Contracts genuineness business law


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Contracts genuineness business law

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Contracts genuineness business law

  1. 1. Contracts Genuineness of Assent
  2. 2. Introduction <ul><li>Contract may be unenforceable if the parties have not genuinely assented to its terms by: </li></ul><ul><ul><li>Mistake. </li></ul></ul><ul><ul><li>Misrepresentation. </li></ul></ul><ul><ul><li>Undue Influence. </li></ul></ul><ul><ul><li>Duress. </li></ul></ul>
  3. 3. §1: Mistakes of Fact <ul><li>Only a Mistake of Fact allows a contract to be canceled. </li></ul><ul><li>Bilateral (Mutual) Mistakes can be rescinded by either party. </li></ul><ul><li>Unilateral Mistakes cannot be canceled unless : </li></ul><ul><ul><li>If other party to the contract knows or should have known that a mistake of fact was made. </li></ul></ul><ul><ul><li>If mistake was due to mathematical mistake in addition, summation, subtraction, division, or multiplication and was made inadvertently and without gross negligence. </li></ul></ul>
  4. 4. Mistakes of Value <ul><li>Generally, contract is enforceable by either party. </li></ul><ul><li>Exception: Mistake of value because of a mistake of material fact. </li></ul>
  5. 5. §2: Fraudulent Misrepresentation <ul><li>Contract Voidable by Innocent Party. </li></ul><ul><li>Elements: </li></ul><ul><ul><li>Misrepresentation of Material Fact. </li></ul></ul><ul><ul><li>Intent to Deceive. </li></ul></ul><ul><ul><li>Reliance on Misrepresentation. </li></ul></ul><ul><ul><li>Injury to the Innocent Party. </li></ul></ul>
  6. 6. Misrepresentation Has Occurred <ul><li>Misrepresentation can be express or implied. </li></ul><ul><ul><li>Concealment. </li></ul></ul><ul><ul><li>Misrepresentation of future facts and statements of opinion are not fraud, unless person professes to be an expert. </li></ul></ul><ul><ul><li>Misrepresentation of Law is not fraud, unless person has greater knowledge of the law. </li></ul></ul><ul><ul><li>Silence is not fraud, unless serious problem or defect known or asked and person lied. </li></ul></ul><ul><ul><li>Case 13.1: Vokes v. Arthur Murray Inc. (1968). </li></ul></ul>
  7. 7. Intent to Deceive <ul><li>Scienter is an Intent to Deceive. </li></ul><ul><ul><li>Party knowledge that fact is not as stated. </li></ul></ul><ul><ul><li>Party makes a reckless statement with disregard of the truth. </li></ul></ul><ul><ul><li>Party implies that statement is based on personal knowledge or investigation. </li></ul></ul><ul><li>Gross negligence is considered intent. </li></ul><ul><li>Case 13.2: Sarvis v. Vermont State Colleges (2001). </li></ul>
  8. 8. Reliance on Misrepresentation <ul><li>Deceived party must have Justifiable Reliance. </li></ul><ul><ul><li>Depends on the knowledge and experience of the party relying. </li></ul></ul><ul><li>Case 13.3: Folet v. Parlier (2002). </li></ul>
  9. 9. Injury to the Innocent Party <ul><li>No proof of injury is required when the action is to rescind contract. </li></ul><ul><li>Proof of injury is universally required to recover damages. </li></ul>
  10. 10. §3: Nonfraudulent Misrepresentation <ul><li>Innocent Misrepresentation. </li></ul><ul><li>Negligent Misrepresentation. </li></ul><ul><ul><li>Equal to Scienter. </li></ul></ul><ul><ul><li>Is treated as fraudulent misrepresentation, even though the misrepresentation was not purposeful. </li></ul></ul>
  11. 11. §4: Undue Influence <ul><li>Contract is Voidable. </li></ul><ul><ul><li>Confidential or Fiduciary Relationship. </li></ul></ul><ul><ul><li>Relationship of dependence. </li></ul></ul><ul><ul><li>Influence or Persuasion. </li></ul></ul><ul><ul><li>Weak party talked into doing something not beneficial to him or herself. </li></ul></ul><ul><li>Presumption of Undue Influence. </li></ul>
  12. 12. §5: Duress <ul><li>Forcing a party to enter into a contract under fear or threat makes the contract voidable . </li></ul><ul><li>Threatened act must be wrongful or illegal. </li></ul><ul><li>Improper Threat. </li></ul><ul><ul><li>Threat to exercise legal rights (criminal or civil suit). </li></ul></ul><ul><ul><li>Economic or physical. </li></ul></ul>
  13. 13. §6: Adhesion contracts and Unconscionability <ul><li>Adhesion Contracts. </li></ul><ul><ul><li>Preprinted contract in which the adhering party has no opportunity to negotiate the terms of the contract. </li></ul></ul><ul><li>Unconscionability. </li></ul><ul><ul><li>One sided bargains in which one party has substantially superior bargaining power and can dictate the terms of the contract. </li></ul></ul><ul><ul><ul><li>“ Standard-form.” </li></ul></ul></ul><ul><ul><ul><li>“ Take-it-or-leave-it” adhesion contracts. </li></ul></ul></ul>