ch. 16 - misrepresentation & nondisclosure

Question 1

two types of misrepresentation

Answer 1

• fraudulent
• misrepresentation

Question 2

fraudulent misrepresentation

Answer 2

if the maker indents to induce a party to manifest

Question 3

material misrepresentation

Answer 3

the misrepresentation induced a party to enter into an agreement, regardless of whether the maker of the misrepresentation knew they were lying

Question 4

material misrepresentation objective view

Answer 4

A reasonable person would likely be induced by the misrepresentation to enter the contact

Question 5

material misrepresentation subjective view

Answer 5

Maker knows that this specific recipient would likely be induced even though a reasonable person might not be induced

Question 6

misrepresentation elements

Answer 6

1. Misrepresentation
2. Fraud or materiality
3. Inducement
4. Justifiable reliance

Question 7

justifiable reliance

Answer 7

Whether the receiving party of the misrepresentation knew or should have known about the falsity of the statement

Question 8

Non-Disclosure

Answer 8

one party has knowledge of a fact that might inhibit the other party from entering into the agreement, but the party with the knowledge does not speak up

Question 9

nondisclosure elements

Answer 9

1. Material effect
2. Not being readily observable

Question 10

intentional concealment

Answer 10

the act of the cover-up and is treated the same as a fraudulent misrepresentation

Question 11

active concealment

Answer 11

when a party purposefully “hides something from the other, as when the seller of a building paints over a defect” = misrepresentation

Question 12

indirect concealment

Answer 12

when “a party prevents the other from making an investigation that would have disclosed a defect.”

Question 13

easily observable fact must be disclosed if:

Answer 13

1. Statute commands it
2. Relationship of trust btwn parties
3. Intentional concealment
4. Stmt by offeror was true when first made, but becomes false afterwards before contract has been finalized

Question 14

inducement

Answer 14

misrepresentation must have occurred at or before contract formation