7-1Duress and Undue Influence 7-2Mistake, Misrepresentation, and Fraud.
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Transcript of 7-1Duress and Undue Influence 7-2Mistake, Misrepresentation, and Fraud.
7-1 Duress and Undue Influence7-2 Mistake, Misrepresentation, and
Fraud
GOALSRecognize when genuine assent is
not presentIdentify the two key elements in
undue influence
Slide 2Chapter 7
Scenario The Thompsons were told that if they did
not sign a contract to repay a $2,000 loan at 40 percent interest, their son would be in danger of physical harm. Afraid that their son would be hurt, the Thompsons signed the contract.
Questions Is the contract enforceable? Why or why not?
Slide 3Chapter 7
Genuine assentDuress
Threats of illegal conductThreats to report crimesThreats to sueEconomic threats
Slide 4Chapter 7
Sign this
or
else!!
Undue influence is wrongfully dominating another party when you are in a position of trust.
The relationshipUnfair persuasion
Slide 5Chapter 7
GOALSRecognize the types of mistakes that
can make a contract voidable or voidList the criteria for a statement to be
treated as a misrepresentationDefine fraud and describe the
remedies for it
Slide 6Chapter 7
Scenario Jane contracts with Mike to purchase one
of his two skateboards. Jane thinks she has bought the red one, a premier skateboard. Mike thinks Jane has bought the blue one, his less valuable skateboard.
Question Does a contract exist?
Slide 7Chapter 7
Unilateral mistakes: only one person is mistaken (see What’s Your Verdict)
Mutual mistakes: neither party reallyunderstands thecontract details
Slide 8BOTH OF THESE TYPES OF MISTAKES DO NOT NECESSARILY
INVALIDATE THE CONTRACT!!!
Untrue statement of factActive concealment: concealing
something in order to substitute for a statement of fact (i.e. paint over a huge crack in the wall in order to sell a house)
Silence: three situations when you HAVE to break silence1. Omitting important info2. True statement is made false3. When seller knows buyer has
made a basic mistaken assumption
Slide 9Chapter 7
Materiality: 3 ways untrue statement can be material1. Statement causes person to contract (i.e.
miles on a vehicle vs. miles since rebuilt)2. Defendant knows plaintiff would rely on
the statement (i.e. plaintiff buys car based on maintenance record and seller mis-stated maintenance)
3. Defendant knew the statement was falseReasonable reliance: no misrep.
Unless defendant relied on information Slide
10Chapter 7
The misrepresentation must be intentional or reckless: deliberately lied or concealed fact
The misrepresentation or concealment must injure: proof of injury (i.e. purchased a car for $10,000 that had an unknown defect and was actually worth $5,000)
Slide 11
Chapter 7
Rescission: rescind the contract and get money or item back
Damages: Recover actual damagesPunitive damages:
damages awardedin order to preventfrom happeningagain.
Slide 12
Chapter 7