Genuine Consent Agreement

1. Genuine Consent Agreement

2. Free /Genuine Consent This concept deals with an individual’s choice of entering into agreements. Two or more person are said to consent when they agree upon the same thing in the same sense If free consent is missing, there is no meeting of the minds- not a valid agreement. Without this element, the contract is void or voidable (depending on the circumstances).

3. Lack of genuine consent Coercion /duress, undue influence, fraud, Misrepresentation and mutual mistake of fact Lack of genuine consent Contracts resulting from such circumstances are voidable at the option of the injured party

4. Coercion /Duress • Coercion is committing or threatening to commit any act forbidden or unlawful detaining or threatening to detain any property to the prejudice of any person whatever with the intention of causing any person to enter into an agreement

5. Coercion /Duress occurs when a party is induced to enter a contract by improper threats. The threat may be one of physical force or some other improper acts. In the business setting, a threat of action that will cause economic injury (such as a refusal to contract), may lead to claims of duress. A contract obtained through the use of duress is voidable at the option of the threatened party. That party may elect to either ratify and enforce the agreement or, in the alternative, to avoid it.

6. Coercion /Duress • Prosecution or a threat to file a suit against does not constitute coercion • To charge high price or high interest rate is not coercion • A threat to commit suicide – which is not punishable

7. Undue influence • Undue influence occurs when a contract is made between parties sharing a special relationship (here one of the party is in position to dominate the will of the other ) and he uses the position to obtain an unfair advantages over the other (as the result of the use of improper advantage or abuse of that relationship. • Two elements must both be present to establish undue influence - a special relationship between the parties and unfair advantage • Where a contract results from undue influence, the contract is voidable at the option of the weaker party who has been improperly persuaded to enter into the agreement.

8. A special relationship and Unfair Advantage • The relationship may be one of trust and confidence where a dependent party justifiably assumes that the other is acting for the benefit of the dependent party, or the requisite relationship may exist where one party uses a personal relationship to dominate the free will of the other. • The fact that the victim is ill, disabled or elderly may be a factor, but is not alone sufficient to establish the necessary special relationship. The special relationship can exist between parent and child, husband and wife, lawyer and client, or physician/counselor and patient, Guardian and ward, trusttee and beneficiary .

9. Undue influence may exist in following cases • Where one party hold apparent authority over other (a dependent party justifiably assumes that the other is acting for the benefit of the dependent party) or he stands in a fiduciary relationship (relationship of trust and confidence- father and son , guardian and ward , solicitor and client , preceptor or follower, trustee and beneficiary ) • A contract with a person whose mental capacity is temporarily affected by reason of age , illness , or mental or bodily distress • Once the requisite special relationship is established, courts will generally find unfair advantage

10. Undue influence • Where a contract results from undue influence, the contract is voidable at the option of the weaker party who has been improperly persuaded to enter into the agreement. • Lack of judgment, want of cautiousness, lack of knowledge of facts or absence of foresight are not the reason of undue influence • To charge high price or high interest rate is not coercion

11. Misrepresentation • Misrepresentation arises when the representation made is inaccurate but the inaccuracy is not due to any desire to defraud the other party • • Misrepresentation occur when a party makes material factual assertions (not statements of pure opinion) that are false and which the other party justifiably relies upon in agreeing to a contract. Misrepresentation is material if: • it would be likely to induce a reasonable person to agree to the bargain, or • the party who made the misrepresentation knew or should have known that it was likely to induce the other party

12. Misrepresentation • Unwarranted assertion – my land produce …… Statements of value made by experts ( belief does not have sufficient ground • Breach of duty • Innocent mistake - when a party incorrectly believes that the information he is providing is accurate.

13. Consequences of misrepresentation • Avoid the agreement • Insist the contract be performed • If the victimized party has already performed at the time she learns of the fraud or misrepresentation, she may sue for contract rescission • (asking the court order the parties to each give back any benefit received under the contract).

