Genuineness of Assent

1. Genuineness of Assent Chapter 7

2. Genuine Assent Whether written or verbal, an agreement is always treated as valid (enforceable and legally binding) • Genuine Assent – a true and complete agreement. • Without genuine assent, a contract can be voided • Rescission – getting back what was put in the contract • An avoidance must be carried out promptly and must be before the injured person ratifies the contract. • Ratification – conduct that confirms the intent to be bound by a contract

3. Duress • Duress- occurs when one party uses an improper threat or act to obtain an agreement • Types of Duress • Threats of illegal or tortious conduct • Threats to report crimes (extortion) • Threats to sue • Economic threats

4. Undue Influence and Assent • Undue Influence – occurs when the dominating party to a confidential relationship exerts pressure to enter into a contract. • Problem is there is No Free Will • What is a Confidential Relationship? • Attorney – Client • Parent – Child • Doctor - Patient

5. What is your verdict? • Albert has cancer and was being treated by Dr. Bennington. He had carefully followed the doctor’s advice and the treatment had been successful. One day, during a checkup, Dr. Bennington said to Albert “to prevent the cancer from returning, you need to reduce stress in your life. Long drives are great for that. Come to think of it, I am selling my convertible right now. You should buy it.” Without investigating, Albert followed the doctor’s directions and contracted to buy the car. Later he found the price he’d agree to pay was nearly double the market value. Could Albert avoid the contract due to undue influence?

6. Mistake & Misrepresentation Section 2

7. Types of contractual mistakes • 2 Types of Contractual Mistakes • Unilateral Mistakes – occurs when only one party holds an incorrect belief about the facts or law related to a contract. • Failure to read and understand contract is most common • Contract still valid • Mutual Mistakes – both parties have incorrect belief about an important fact or the application of the law. • Material Facts – important facts that influence the parties’ decision about a contract • May or may not void a contract

8. Misrepresentation • 2 Types • Innocent Misrepresentation • Fraudulent Misrepresentation • Contract is VOIDABLE by party whom the misrepresentation is made IF: • The untrue statement is one of fact or active concealment • The statement is material to the transaction or is fraudulent • The victim reasonably relied on the statement

9. Common Misrepresentation • Untrue Statement of Fact – must be a fact rather than an opinion • Active Concealment – may be a substitute for false fact • Silence- disclose is required when • Material fact cannot omit important info • True statement is made false later • When one party knows the other has mistaken info • Materiality • Statement would cause the average person to contract • The average person would rely on the information • The party knew the material facts were false • Reasonable Reliance • NO MISREPRESETATION UNLESS THE VICTIM REASONABLE RELIED ON THE INFO

10. Fraud & Remedies for Fraud

11. What is Fraud? • Fraud – misrepresentation plus 2 additional elements • The misstatement was make recklessly or intentionally • Injury resulted • To be proven in court, one must first prove misrepresentation, then the two additional elements

12. 2 Additional elements • Intentional or Reckless – must prove that there was reckless intention to lure the victim into a contract • Some jurisdiction requires victim to prove there was no way to check for due diligence • Injury – causes some harm, often financial, to the victim based on the misrepresentation

13. Remedies for fraud • Rescission – contract is voidable and anything received by both parties must be returned • Damages – victim may seek damages for the loss created by the fraud. Damages may be sought in innocent misrepresentation

14. Assignment • Create a 1-4 slide cartoon illustrating mistake, misrepresentation and/or fraud. • You will be graded on completion, creativity, and spelling/grammar.