Chapter 19 - Mistakes, Misrepresentation, Duress, and Undue Influence

Question 1

Mutual/Bilateral Mistakes

Answer 1

• BOTH parties are mistaken as to a MATERIAL FACT.
• General Rule: Both parties are mistaken and the court may grant a rescission of the contract.
• MATERIAL FACT is different than a MISTAKE OF VALUE (won’t rescind).

Question 2

Unilateral Mistake

Answer 2

• Only ONE party was mistaken.

- General Rule: Mistaken party cannot get a rescission of the contract.

Question 3

Health East Bethesda Hospital Case

Answer 3

• Hospital sued by traveler’s insurance.
• Hospital billed the insurance company for a ton of money.
• The guy who had disease lied about his health status.
• The hospital still incurred expense and it was a unilateral mistake on the part of the insurance company.
• Court ruled that it was a unilateral mistake so could not rescind the contract.

Question 4

Fradulent Misrepresentation

Answer 4

• Mis-stating a MATERIAL FACT with INTENT TO DECEIVE and the other party RELIES on it.

Question 5

Negligent Misrepresentation

Answer 5

• There was something I could have done to avoid the misrepresentation, but I didn’t.
• Court won’t rescind contract.

Question 6

Innocent Misrepresentation

Answer 6

• Ex. I am selling a car. Person asks if it has ever been in an accident. I don’t know that it has been, so I say “no.”
• Court won’t rescind contract.

Question 7

Duress

Answer 7

• Forced to do something.
• Party enters into a contract because they feel threatened.
• The contract may be rescinded.

Question 8

Undue Influence

Answer 8

• Someone is pressuring the other party to enter into a contract.
• Exerts significant pressure.
• May be possible to rescind a contract.