Chapter 11- Conduct Invalidating Assent

Question 0

Five situations of invalidating conduct

Answer 0

Duress, undue influence, fraud, non-fraudulent misrepresentation, and mistake

Question 1

Conduct Invalidating Assent

Answer 1

The law requires that the agreement be voluntary and knowing. If these requirements are not met in the contract is either voidable or void.

Question 2

2 Types of Duress

Answer 2

The law WILL NOT enforce any contract induced by durress
2 types
1) Physical Duress: when one party forces another to consent by physical force. (i.e: gun) very rare, CONTRACT IS VOID
2) Improper Threats: Economical or Social coersion to compel into a contract. Can be explicit or inferred, it must leave the victim with no other reasonable alternative.
- the test is subjective: asks question “did the threat actually induce assent?”
- Under improper threats contract is VOIDABLE.

Question 3

Undue Influence

Answer 3

the unfair persuation of a person by a party in a dominant position based on confidential relationship. The log very carefully scrutinizes contracts between those in a relationship of trust and confidence that is likely to permit one party to take unfair advantage of another. FIDUCIARY RELATIONSHIPS.

• CONTRACT IS VOIDABLE
• must take into consideration whether the agreement was induced by the dominant party, or mutually.

Question 4

Fraud (two types)

Answer 4

Preventing knowingly given information.
2 types:
1) Fraud in the Execution (void)
2) Fraud in the Inducement (voidable)

Question 5

Fraud in the Execution

Answer 5

• VOID
• The person being misled does not even know the nature of the contract, has no idea that it is a contract/what she is signing for.

Question 6

Fraud in the Inducement

Answer 6

- Voidable
5 Elements must be present: 
1) a false representation 
2) of a fact
3) that is material 
4) is made with the knowledge of its falsity, with the intention to deceive
5) Which was justifiably relied upon.

Question 7

False Representation

Answer 7

-Lies, half truth, concealment, denial. (silence usually does not count)
EXCEPTIONS: latent defect, known fact, goes to basic assumption, bad faith not to tell.

Question 8

2) About a Fact

Answer 8

Must be an event that actually took place.

Not an opinion or sales pitch.

Question 9

3) Materiality

Answer 9

1) it would likely induce a person to assent

2) the maker/seller is aware.

Question 10

4) Knowledge of Falsity, with the intention to deceive

Answer 10

the misrepresentation must have been known by one party, and used with the intention to deceive.
Examples:
~Actual knowledge
~lack of belief in statements truthfullness
~reckless indifference to its truthfullness.

Question 11

5) Justifiably Relied Upon

Answer 11

A person is not entitled to relief unless he or she has justifiably relied upon the misreepentation.
Justifiable reliance requires that the parties decision to enter into the contract was substantially based on the misled information. If the complaining party knew where it was obvious that the representation of the defendant was untrue but still entered into the contract, then he or she did not justifiably rely on the misled information. Not knowing we’re discovering the truth before making a contract does not make a person’s reliance unjustified unless her alliance amounts to a failure to act in good faith in accordance with reasonable standards of fair dealing.

Question 12

Non-fraudulent Misrepresentation

Answer 12

a material, false statement that induces another to rely justifiably but is made without the intention to deceive.
In order to obtain relief from non-fraudulent misrepresentation all of the other elements of fraud must be present and misrepresentation material.
2 Types:
1)Negligent Misrepresentation
2)Innocent Misrepresentation

Question 13

Negligent Misrepresentation

Answer 13

a false representation that is made without care in ascertaining its truthfulness. RENDERS AGREEMENT VOIDABLE.

Question 14

Innocent Misrepresentation

Answer 14

A false representation made without knowledge of its falsity but with care. RENDERS AGREEMENT VOIDABLE

Question 15

Mistake

Answer 15

A belief that is not in accord with the facts. Where the mistaken fact relates to the basis of the parties agreement, the law permits be adversely affected party to avoid or form the contract under certain circumstances.

Question 16

Mutual Mistake

Answer 16

Occurs when both parties are mistaken as to the same set of facts. Then it is voidable by that adversely affected party unless he bears the risk of the mistake.

Question 17

Unilateral Mistake

Answer 17

Occurs when only one of the parties is mistaken.
UNLESS: The non-mistaken party knows, or reasonably should know, that such a mistake has been made or where the mistake was caused by the fault of the non-mistaken party.