Chapter 7 Genuineness of Assent

1. Law in Society Ms. Baumgartner Chapter 7Genuineness of Assent

2. Section 1 Objectives • Recognize when genuine assent is not present • Identify the two key elements in undue influence

3. Genuine Assent & Duress • 1 of the most important legal requirements of a contract to be legal and valid is genuine assent – true and complete agreement • Sometimes, genuine assent is hard to prove in court because of the following: • Duress (pressure/force when negotiating a contract—cannot threaten someone to agree to a contract with you) • Undue influence ( will define in later slide) • Mistake • Misrepresentation • Fraud

4. Genuine Assent & Duress • Without genuine assent a contract is typically voidable – the injured party can cancel the transaction • The party then has the legal right to get back what has already been put into the contract – rescission • For this to happen, a lack of genuine assent must be found before you ratify the contract • Ratification is conduct that confirms the contract

5. Genuine Assent & Duress • Genuine assent can be affected by the following: • Duress – use of an improper act or threat to obtain an expression of agreement • THREATS OF ILLEGAL OR TORTIOUS CONDUCT • Threat could be to the physical life, liberty, or property of victim or their relatives • You cannot threaten someone or inflict bodily harm on someone to agree to a contract • THREATS TO REPORT CRIMES • You cannot threaten to report a crime they committed to force the criminal to contract with you. • THREATS TO SUE • Only duress if the threat to sue is unrelated to the actual suit…….man threatens to sue wife for custody of children if she doesn’t sign over valuable pieces of jewelry/watches • ECONOMIC THREATS • Threats to a persons business or finances

6. Answer question: • The following question is listed next in your notes. Answer it based on notes you took so far: • List the various forms of legal duress

7. Undue Influence & Assent • Undue influence– occurs when 1 party to the contract is in a position of trust and wrongfully dominates the other party • The dominated person then does not exercise free will in accepting the contract • The 2 key elements in undue influence are: • The relationship – trust, confidence, or authority must exist between the parties to the contract • Attorney/client • Husband/wife • Parent/child • Patient/doctor • Wrongful/unfair persuasion – lack of free will must exist • EX: Elderly parent dependent on child for care, may sign over bank accounts or their house for free or half its value

8. Answer question: • The following question is listed next in your notes. Answer it based on notes you took so far: • What are the key parts in undue influence?

9. 7-1 Assessment Questions • Complete 7-1 assessment questions #1-8 and DO NOT continue until all 7-1 notes and questions are answered completely.

10. Section 2 Objectives • Recognize the types of mistakes that can make a contract voidable or void • List the criteria for a statement to be treated as a misrepresentation • Define fraud and describe the remedies for it

11. 7.2 Types of Contractual Mistakes • Two types of mistakes: • Unilateral – occurs when one party holds an incorrect belief about the facts or law related to the contract. • Failure to read a contract before signing • Misunderstanding from a hurried or careless reading • Signing a contract written in a foreign language • Usually cannot get out of contract Example: if you send an offer and type amount incorrectly—you are bound by the amount printed in offer

12. Types of Contractual Mistakes cont • Mutual (bilateral) – occurs when both parties have a incorrect belief about an important fact or the applicable law • May be voided by either party • Important facts that influence the parties’ decisions about a contract are called material facts • If a mutual mistake of the fact occurs, the contract is void – without legal effect (totally invalid) Ex: Both parties believe that a property is 48 acres, when in fact it is 28. Contract can be voided once mistake is uncovered.

13. Answer question: • The following question is listed next in your notes. Answer it based on notes you took so far: • Name the types of mistakes that can make a contract void or voidable

14. What is Misrepresentation? • In many contract negotiations, the parties make statements that turn out to be untrue • Innocent misrepresentation- party to a contract does not know that a statement he/she made is untrue (“I didn’t know!”) • Fraudulent misrepresentation– deliberate false representation or concealment of a material fact, which is meant to and which does persuade another to enter into an unfavorable contract Ex: If a car dealer is unaware that the previous owner replaced the odometer and the can has 150,000 miles instead of 70,000.

15. What is Misrepresentation? • Statements are treated as misrepresentation by the law only if: • The untrue statement is fact or there is active concealment • Opinion vs. fact – sales talk or expert opinion • Active concealment – seller of house paints ceiling to cover up water damage; sticker over a scratch on a new LED TV • The statement is material to the transaction if the defendant knew this plaintiff would rely on the statement and intentionally made a false statement • A used car dealer tells a customer that the oil had been changed every 3000 miles, when it was changed every 5000 miles instead. • The victim reasonably relied on the statement

16. Answer Question: • The following question is listed next in your notes. Answer it based on notes you took so far: • What are the 3 criteria for a statement to be treated as a misrepresentation?

17. Fraud & Remedies for Fraud • Fraud – intentional misrepresentation of an existing, important fact • All 3 elements of misrepresentation must be proven to show fraud PLUS 2 additional elements: • Intent – deliberately lies or conceals a material fact • Injury – usually financial; must be proof of injury • Remedies (verdicts) for fraud cases: • Rescission – cancel contract and recover what has been paid or given • Damages - $$$$$$ (actual and/or punitive)

18. Answer Question: • The following question is listed next in your notes. Answer it based on notes you took so far: • What are the remedies (solutions) for fraud?

19. 7-2 Assessment Questions • Answer assigned questions on a separate sheet of paper. FOLLOW directions and be complete with your answers!