CH 8 - Factors Affecting the Contractual Relationship

Question 1

Misrepresentation (Pt 1)

Answer 1

False statement of fact that persuades someone
to enter into a contract
* Misrepresentation is a false statement of fact;
cannot be an opinion (unless it’s from an expert)
* Silence is not misrepresentation when there is no
duty to disclose
* Half truth statements can be misrepresentation

Question 2

Misrepresentation (Pt 2)

Answer 2

Common law equitable remedies vs. breach of
contract
* Breach of contract applies if misleading statement
is made a term of the agreement
* Common law equitable remedies rely on the rule
of misrepresentation
* Innocent, fraudulent, and negligent

Question 3

Selling car “its a good deal it works well” can be legal if the person isnt an expert, but if a mechanic says that its considered illegal. is an example of

Answer 3

Misrepresntation - Misrepresentation is a false statement of fact; cannot be an opinion (unless it’s from an expert)

Question 4

-Ex sell house and huge hole inside house, and the landlord puts a painting on top of the hole thats considered

Answer 4

Misrepresntation

Question 5

‘Used car salesman, says ‘transmission of car is replaced, but they didnt disclose that the used transmission was replaced by a used one instead of new one
What is this considered

Answer 5

half truth, therefore a misrepresentation

Question 6

Innocent Misrepresentation

Answer 6

The person making it honestly believes it to be
true
* Remedies are limited to rescission
* Rescission puts both parties back into original
positions
* Rescission of contract is not available when:
– Where a contract is affirmed
– Impossible to restore
 Where a third party is involved
– Plaintiff is not blameless

“Seller would return money, and buyer would give back car”

“Me riding that car around for 4 months, knowing the breach thats affirming the contract.

Question 7

Negligent Misrepresentation

Answer 7

Carelessly providing false information
* Must establish four elements of negligence
– A duty of care
– Breach of that duty
– Causation
– Damages
* Damages of negligence possible for
misrepresentation

Question 8

Fraudulent Misrepresentation

Answer 8

• Fraud exists when the false statement was made
  – Knowingly or recklessly, not caring if true or false
• An innocent misrepresentation becomes
  fraudulent if not corrected when discovered
• Court remedies for established fraudulent

Basically completely lying, “selling my property, and buyer says it was made 5 years ago, but the seller didnt know and recklessly lies, that’s fraudulent misre

Question 9

“You have a duty to correct your statement once you find out” ex tell buyer 5 years when it was actually 12.
if not this is considered…

Answer 9

Fraudulent Misrepresentation

Question 10

What is duress

Answer 10

Duress, includes threats:
– Of violence
– Of imprisonment
– Of criminal prosecution
– To disclose scandalous information
– To goods or property
– Of loss of employment
* The threat must be the main inducement to enter
into the contract

Question 11

Planteff must prove that a threat was reason why you entred a contract
this is an example of

Answer 11

Duress

Question 12

EX Boss and employee debating a contract, a power unbalance, so employee can say I felt this undue influence, or teacher pressures student to buy something off them. “Special relationship”
This is an example of….

Answer 12

Undue Influence

Question 13

“One party thought car was 500$ monthly, one thought it was 500$ total. Court uses reasonable test

Voided EX “gold bracelet, seller says yes it is… the seller is under impression that the gold is on the bottom, and buyer thinks on the top, therefore theyre both right technically”

This is an example of….

Answer 13

Misunderstanding

Neither party is aware of the other party’s
misunderstanding about the terms of the
agreement
* Reasonable person test for the correct
interpretation of the contract
– If two interpretations are equally reasonable then the
contract is void

Question 14

Rules of interpretation

Answer 14

Reasonable person test
* Literal or liberal meanings imposed on written
terms
* Parol Evidence Rule
– Outside evidence will not change clear wording

Question 15

Ex agreement states 2008 civic sedan, lets say the contract says 2008 “veichle” which could mean car, motorcycle etc, and can bring outside evidence.
this is an example of

Answer 15

rules of interpretation

Question 16

Privity of contract

Answer 16

Contract can only affect parties to it
* Why Mrs. Donoghue couldn’t sue the coffee shop
for breach of contract
* Exceptions:
– When an agent acts on behalf of a principal in
contracting with a third party

Question 17

Assignment

Answer 17

A person entitled to receive a benefit under a
contract can transfer that benefit to a third party
– Obligation cannot be assigned
– Vicarious performance: contractual obligations can be
performed by others; original party remains responsible
for the work

Question 18

Ex lets say I hire contractors to fix parents deck, the benefit is going towards parents not me, but Im still legally liable for the obligation part of the contract. “I cant hire a subcontractor to teach a class when Im the teacher”

Ex im super busy as a contractor and I hire a third party, but Im vacariously liable, therefore if they get sued I get sued.

This is an example of

Answer 18

Assignment