MGMT 311 Exam 3 - FLASHCARDS - Chapter 13 (1)
What is a misunderstanding?
If a term in the contract is subject to more than one reasonable interpretation and the parties each attach materially different meanings to the term, the mutual misunderstanding may allow the contract to be rescinded.
What was Raffles v. Wichelhaus (Engl. 1864)?
Indian farmer of cotton and an american merchant. Telegram says “to arrive pureless”
What is the general rule of unilateral mistakes?
a contract will not be rescinded by the courts
What is an example of unilateral mistakes?
john wants to sell his car for $17,000 but his email on the deal has a price of $12,250
What are exceptions for unilateral mistakes?
1) The other party knew of the mistake or should have known of the mistake and failed to correct the mistake; or
2) The mistake was made because of an inadvertent mathematical error and the mistaken party was not grossly negligent.
What are bilateral mistakes of fact?
a “mutual misunderstanding between both parties concerning a basic assumption on which the contract was made
True or false: both unilateral and bilateral mistakes must be about a material fact?
TRUE
True or false: When both parties are mistaken about the same material fact, the contract can be rescinded by either party?
TRUE
What are mistakes of value?
If a mistake concerns the future market value or quality of the object of the contract. Value is variable, depends on many factors. Value mistaks are never a basis for recission
Sung buys a violin from Bev for $250. Although the violin is very old, neither party believes that it is valuable. Later, however, an antiques dealer informs the parties that the violin is rare and worth thousands of dollars. What type of mistake is this an example of?
Mistake of value. Here, both parties were mistaken, but the mistake is a mistake of value rather than a mistake of fact. Because mistakes of value do not warrant contract rescission, Bev normally cannot rescind the contract
What is the main difference between mistakes of fact and mistakes of value?
Subject of terms
What does a plaintif have to prove about fraudulent misrepresentation in order to win a fraud case?
a. A Misrepresentation of a material fact
b. Made with intent to deceive
c. Innocent party justifiably relies on the misrepresentation
True or false: can be by words or actions?
TRUE
True or false: plaintif has to prove that they were justified in relying on the misrepresentation?
TRUE
Injury/Harm only has to be proven to collect damages; if Plaintiff is only seeking rescission no injury must be proven
.
What is undue influence?
One party has the dominant position and another party depends on the deminant party. The dominant takes advantage of the other. When the dominant party secures an unfair advantage in a contract with the weaker, dominated party, the contract is voidable and may be disaffirmed by the dominated party.
True or false: undue influence can only happen when there is a relationship between the parties?
TRUE
There is a rebuttable presumption of undue influence when the parties are in a familiar or fiduciary relationship based upon trust and confidence, and the contract is extremely unfair to the dominated party. Why?
Because of the relationship, the courts are going to assume the dominant party took advantage of the other party
How might a presumption be rebutted?
The presumption may be rebutted by showing that a full disclosure was made, the consideration that was received was adequate and/or competent, and independent advice was received by the weaker party
What is duress?
if a party is forced into entering into a contract by threatening a wrongful act, the contract is voidable
For duress, must the act threatened be wrongful or illegal?
Yes
What is something that must be fulfilled before a party’s performance can be required?
Condition precedent
What happens if the condition precedent does not occur?
If the condition precedent does not occur, the parties are discharged from their contractual obligations
Letting the insurance company inspect the damages is a condition precedent
.
What does it mean to discharge a contract?
Be finished with contractual duties
To have performed
To have duties terminated
To be no longer required to perform
What is discharge by performance?
Full, complete performance in the manner prescribed by the contract discharges the performing party. The contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised
What does complete performance include?
Complete performance includes strict compliance with any express conditions.
What is an example of discharge by performance?
a buyer and seller enter into an agreement via e-mail for the sale of a Lexus RZ for $63,000. This contract will be discharged by performance when the buyer pays $63,000 to the seller and the seller transfers possession of the Lexus to the buyer.
True or false: failure to comply with an express condition and render the exact performance may discharge the party receiving the defective performance
TRUE
What is an unconditional offer to perform by a party who is ready, willing, and able to do so?
Tender of complete performance
True or false: The tendering party is discharged if his tender is not accepted?
TRUE
