ALM Contracts Flashcards
Misrepresentation - Elements
The elements to rescind a contract based on misrepresentation are:
(1) a false statement;
(2) the false statement is material to the contract; and
(3) the reliance is justifiable
Misrepresentation - General Definition
An assertion that is not in accord with the facts
Misrepresentation - Element 1 + Definition
(1) a false statement
False means untrue, inaccurate, or erroneous
Misrepresentation - Element 2 + Definition
(2) the false statement is material to the contract
A matter is material if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so
Misrepresentation - Element 3 + Defintion
(3) the reliance is justifiable
Reliance is justifiable if the buyer actually and reasonably relied on the statement
Did the representation actually cause the buyer to make the contract and is the representation something a reasonable person would consider?
Misrepresentation - Case Law
Hill - material/reasonable person [cite for element 2]
Misrepresentation - Counter Argument
P’s reliance was unjustified
P bears the risk and should have exercised due diligence to investigate the matter
DUE DILIGENCE is the care that a reasonable person exercises to avoid harm to other persons or their property
Mistake - Definition
A belief that is not in accord with the facts
Mutual Mistake - Elements
The elements to rescind a contract based on mutual mistake are:
(1) both parties are wrong about something;
(2) the mistaken belief goes to the basic assumption of the contract;
(3) the mistaken belief has a material effect on the agreed exchange of performances; and
(4) the adverse party bears no assumption of risk
Mutual Mistake - Element 2 + Definition
(2) the mistaken belief goes to the basic assumption of the contract
The basic assumption of a contract is an essential part and condition upon which it was made [cite RENNER]
Essentially, the basic assumption is the reason why the parties entered the contract – sole purpose/core of the deal
Mutual Mistake - Element 3 + Definition
(3) the mistaken belief has a material effect on the agreed exchange of performances
A material effect is something that upsets the very bases of the contract [cite RENNER]
Mutual Mistake - Element 4 + Definition
(4) the adverse party bears no assumption of risk
A party bears the risk of mistake when:
(1) the risk is allocated to him by agreement of the parties, or
(2) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats limited knowledge as sufficient [conscious ignorance]
Mutual Mistake - Case Law
Renner – sole purpose of the contract was to grow jojobas which required an adequate water supply
