts - liable if she knows material defect that cannot be reasonably discovered by buyer

Mistake of Value: Generally, contract is ______ by _____ party Exception: ______

- enforceable by either party. - Mistakes of value because of a mistake of material fact

Mistakes: Only a mistake of _______ allows a contract to be _______. Unilateral Mistakes can't be cancelled unless: __________

- fact; canceled - unless: the other party to the contract knows or should have known a mistake of fact was made, OR if the mistake was due to an inadvertent mathematical and without gross negligence

Duress: Economic duress is generally _________ to constitute _____, unless same party who ______ the need also ______ the money

Economic duress is generally not sufficient to constitute duress, unless same party who created the need also requires the money

Fraudulent Misrepresentation: Misrepresentation by Conduct: Occurs when a party _____

Occurs when a party takes specific action to conceal a fact that is material to the contract

Duress: Party who enters into a ____ under _____ or _____ makes the contract _____

Party who enters into a contract under fear or threat makes the contract voidable

Duress: Threatened act must be ______ or _____ and render person ______ of exercising ______ ______

Threatened act must be wrongful or illegal and render person incapable of exercising free will (Threat of civil suit is not unlawful)

Fraudulent Misrepresentation: Contract is _______ by ________ party Consists of: M______ of M______ F______ I_____ to D______ R______ on M_______ I_______ to the I______ P_____

Voidable by Innocent party Misrepresentation of Material Fact Intent to Deceive Reliance on Misrepresentation Injury to the Innocent Party

Fraudulent Misrepresentation: Misrepresentation by Silence: When parties are in ______ relationships, failure to ________ material facts may be ______

When parties are in fiduciary relationships, failure to disclose material facts may be fraud

Mistakes: Bilateral (Mutual) Mistakes can be _______ by _______ Party

can be rescinded by either party

Fraudulent Misrepresentation: Misrepresentation of Law does not _______

entitle a party to relief

Contracts may be unenforceable if _______

the parties have not genuinely assented to its terms