Genuineness of assent Flashcards
fraudulent misrepresentation consequences
innocent party can either:
- rescind the contract and be restored to his original position- make as if contract never happened- contract
- enforce the contract and seek damages for injuries resulting from the fraud- pay back difference in price - tort
elements of fraudulent misrepresentation
- a misrepresentation
- of a material fact
- made with the intent to deceive or with reckless disregard for the truth
- on which another justifiably relies
- resulting in damages to that person
misrepresentation can be
can be express or implied, misrepresentation by conduct
- not statements regarding future facts or opinions
- but when an opinion is rendered by an expert, you can treat it as a fact
misrepresentation by silence
normally neither party has a duty to disclose information the other party does not know, exceptions:
- a seller may have to disclose information about a serious defect or potential problem if the buyer could not reasonably find it out
- fiduciaries must reveal material facts to beneficiaries (attorney client, doctor patient, partners, directors, shareholders, guardians)
misrepresentation of law
no relief, can’t sue someone
-exception: if the speaker is in a profession that should know more about the law than a layperson
intent to deceive/ scienter
either know the statement is false, or don’t know and make no effort to find out - don’t know and don’t care= reckless disregard for the truth
- to prevent carelessness, still liable if only negligent as to truth of statement
reliance on the misrepresentation
if statement is obviously false or if the other party knows or could reasonably discover truth, reliance is not justified. if you say car is new but you can see dents, not justified reliance
injury to the innocent party (tort claim)
may also collect punitive damages (based on wealth of defendant) to punish defendant and deter others from acting similarly
undue influence
where, because of a relationship, one party can manipulate the other so that he is not exercising free will. contracts between the two are voidable by the one being manipulated.
doctor-patient/ attorney-client/ guardian-ward/ spouses/ clergy
a. If parties are in confidential or fiduciary relationship, and the contract unjustly enriches the dominant party, the court will presume undue influence
-can rebut presumption by showing arms length deal, had independent advice
duress
forcing someone to do something through fear created by threats, court can order recission
a. the threatened act must be wrongful or illegal
b. economic duress: requiring a party to pay a high price for something that party needs
mistake
a contract can be rescinded (is voidable by either party) if both parties are mutually mistaken about a material fact.
example: raffles v wichelhaus- agreed to ship on pierless, but there were two ships so they were both wrong
Unilateral mistake of fact
no relief if only one party is mistaken. Why?- because it creates a huge escape rule, shift risk to other party
1st exception: if one person knows or should have known that the other person made a mistake, the contract is not enforceable. ex. met life knows he didn’t have copy of policy so they gave him lower than the policy limit
2nd exception- if the mistake is due to an inadvertent mathematical mistake
mistake of value
contracts are not voidable due to mistakes of value, whether bilateral or unilateral. why not? not courts job to get into adequacy of consideration. don’t want to mess around with risks
example: belmont agreed to sell derby a horse. derby thought the horse had potential and paid 50000. the horse didn’t like racing and was only worth 5000. derby cannot rescind, it was a mistake of value, no relief
but: belmond agreed to sell thoroughbred horse for 50. before delivery derby discovered the horse was not a thoroughbred. derby can rescind, bc mutual mistake of material fact
