Genuine Assent. Recognize when genuine assent is not present. Identify the two key elements in...

CHAPTER 7Genuine Assent

Objective:

Recognize when genuine assent is not present.

Identify the two key elements in undue influence.

Genuine Assent and Duress

Genuine Assent: a true and complete agreement. It is an agreement to enter into a contract that is evidenced by words or conduct between the parties.

Genuine Assent and Duress

Voidable: Occurs when an injured party cancels the contractual obligation

Rescission: When the injured party tries to get back what has already been put into the contract.

Genuine Assent and Duress

RATIFICATION: DURESS:

Conduct of all parties that confirm they intent to be bound by the contract.

Occurs only when on party uses an improper threat or act to obtain an expression of a contract.

Genuine Assent and Duress

Undue Influence: When one party to the contract is in a position of trust and wrongfully dominated the other party.

Types of Contractual Mistakes

Unilateral Mistakes: Occurs when only one party holds an incorrect belief about the facts or law related to the contract.

Mutual Mistake: (bilateral mistake): Occurs when both parties have an incorrect belief about an important fact (voidable), or the applicable law (not voidable)

Types of Contractual Mistakes

Material Facts: facts that influence the parties’ decisions about the contract.

Void: When something is without legal effect.

Misrepresentation

Innocent misrepresentation: Occurs when a party, during the negotiations, makes a statement that turns out to be untrue.

Fraudulent misrepresentation: Occurs when a party knowingly makes a statement that in untrue.

Active Concealment: A substitute for a false statement of fact.

Silence

There are three important situations where disclosure is required.

1. When a statement about a material fact omits important information.

2. When a true statement is made false by subsequent events.

3. When one party knows the other party has made a basic mistaken assumption.

Materiality

There are three ways an untrue statement can be determined to be material:

1. If an untrue statement would cause a reasonable person to contract.

2. If the defendant knew the plaintiff would rely on the statement.

3. If the defendant knew the statement was false.

Materiality

Reasonable Reliance: Even though the statement is material. There is no misrepresentation unless the victim reasonably relied on it.

Fraud and Remedies for Fraud

Fraud exits: when a person deliberately lies or conceals a material fact. To establish fraud, there must be proof of injury.

Remedies for Fraud

1. Rescission: Voiding of the contract by the injured party. Normally, when you rescind, anything you received must be returned.

2. Damages: The defrauded party may seek damages for the loss created by the fraud.

Damages

Punitive Damages: A form of punishment. These damages are awarded above the amount of the defrauded party’s original damages to act as punishment to the party who committed fraud.