Defects in Agreement

Mutual Mistake

viodable by either party, if material fact assumed to be true

Unilateral mistakes

(mistakes by one party) only are usually enforced. unless the mistaked party knew it a mistake.

fiduciary relationship

A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.

Maddie enters into a contract with Phillip. She did so acting under duress. When Maddie does not perform under the terms of the contract, Phillip sues to enforce it. Which of the following is correct? Because Maddie agreed to the contract under duress, the contract is voidable by Phillip. Because Maddie agreed to the contract under duress, the contract is void. If the contract is a good deal, it does not matter if Maddie agreed to it under duress. Because Maddie agreed to the contract under duress, the contract is voidable by Maddie

Because Maddie agreed to the contract under duress, the contract is voidable by Maddie

Samantha sells her Montana ranch to Felix (residing in New York), and fraudulently tells him that there is a lake on the ranch. Felix negligently fails to inspect the ranch but buys it anyway. According to the case law in this lesson, which of the following is true? Felix is barred from recovery because of his negligence. This case is controlled by the doctrine of caveat emptor Felix can rescind even though he was negligent

Felix can rescind even though he was negligent

Elements of Material Fact

Fiduciary Relationship, Correcting Mistakes about Basic Assumptions, Supervening Events

A court may order the payment of money damages in connection with contract rescission based on which of the following? fraud undue influence duress

Fraud

Alexander wishes to rescind his contract with Sofia as quickly and simply as possible. He can choose to sue for either fraud or misrepresentation. Which of the following is correct? He must prove at least misrepresentation in order to rescind the contract. He must prove fraud in order to rescind the contract. The only remedy for fraud and misrepresentation is money damages.

He must prove at least misrepresentation in order to rescind the contract

Duress

If a party is compelled to enter into an agreement by force or compulsion, a meeting of the minds has not occurred and the agreement is voidable by the party who entered it under duress; it may be rescinded by that party

With respect to mutual mistake and unilateral mistake, which of the following is correct? Rescission is never allowed in cases of unilateral mistake. Rescission is always allowed in cases of unilateral mistake. Rescission is allowed in cases of mutual mistake

Rescission is allowed in cases of mutual mistake

False Statement Justifiably Relied On

To be actionable, a false statement must be relied on

Proof of fraud requires proof of scienter (intent). Which of the following is correct about scienter? The scienter requirement is satisfied if a false statement is made knowingly. Scienter requires that the victim relied on a false statement Scienter requires that false statements be in writing

The scienter requirement is satisfied if a false statement is made knowingly.

ratification

The willingness to continue with a contract, despite a lack of mutual assent

Element: False Statement Made with Intent to Deceive

This so-called guilty knowledge is referred to in legal jargon as scienter

rescission

To rescind a contract means to cancel it. The process of rescission requires each party to return to his or her pre contract position;

If I have a fiduciary relationship with my aging grandfather and inappropriately use that relationship to persuade him to enter into a contract to sell me his house for way less than market value, the best defense for him to raise is: fraud duress undue Influence

Undue Influence

Three types of fraud

a false representation of a material fact a false representation made with intent to deceive a false representation justifiably relied on by the injured party

Correcting Mistakes about Basic Assumptions

a party has an obligation to disclose information if a contracting party is acting on the basis of a mistake which is central to the transaction and the mistake is known to the other party

Supervening Event

a party has an obligation to disclose information if supervening facts (new facts) arise

seven elements of undue influence

discussion of the transaction at an unusual or inappropriate time, consummation of the transaction in an unusual place, insistent demand that the business be finished at once, extreme emphasis on untoward consequences of delay, the use of multiple persuaders by the dominant side against a single servient party, absence of the third party advisers to the servient party, statements that there is no time to consult financial advisers or attorneys

Misrepresentation

fraud without the requirement to prove intent;does not require proof of scienter (intentional concealment or misrepresentation of facts)

defects in mutual assent

fraud, misrepresentation, mistake, duress, and undue influence

Fraud

intentionally misrepresent facts for the purpose of inducing another person to enter into a contract.

caveat emptor

let the buyer beware

Remedies

rescission (Justifiably relied on) and money damages (fraud tort)

Undue Influence

voidable by the party who was unduly influenced may be rescinded by that party; requires evidence that the persuasion was in an atmosphere of trust and confidence where one party has dominance over the other, and that the persuasion was unfair