Invalid Assent (ch 4)

Question 1

Question

Answer 1

Ansewer

Question 2

sales talk; not generally considered statements of fact

Answer 2

puffing

Question 3

false statement made without intent to deceive, upon which a party justifiably relies to his detriment (e.g., carelessness, mistake)

Answer 3

misrepresentation

Question 4

Two questions that come into play when determining misrepresentation

Answer 4

1. Whether statement was one of fact2. Whether injured party was justified in relying on speaker

Question 5

one party is obligated to act in the best interest of the other party

Answer 5

fiduciary interest

Question 6

3 types of misrepresentation

Answer 6

1. innocent (actually believe it, with good reason)2. negligent (fail to exercise reasonable care in ascertaining facts)3. fraudulent (intent to deceive)

Question 7

3 remedies for innocent or negligent misrepresentation

Answer 7

1. uphold contract2. rescind on contract and void3. keep contract and collect damages

Question 8

You may not sue for (1) under contract law. Fraudulent misrepresentation must be sued for through the avenue of (2).

Answer 8

1. punitive damages2. Tort law

Question 9

Fraudulent misrepresentation is difficult to sue for because you must prove a (1).

Answer 9

1. state of mind

Question 10

3 avenues through which you can prove state of mind for fraud

Answer 10

1. seller knew/believed assertion was untrue2. seller lacked confidence in the truth of his statement but presented it as fact3. seller implied there was a basis for the truth of his statement (e.g., he looked it up)

Question 11

For collecting damages, it must be proven that the buyer (1) on the untruthful statement

Answer 11

1. relied

Question 12

Where there is not (1), there is a generaly rule that there is no duty to disclose info to another party.

Answer 12

statutory authority

Question 13

5 exceptions to presumed lack of duty to disclose info

Answer 13

1. half-truths (“I’ve never see a rattlesnake”–has seen many other snakes)2. positive concealment (filling in cracks)3. failure to correct a past statement (e.g., if something new happens to the property)4. fiduciary relationship (obligated to look out for best interests of the person)5. failure to correct a known mistake (e.g., a buyer’s mistake–“red diamond”)

Question 14

A mere expression of opinion that does not relate to an (1) cannot be the basis of a claim of (2) or (3) unless the person stating the opinion has (4) or (5) knowledge.

Answer 14

1. existing fact2. fraud3. misrepresentation4. exclusive5. superior

Question 15

Where an opinion is a (1) in a purchase, this can be misrepresentation.

Answer 15

1. decisive factor (e.g., “fashionable” couch)

Question 16

Fraud in the (1) and fraud in the (2) have similar fact patterns.

Answer 16

1. execution2. inducement

Question 17

relates to parties’ motivation for entering into the contract (e.g., buy a car thinking 50k miles–actually has 150k)

Answer 17

fraud in the inducement

Question 18

relates to deception in what document is actually being presented for approval

Answer 18

fraud in the execution

Question 19

(1), or nondisclosure, is difficult to prove as there is not always a (2).

Answer 19

1. silence as fraud2. duty to disclose

Question 20

knowledge of falsity; a “guilty mind”

Answer 20

scienter

Question 21

Mistake, if (1), can be rescinded by the offeror. The mistake must be (2), which is hard to prove. Relief can be granted if the mistake relates to the (3)–not to (4) or (5). A mistake in (6) is also not voidable.

Answer 21

1. mutual2. material3. substance4. quality 5. value6. judgment (believing something is going to gain value)

Question 22

silence as fraud

Answer 22

Having a duty to disclose but knowingly concealing the truth.

Question 23

scienter

Answer 23

Having a guilty mind, knowledge of the falsity.

Question 24

Innocent misrepresentation (remidies)

Answer 24

You may have a remedy when the misrepresentation was material “imporant to you and infuenced your decision to enter into contract.” You have the option to void the contract or sue for damages. EX - No intention of misrepresentation

Question 25

Negligent misrepresentation (remidies)

Answer 25

You may have a remedy when the misrepresentation was material “imporant to you and infuenced your decision to enter into contract.” You have the option to void the contract or sue for damages. Ex- selling house that is “probably” five acres, too lazy to have property suveyed

Question 26

Fraudulent misrepresentation (remidies)

Answer 26

Because fraud is a tort, you will be able to sue for punitive damages in addition to voiding the contract. There must be intent present

Question 27

mutual mistake

Answer 27

All parties are mistaken as to a basic assumption of the contract.

Question 28

Three Ms of mutual mistake

Answer 28

1. Mutual – both parties must believe mistaken assumption. 2. Material – must be large or material “substance” 3. Legal mistake – ask whether the parties contracted on the basis of the set of facts that parties took as true

Question 29

unilateral mistake

Answer 29

Only one of the parties is mistaken as to a basic assumption of the contract. Usually you are able to get out of these contracts.

Question 30

A (1) mistake usually relates to an accounting error, and it is voidable.

Answer 30

unilateral

Question 31

consists of any wrongful act or threat which overcomes the free will of the other party. Not necessarily illegal – e.g., threatening a lawsuit

Answer 31

duress

Question 32

Duress uses a (1) standard–relates to what the person threatened feels

Answer 32

subjective

Question 33

4 ways to commit duress

Answer 33

1. threat of violence2. threat of imprisonment3. wrongful taking/keeping of another’s property or threat to do so4. threat to breach a contract

Question 34

(1) is hard to prove–it is basically an abuse of trust

Answer 34

undue influence

Question 35

2 things that must be established for undue influence

Answer 35

1. person unduly influenced had a relationship of dependence and trust and other party dominated them and made them believe they were acting on trust2. dominant party abused their position of trust and had a psychological advantage over the other person

Question 36

2 ways to end up with an unconscionable/adhesion contract

Answer 36

1. large disparity in bargaining position of parties (one has little or no ability to negotiate)2. terms of contract are so unfair as to “shock the conscience”

Question 37

adhesion contract

Answer 37

A contract where all the bargaining power is concentrated in one person. It is a take it or leave it contract, an example of an unconscionable contract.

Question 38

2 ways a contract can “shock the conscience”

Answer 38

1. procedural - bargaining process is impaired e.g. language barrier, absolution of responsibility on back of parking pass2. substantive - terms are lopsided e.g., enormous interest rate