Ch. 14 Mistakes, Fraud, and Voluntary Consent

Question 1

Mistakes of fact

Answer 1

the only type of mistake that makes a contract voidable. they occur in two forms (1) bilateral: made by both of the contracting parties (2) unilateral: made by only one of the parties

Question 2

Bilateral mistakes of fact

Answer 2

mutual misunderstanding concerning a basic assumption in which the contract was made. this can make the contract voidable

Question 3

unilateral mistakes of fact

Answer 3

occurs when only one of the parties makes a mistake about a material fact this doesnt usually award the mistaken party any exceptions to the contract, the contract usually remains enforceable

Question 4

What are the two exceptions to the enforcing of a unilateral mistake of fact?

Answer 4

(1) the other party should have been aware of the mistake and done something to amend it (2) or the error was made mathematically and was made inadvertently without gross negligence

Question 5

mistakes of value

Answer 5

the mistake concerns the future market or quality of the object of the contract, the mistake generally remains enforceable. this is generally because value is variable and can change quickly

Question 6

fraudulent misrepresentation

Answer 6

generally refers only to misrepresentation that is consciously false and is intended to mislead another

Question 7

What elements does a fraudulent misrepresentation typically consist of?

Answer 7

(1) a misrepresentation of a material fact (2) must be an intent to deceive (3) innocent party must justifiably rely on the misrepresentation

Question 8

Statement of fact

Answer 8

the misrepresentation must involve a material fact and not merely a statement of opinion

Question 9

statements of opinion

Answer 9

and representations of future facts (predictions) are not generally subject to claims of fraud. unless the opinion comes from an expert that the innocent party is relying on for info, the contract may be available for reformation

Question 10

reformation

Answer 10

an equitable remedy granted by a court in which the terms of the contract are altered to reflect the true intentions of the parties

Question 11

misrepresentation by conduct

Answer 11

arises when a party takes specific action to conceal a fact that is material to the contract

Question 12

misrepresentation of law

Answer 12

generally does not allow for relief of a contract, people are more often expected to know local laws and be able to apply them and should not rely on non law people to provide them information on a subject they are not professionally required to know anything about. the exception is if the misrepresentation of law is applied by a person in a profession in which they are required to know more about a subject than the average citizen

Question 13

misrepresentation by silence

Answer 13

parties not required to come forth with info so contracts are generally not set aside due to silence of info. however if a party requests pertinent info from the other party and they lie, this contract become subject to fraudulent misrepresentation

Question 14

latent defects

Answer 14

defects that cannot be readily ascertained, these are typically required of a parry to disclose

Question 15

fiduciary relationship

Answer 15

a relationship founded on trust and confidentiality such as between a physician to patient or a lawyer to client. there is a duty to disclose material facts

Question 16

scienter

Answer 16

“guilty knowledge”. signifies that there was intent to deceive. this occurs when a party clearly knows that a fact is not as stated, a party makes a statement that he or she believes is not true, or a party says or implies that a statement is made on some basis when it is not

Question 17

innocent misrepresentation

Answer 17

a person makes a statement that he or she believes to be true but us actually misrepresents material facts

Question 18

negligent misrepresentation

Answer 18

when a party makes a misrepresentation due to carelessness and fails to uncover the facts with reasonable care or the correct skill and competence