Chapter 15 Mistakes, Fraud, and Voluntary Consent Flashcards
Material fact
A fact that a reasonable person would consider important when determining his or her course of action
Bilateral mistake
Mutual misunderstanding concerning a basic assumption on which the contract was made
Mistake of value
When a mistake concerns the future market value or quality of the object of the contract
Merger clause
A contract clause stating that the contract embodies the entire agreement between the parties that no separate agreements between the parties are to be considered in interpreting the contract
Misrepresentation of law…
Ordinarily doesn’t entitle a party to relief from the contract -> you are assumed to know the law
Latent defect
Defects that could not readily be ascertained
Scienter
Guilty knowledge, signifies intent to deceive
Innocent misrepresentation
When a person makes a statement that he/she believes to be true but actually is misrepresenting
- Can rescind contract but cannot seek damages
Negligent misrepresentation
Making a misrepresentation through carelessness
- Basically equal to scienter so is fraudulent
Undue influence
One party can greatly influence another party, thus overcoming that party’s free will
When undue influence is presumed…
When the dominant party in a fiduciary relationship benefits from that relationship
Duress
Use of threats to force parties into an agreement
Economic duress
May be found only when the party exacting the price also creates the need for the item
Standard form contracts
Contracts that contain fine-print provisions that shift a risk ordinarily borne by one party to the other
Adhesion contract
A contract that is written exclusively by one party and presented to the other on a take it or leave it basis
