Chpater 9 Flashcards
Pre-contractual statements
Puff
- Exaggerated statement of a product benefits
Representation
-statement that one party makes with the intention of inducing the other party to create a contract
Term
- right and obligation that can be enforced within the contract
Relationship between term and representation
Once a representation is agreed to it gets put in the contract and becomes a term
Misrepresentation
Not every inaccurate statement in negotiations will amount to misrepresentation
Reasonable people do not rely on
- Predictions of the future
- opinions
- statements about the content of the law
Reasonable people do their own research or seek legal advice and don’t lie on the other party statements of the law
Elements of misrepresent
If a pre-contractual statement is
- False or untrue
- positive (was actually said/not silent)
- about a past or existing fact
- intended to induce creation of a contract AND
- Successfully induced creation of a contract
Misrepresentation with silence
generally does not mean misrepresentation, except when
- silent with distort a previous assertion (information has changed)
- half truths or leaving things out is not considered silence
- if the contract has a duty of most good faith
- when fiduciary relationship exists between the parties
- When required by statute to disclose
- when fact are actively concealed
Types of misrepresentation
Innocent
- Representer doesn’t know it’s false and wouldn’t be expected to know
Negligent
- carelessly fails to realize it’s false
- doesn’t doublecheck
Fraudulent (intent to lie)
- represent knows the statement is false
- includes wilful blindness and recklessness
Remedies for misrepresentation
- rescission
- restoration in specie
- indemnification
- accounts of profits
- damages in tort
- rescission
Restoring parties to their pre-contractual positions
A party can void their right to rescission if they affirm the contract with their actions
- restoration in specie
Return the same property that was transferred - indemnification
Monetary compensation or reimbursement for loss - accounts of profits
Give up benefits/profits obtained - damages in tort
Only awarded if the loss was caused by a misrepresentation that was negligent or fraudulent
Express terms
Positively stated orally and/or in writing
A statement that a reasonable person would believe was intended to create a contractual obligation
Implied terms
Not stated in a contract
Can be considered part of the contract if implied by law or court (the agreement wouldn’t make sense without it)
Boiler plate clauses
Standard pre-drafted provision that addresses common legal elements like termination
Often reused without revision
Exclusion clause
Protects party from liability (limitation clause)
Force majure clauses
Protection from events outside of their control
Example, earthquake
Confidentiality clause
Disallows sharing protected information
Arbitration clause
States disputes will be handled in arbitration rather than litigation
Jurisdiction clauses
States which laws govern agreement
Entire agreement clauses
States the entire agreement is within the four corners of the document
Parol evidence
Information that is not contained within the written contract
Peril evidence rules states that are written contract consist of the words on the page and nothing more
Usually enforced with an entire agreement clause
Parol evidence exception
Parol evidence may be permissible to allow courts to consider surrounding context in order to
Fix mistake
Prove a contract was never really formed or defective
Resolve ambiguity or prove document is not contain entire agreement
Legalese (contractual interpretation)
Excessively formal or technical jargon traditionally used in legal documents
Golden rule (contractual interpretation)
Words are given their plan in ordinary meaning unless doing so resolved and absurdity
Contra proferentem rule
Any ambiguity in the document is resolved against the interest of the person who drafted the document
Contextual approach
Includes the surrounding circumstances along with the words on the page to interpret the meaning 