14. Fraud • When one person decides to influence another person to rely and act on a misrepresentation, it is an intentional misrepresentation or fraud. To prove fraud, the following elements must be shown: • The wrongdoer made a false representation of material fact. • The wrongdoer intended to deceive the innocent party. • The innocent party justifiably relied on the misrepresentation. • The innocent party was injured. The Fraud include all acts committed by a person with a view to deceive another person. To deceive means “ induce a man to believe a thing is true which is false

15. Fraud • Fraud • False statement -my land produce ( not at al fertile ) • Active concealment – rent • Intentional non performance – Michel Jackson • Deception- piracy • Fraudulent act or omission-defect material

16. Misrepresentation & Fraud • Jac was not graduated from Eastern University because of poor scholastic standing. When state sued to collect past due tuition (breach of contract), Jac defended by arguing that state fraudulently misrepresented that it would teach him wisdom, truth, character and enlightenment. Jac claimed that these representations were made in the school motto, the inscription over the college chapel, and in a variety of brochures and speeches. The issue was whether state had made a false statement of fact that induced Jac to enter into a contract to pay tuition and attend the university.

17. Can silence be fraudulent • Mere silence is not fraud • Silence is fraudulent “ if the circumstances of the case are such that regard being had to them , it is the duty of the person keeping silence to speak • Silence is fraudulent if the silence is in itself equivalent to speech

18. Uberrimaer fidie • Uberrimaer fidieare contracts where law imposes upon the parties the duty of making full disclosure of all material facts . • In such contracts , if one of the parties has any information concerning the subject matter of the transaction which is likely to affect the willingness of the other party to enter into the transaction , he is bound to disclose the information Examples • Contracts of insurance • Fiduciary relationship • Sale of immovable property • Allotment of shares of company • Family settlement

19. Misrepresentation or fraud Co built a housing development near a landfill where huge quantities of hazardous chemicals had been illegally dumped. C and the marketing firm he hired to sell the homes in the development both knew of the dangerous chemicals, but did not say anything to buyers of homes, even when some home owners complained of smells. When buyers learned about the toxic waste in the nearby landfill, they brought suit against Co and the marketing firm.

20. Consequences of fraud • He can avoid the performance • He can insist that the contract shall be performed • The aggrieved party can sue for damages

21. Distinction between fraud and Misrepresentation • Different intention • Different belief • Different rights • Different defense

22. Mutual mistake • Mutual mistake of fact is a defect that occurs without wrongful conduct by either party in the bargaining process. Mutual mistake of fact arises whenever the parties enter into a contract with a common belief about a fact that forms the basis of that contract, and the fact is later found to be untrue. • Mutual mistake may also be found where the parties each have a different understanding about language in the contract that is subject to different interpretations. In such cases there can be no meeting of the minds since the parties do not have an actual agreement on an important contract term.

23. Mistake • Erroneous belief concerning something • Mistakes may be mistake of law and mistake of fact • an erroneous opinion as to the value of the thing which forms the subject matter of the agreement is not to be deemed a mistakes as to matter of fact • Mistakes can be bilateral or unilateral

24. Mistakes may be mistake of law and mistake of fact • Mistake of fact arises whenever the parties enter into a contract with a common belief about a fact that forms the basis of that contract, and the fact is later found to be untrue. • Mutual mistake may also be found where the parties each have a different understanding about language in the contract that is subject to different interpretations. In such cases there can be no meeting of the minds since the parties do not have an actual agreement on an important contract term.

25. Mistakes can be bilateral or unilateral • Mistake – Bilateral A bilateral mistake occurs when both parties negotiate based on the same factual error. -If the parties contract based on an important factual error, the contract is voidable by the injured party. • Mistake – Unilateral - Sometimes only one party enters a contract under a mistaken assumption, a situation called unilateral mistake. A mistake by one of the party does not generally affect the validity of a contract.In the following situations, a contract may not be enforced when there is a unilateral mistake: • One party makes a unilateral mistake of fact and the other party knew or should have known that a mistake was made. • A unilateral mistake occurs because of a clerical or mathematical error that is not the result of gross negligence

26. Examples of Mistakes • Mistake about the nature of the transaction (error in negotion) • Mistake about identification of the subject matter of the contract (error in object) • Mistake about the identity of the other contracting party (error in person)  • Mistake about the quantity • Mistake on the necessary state of facts which according to commercial honesty are considered essential elements of the contract.

27. Mutual mistake • Bryan at 12 years of age, purchased a 1968 Nolan Ryan rookie card at Joe Irmen's Ball-mart store for $12. An inexperienced clerk had misread the "1200" price tag as $12 when she sold the card to Bryan. Irmen sued for contract rescission on the basis of mutual mistake. Bryan testified that he wasn't sure how much the card was worth when he bought it, but he knew he was getting a good deal. What result?