Chapter 12: Defenses to Contract Enforceability Flashcards
Voluntary Consent may be lacking because of
Mistake
Fraudulent Misrepresentation
Undue Influence
Duress
What are the different kinds of mistakes?
Mistakes of Fact
Mistakes of Quality
What is the only mistake to allow a contract to be canceled?
Mistakes of Fact
One party is mistaken as to a material fact
Unilateral Mistake of fact
Does not give the mistaken party any right to relief from the contract
Unilateral Mistake of fact
Mutual misunderstanding concerning a basic assumption on which the contract was made
Bilateral Mistakes of fact
Presence of _____ effects the authenticity of the innocent party’s to consent to a contract
fraud
Usually can be avoided (voidable) because she or he has not voluntarily consented to a contrct
Fraudulent Misrepresentation
What are the 3 elements to Fraud
Misrepresentation of a material fraud must occur
Must be an intent to deceive
Innocent party must justifiably rely on the misrepresentation
To collect damages on fraudulent misrepresentation, a party must have been
Harmed as a result of the misrepresentation
A party takes specific action to conceal a fact that is material to the contract
Misrepresentation by Conduct
Untruthful denial of knowledge or information concerning facts that are material to the contract when such knowledge or information is requested
Misrepresentation by Conduct
Not subject to claims of fraud
Statements of Opinion
When a naive purchaser relies on an opinion from an expert, the innocent party may be entitled to
Rescission or Reformation
Ordinarily does not entitle a party to be relieved of a contract
Misrepresentation of Law
Neither party to a contract has a duty to come forward and disclose facts
Misrepresentation by silence
Seller must disclose only
Latent Defects
When parties are in a fiduciary relationship, there is a duty to disclose
Material Facts
Knowledge by a misrepresenting party that material facts have been falsely represented or omitted with an intent to decieve
Scienter
Exists if a party makes a statement that he or she believes not to be true or makes a statement recklessly without regard to whether it is true or false
Intent to Deceive
The misrepresentation must be an important factor in inducing the party to enter into the contract
Justifiable Reliance on the Misrepresentation
Reliance is not justified if the innocent party knows the true facts or relies on
obviously extravagant statements
Most courts do not require a showing of harm when the action is to rescind the contract
Injury to the innocent party
To recover damages for injury to the innocent party, this is universally required
Proof of an injury