Exam 1 Chapter 17 & 18

For a mutual mistake to interfere with legal consent, all of the following must be present.

1. A basic assumption about the subject matter. 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 agreement.

Statute of Frauds- three main purposes

1. Attempts to ease contractual negotiations by requiring sufficiently reliable evidence to prove the existence and specific terms of a contract. 2. To prevent unreliable oral evidence from interfering with a contractual relationship. 3. To prevent parties from entering into contracts with which they do not agree.

Any of the following conditions would permit a court to invalidate a contract on grounds of unilateral mistake:

1. One party made a mistake and the other party knew about it. 2. The mistake was caused by an error that was accidental and not negligent. 3. The mistake was so serious that the contract is outrageous.

Contracts falling within the statue of frauds (formal)

1.Contracts whose terms prevent possible performance within one year. 2. Promises in consideration of marriage. 3. Contracts for one party to pay the debt of another if the initial party fails to pay. 4. Contracts related to an interest in land. 5. Sales of goods greater than $500.

Fraudulent misrepresentation

A consciously false representation of a material fact intended to mislead the other party.

Legal Assent

A promise the courts will require the parties to obey

Fiduciary relationships

A relationship of special trust & confidence usually a dominating & a dominated party Examples: attorney/client, agent/principal, executor/heirs, banker/customer, caregiver/patient

Secondary Obligation

A term for contracts within the statute of frauds involving promises to pay a debt of another if the initial party fails to pay.

Exemptions to the Statute of Frauds

Admission Partial performance Promissory estoppel

Integrated contracts

Are written contracts intended to be the complete & final representation of the parties agreement.

Merger clause

Attempt to signal to judges that the written contract is intended to be the final & complete statement of their agreement.

Adhesion contract

Comes from unconscionability.

Prenuptial Agreement

Contract you enter before marriage that states what belongs to whom.

Equal dignity rule

Contracts that would normally fall under the statute and need a writing if negotiated by the principal must be in writing even if negotiated by an agent.

Condition precedent

Entire contract is conditioned on something else's occurring first.

Nondisclosure

Failure to provide pertinent information about the projected contract.

Three types of fraudulent misrepresentation

False assertion of fact Intent to deceive Justifiable reliance of the false assertion

False Assertion of fact

For fraudulent misrepresentation to be the basis for a contract rescission, the statement of fact needs not be an actual assertion. It can also be concealment or a nondisclosure.

Partial performance

If the buyer of land as paid any portion of the sale price, has begun to permanently improve the land, or has taken possession of it, the courts will consider the contract partially performed and it will amount to proof of the contract.

Three types of misrepresentation

Innocent misrepresentation Negligent misrepresentation Fraudulent misrepresentation

Mistake of fact

Is an erroneous belief about the facts of the contract and the time the contract is concluded. Legal Assent is absent.

Misrepresentation

Is an untruthful representation about that material fact- so they only appeared to agree and there is no contract.

Parol Evidence rule

Makes oral evidence inadmissible if it is made before or at the same time as a writing that the parties intend to be the complete and final version of their agreement. Exceptions: 1. Contracts that have been subsequently modified. 2. Conditioned on orally agreed on terms. 3. Non-finalized, partially written and partially oral contracts. 4. Contracts containing ambiguous terms. 5. Incomplete contracts. 6. Contracts with obvious typographical errors. 7. Void or Voidable contracts. 8. Evidence of Prior Dealings or usage of trade.

Collateral promise

Occurs when a party outside a primary agreement promises to fulfill one of the original party's obligations if the original party fails to fulfill it.

Negligent Misrepresentation

One party makes a statement of material fact that he thinks is true, if he could have known the truth by using reasonable care to discover or reveal it.

Economic duress

Person refuses to perform according to a contract unless the other person either signs another contract with the one making the threat or pays that person a higher price than was specified in the original agreement.

Promises in consideration of Marriage

Promises to marry in exchange for something must be in writing.

Undue Influence

Refers to those one person unfairly persuades the other and interferes with that person's ability to make his own decision. When people bargain with their attorney, doctor, guardian, relative, or anyone else in a relationship that includes a high degree of trust, they are susceptible to being persuaded by unusual pressures unique to that relationship.

Innocent Misrepresentation

Results from a false statement about a fact material to an agreement that them person making it believed to be true. The person had no knowledge that the claim was false.

Mistakes can be mutual

Shared by both parties of the agreement.

Mutual

Shared by both parties to the agreement.

Concealment

The active hiding of the truth about a material fact.

Justifiable Reliance on the False Assertion

The injured party has no justifiable claim of fraud after relying on assertions whose falsity should have been obvious.

Fraudulent misrepresentation here Scienter is clear:

The party making the misrepresentation either knows or believes that the factual claim is false or knows there is no basis for it.

Unilateral

The result of an error by one party about a material fact, that is, a fact that is important in the context of the particular contract.

Sufficiency of the writing

There are no specific requirements for the form of a written contract under the statute of frauds. Although certain elements must be present: a. Name of the parties to the contract. b. The subject matter of the agreement. c. The consideration given for the contract. d. All relevant contractual terms. e. The signature of at least the party against whom the action is brought.

Promissory Estoppel

When a party relies on an oral contract that within the statute of frauds is required to be in writing.

Admission

When a statement is made in court under oath in which the party against whom the charges have been brought admits that an oral contract existed, even though the contract was required to be in writing. If admission occurs the courts will uphold the contract.

Unconscionability

When one party has so much more bargaining power that he dictates the terms of the agreement if this is present it can be rescinded.

Duress

When one party is forced into the agreement by the wrongful act of another. If present the contract is voidable by the innocent party.

Intent to deceive

When the party making the false statement claims to have or implies to have personal knowledge of its accuracy.

Rescinded

When the person who cancelled avoidable contract requires the return of everything she gave the other party.

Integrated contracts

Written contracts intended to be the complete and final representation of the agreement. In this case parol evidence is inadmissible.