ch17 legal assent

rescinded

-"cancelled" -voidable contact may be rescinded

fraudulent misrepresentation

-consciously false representation of a material fact intended to mislead the other party -one party was tricked into the "agreement"

innocent misrepresentation

-false statement about a fact material to an agreement that the person making it believed to be true. -person had no knowledge of the claims falsity -lacked scienter (knowledge) -aggrieved party cannot sue for damages because he had no intent to mislead

mistake of fact

-incorrect belief about the facts of the contract at the time the contract is concluded. -legal assent is absent

major obstacles to legal assent

-mistake -misrepresentation -undue influence -duress -unconscionably

mutual mistake

-mistakes shared by BOTH parties -either can choose to rescind the contract

unconscionably

-one of the parties has so much more bargaining power than the other that he dictates the terms of the agreement -can be rescinded -misappropriate amount of power possessed by one party to the contract has made a mockery of the idea of free will, which is a necessity for legal consent. -resulting contract is called an "adhesion contract"

negligent misrepresentation

-one party "thinks" a material fact is true -if he could have known the truth by using reasonable care to discover or reveal it, its negligent -impact is identical to fraudulent misrepresentation

duress

-one party is forced into the agreement by the wrongful act of another -injured party makes the case for duress by demonstraiting that the threat left no resonable alternatives and the the free will necessary for legal consent was removed by the specifics of the threat

conditions that would invalidate contract of unilateral mistake (any of the following)

-one party made a mistake about a material fact, and the other party knew or had reason to know about the mistake -the mistake was caused by a clerical error that was accidental and did not result from gross negligence -the mistake was so serious that the contract is unconscionable, that is, so unreasonable that it is outrageous

any of the following might trigger a successful request for rescission on the grounds of duress

-one party threatens physical harm or extortion to gain consent to a contract -one party threatens a criminal lawsuit unless consent is given to the terms on the contract -one party threatens the other's economic interests (economic duress)

unilateral mistake

-result of error by ONE party about a material fact -does not generally void a contract -rare occasions: rescission is permitted

undue influence

-special relationships in which one person takes advantage of a dominant position in a relationship to unfairly persuade the other and interfere with that person's ability to make his own decision -voidable

misrepresentation

-untruthful assertion by one of the parties about the material fact -only "appear" to agree, so it lacks legal assent

conditions that would invalidate contract of mutual mistake (all must be present)

1-a basic assumption about the subject matter of the contract 2-a material effect on the agreement 3-an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement

elements required to finding fraudulent misrepresentation

1-a false statement about a past or existing fact that is material to the contract 2-intent to deceive ....then add third necessary element 3-justifiable reliance on the false statement by the innocent party to the agreement -if damages are sought, the defrauded party must have been injured by the misrepresentation

factors that enter into the finding of undue influence are

1-was the dominant party rushing the other party to consent? 2-did the dominant party gain undue enrichment from the agreement? 3-was the non-dominant party isolated from other advisers at the time of the agreement? 4-is the contract unreasonable because it overwhelmingly benefits the dominant party?

legal assessment

a promise that the courts will require all parties to obey

nondisclosure

failure to provide pertinent info about the projected contract

concealment

the active hiding of the truth about a material fact

LEGAL PRINCIPLE: misrepresentation

the effect of both a negligent and a fraudulent misrepresentation is that the victim can either rescind the contract of keep the contract and sue for damages, whereas is the mistake is innocent, the victim can only seek rescission.

LEGAL PRINCIPLE: undue influence

the essential element of undue influence is the existence of a dominant-subservient relationship,

LEGAL PRINCIPLE: duress

when one party is forced to enter into a contract by the wrongful threat of another, the contract is voidable by the innocent party due to duress

voidable

without legal assent, a contract may be voidable