Round 2 Lecture 3

Question 1

subjective test

Answer 1

was there real consent or was the formation of contract process tainted in some way? if it was the contract is voidable by the aggrieved party

Question 2

voidable

Answer 2

the aggrieved party can be relieved of the obligations under the contract

Question 3

remedies available

Answer 3

rescission or money damages

Question 4

rescission

Answer 4

undo the contract (you give up what you received and get back what you gave)- you must asset this right promptly- an unreasonable delay may be interpreted as acceptance of the voidable contract

Question 5

fraud in the inducement

Answer 5

• classic fraud
• generally occurs in the contract formation process-a tort action
• an allegation that one has been led by another’s guile, superstitiousness, or other form of deceit to enter into an agreement to his or her detriment

Question 6

elements of fraud in the execution

Answer 6

• a false representation was made in the form of spoken words, conduct (concealment), or silence probably during negotiations
• of a fact -can you define in terms of true or false?
• that is material
• with knowledge of falsity and intention to deceive
• justifiable reliance on the misrepresentation

Question 7

general rule about silence

Answer 7

failure to disclose a fact is not misrepresentation unless the nondisclosing party has a duty to disclose the fact

Question 8

examples of when a party has a duty to disclose

Answer 8

• latent (hidden) deficiency that the other party didn’t discover
• to correct prior incorrect statements
• make greater disclosures if there exists a fiduciary relationship
• to correct other party’s mistake about a basic assumption of the contract

Question 9

the following are generally not regarded as facts

Answer 9

• statements of opinion as to value, quality, authenticity, or other matters of judgement (except for statements made by experts)
• puffing (sales talk)

Question 10

what makes a false representation material?

Answer 10

• must induce reliance and influence to a substantial degree, the making of the decision to contract
• would knowing the truth of the matter have made a difference with regard to the decision to enter into the contract?

Question 11

3 situations that satisfy the knowledge requirement

Answer 11

• actual knowledge of falsity
• constructive knowledge of falsity-a lack of belief in the statements truthfulness
• reckless disregard for the truth of the statement - a representation made w/o a sufficient basis of info to support the rep.

Question 12

justifiable reliance on the misrep

Answer 12

if you know its false, you can’t go back later and claim fraud

Question 13

what obligation does the innocent person have to discover fraud?

Answer 13

was the aggrieved party’s fault so negligent as to the amt. to a failure to act in good faith and in accordance with reasonable standards of fair dealing

Question 14

remedies for fraud in the execution

Answer 14

• rescission

- no rescission, but right to recover benefit of the bargain damages

Question 15

remedies for fraud in execution under the UCC

Answer 15

not necessary to choose, you can rescind and recover damages

Question 16

nonfraudulent misrepresentation

Answer 16

all the elements of fraud except yo u do not have to show knowledge and intent on the part of the wrongdoer

Question 17

negligent misrepresentation

Answer 17

a misrep. made w/o knowledge of the falsity of the rep. but made without due care

Question 18

innocent misrep.

Answer 18

a misrep. made w/o knowledge of the falsity of the rep. but made with due care

Question 19

remedies for nonfraudulent misrep.

Answer 19

rescission (generally you cannot recover money damages, except out of pocket damages if you elect not to rescind)

Question 20

the economic loss doctrine

Answer 20

a limitation on your right to allege fraudulent or non-fraudulent misrepresentation. in the formation of a contract involving the sale of goods or real estate if you could sue for breach of contract- this doctrine or some variation of it has been adopted by many states - does not apply to contracts for services

Question 21

what is the intent of the economic loss doctrine

Answer 21

to prevent product or real estate liability lawsuits based on negligence or strict liability when a breach of warranty claim could be made

Question 22

what are economic losses?

Answer 22

damages arising because the product or real estate does not perform as expected or in not as represented

Question 23

mutual mistake

Answer 23

both parties mistaken (no effective meeting of the minds)- a mutual belief about a material fact that is not in accord with the truth

Question 24

examples of mutual mistake

Answer 24

1) existence of subject matter
2) character of subject matter
3) identity of subject matter
4) the parties reach an agreement but fail to accurately express it in writing - a paperwork error - remedy is usually correcting the written contract to conform to what was originally intended

Question 25

unilateral mistake

Answer 25

mistake by one party

Question 26

unilateral mistake –if a value of bargain (bad deal)

Answer 26

• no relief to the mistaken party

Question 27

unilateral mistake as to a collateral (secondary) matter that other party was aware of

Answer 27

• collateral matters: math error, typo, clerical, descriptive error, etc
• other party must have known or should have know of the mistake

Question 28

remedy for mutual or unilateral mistake

Answer 28

rescision; but if the mutual mistake is in a written contract the aggrieved party may elect to have the contract reformed (corrected) by the court

Question 29

duress

Answer 29

wrongful coercion that induces a person to enter into or modify a contract (threat of physical or emotional harm, or more recently economic duress)

Question 30

undue influence

Answer 30

unfair persuasion exerted by one person upon another during the bargaining process where the relationship btw the parties is either one of trust and confidence or one in which a person exercising the persuasion dominates the person being persuaded