Excuses From Enforcing

Question 1

Elements of Mutual Mistake

R-S 152

Answer 1

Mistake of both parties
• An error, misconception, or misunderstanding
At time of contract making

As to basic assumption on which contract made
• Substance is part of basis of contract where makes distinct difference
• Quality is not a distinct difference
Which has material effect on agreed exchange
• Objective standard
Then, contract is voidable UNLESS party has risk of mistake under Rule § 154

Question 2

Special Elements for Unilateral

R-S 153

Answer 2

Mistake of both parties
• Regardless of ordinary care
• An error, misconception, or misunderstanding
At time of contract making

As to basic assumption on which contract made
• Substance not Quality
• Looks at the essence of the agreement NOR central part of the agreement
Which has material effect on agreed exchange
• Objective standard
Contract is voidable UNLESS party has risk of mistake under Rule § 154
• Mistake makes enforcement unconscionable OR had reason to know
• Correction can put non-mistake party back at status quo

Question 3

Bearing Risk of Mistake

R-S 154

Answer 3

Rule § 154 - A party bears risk of mistake when:

(a) risk is allocated by agreement of parties
(b) party is aware, at time of making, that he has limited knowledge of facts related to the mistake but treats his limited knowledge as sufficient
(c) risk is allocated to him by the court on grounds that it is reasonable under circumstances

Question 4

Cases for Mistake

Answer 4

Sherwood – meat cow/preggo cow
Wood – sells uncut diamond (mutual mistake not fraud)
Williams – injury release and new injuries
Bailey – parcel & lilac bush
1st Baptist – bad bid math (clerical error)

Question 5

Elements of Fraud

main 5

Answer 5

Misrepresentation (of)
Material 
Fact
On which the party asserting the defense reasonably relied
(and) Did Rely

Question 6

Define “Misrepresentation”

FRAUD

Answer 6

• Affirmative misstatement of material fact (lie)
• Nondisclosure of a material fact
Is NOT when:
• Non-disclosure is patent (obvious), or
• PL has equal opportunity to obtain info, or
• DF had no reason to think he is acting under misapprehension
IS when:
• seller creates a condition that materially impairs the value of the contract,
• AND which is in the knowledge of the seller
• OR unlikely to be discovered by a reasonable purchaser/buyer
• Examples:
o Partial disclosure
o Predatory acts done in bad faith
o Bad business practice

Question 7

Define “Material”

FRAUD

Answer 7

Cousineau defines “material” as what a reasonable man might expect to attach importance in making a choice of action; a fact reasonably expected to influence judgement of a transaction

Question 8

Define “Fact”

FRAUD

Answer 8

Opinion statements are not fact UNLESS
 Fiduciary relationship between parties
 Artifice or trick is employed
 Parties not dealing “at arm’s length”
 Representee does not have equal opportunity to become apprised of truth or falsehood of representations
 Deception

Question 9

Define “Reasonably Relied”

FRAUD

Answer 9

NEED TO LOCATE

Question 10

Define “Did Rely”

FRAUD

Answer 10

• Look at surrounding circumstances
 If silence was misrepresentation, did party rely on nondisclosure

Policy: Issue with Burden on a Seller for Nondisclosure

       1. Seller may not know why buyer wants property 
       2. Does it discourage a buyer from doing due diligence?

Question 11

Cases for FRAUD

Answer 11

Vokes – dancing widow
Stambovsky – bought a haunted house
Cosineau – gravel lie

Question 12

Elements of Duress

Answer 12

“improper threat” or act

with no reasonable alternative

Question 13

Define “Improper Threat”

DURESS

Answer 13

R-S 176:
Improper if:
• Threatening is crime or tort, (or would be if obtaining property);
• Threatening criminal prosecution;
• Threatening use of civil process (suit) or threat in bad faith; or
• Threat is breach of duty of good faith and fair dealings under K
Improper if resulting in unfair exchange terms, and also:
• Threatened act would harm party threatened but not benefit one making threat
• Effectiveness of threat is significantly increased by prior unfair dealings by one making threat
• Threat involves using power for illegitimate ends

Question 14

Elements of Undue Influence

Answer 14

1. Relationship with imbalance of power

2. Excessive pressure or “overpersuasion”

Question 15

Elements of Overpersuasion

UNDUE INFLUENCE

Answer 15

1. Time - unusual or inappropriate
2. Place - consummation at unusual place
3. Immediacy - insist completing now
4. Consequence - extreme emphasis on consequence of delay
5. Persuaders - multiple persuaders against one target
6. Advisors - no other person available for opinion
7. Experts - no time to get attorney or other expert advice

Question 16

Define “improper use of power”

UNDUE INFLUENCE

Answer 16

Weak party is under the domination of the persuading party
o Weaker has belief that persuader will not act inconsistent with their welfare
o Belief is justified based on nature of relationship

Domination by use of  
      o	Relationship 
      o	Trust 
      o   Use promises to secure confidence  
      o	Superior position 
      o	Expertise  (Voles x/r hypo 1.26)

Question 17

Mistake

Answer 17

Mutual Mistake

Unilateral Mistake (rarely will use)