Buslaw08-Mutual Assent and Defective Agreement

8/9/2019 Buslaw08-Mutual Assent and Defective Agreement

1/27

1. Explain the nature of mutual assent and

indicate how mutual assent can be

destroyed.

2. List the elements that must be proved toestablish fraud and judge whether those

elements are present in a given contract

situation.

MUTUAL ASSENT AND

DEFECTIVE AGREEMENT

Chapter Outcomes:

Chapter 8


2/27

3. Identify situations that can give rise to claimsof passive fraud.

4. Distinguish between fraud and misrepresentation

and contrast the remedies available for each.

MUTUAL ASSENT AND

DEFECTIVE AGREEMENTChapter 8

Chapter Outcomes (continued):


3/27

5. Discuss the difference between unilateral and

bilateral mistakes.

6. Judge which types of mistakes provideappropriate grounds for getting out of the

contract.

MUTUAL ASSENT AND

DEFECTIVE AGREEMENT

Chapter 8

Chapter Outcomes (continued):


4/27

Mutual Assent

The Nature of Mutual Assent

The Destruction of Mutual Assent

88--11


5/27

88--11

1. Mutual assent means that the

parties have a meeting of the

mind.

Topic Quiz

TRUE

Answer the following true/false questions:


6/27

88--11

2. After mutual assent has been

reached, the law protects the

parties in their contractualrelationship.

Topic Quiz

TRUE



7/27

88--11

3. A defective agreement can arise only in

a case of fraud.

Topic Quiz

FALSE


Also misrepresentation, mutual

mistake, duress, and undue influence.


8/27

Fraud and Misrepresentation

The Elements of FraudActive Fraud

Passive Fraud

Misrepresentation

88--22


9/27

LawLINKS

Chapter 8Chapter 8

The National Fraud Information Centermaintains an extensive website at

http://www.fraud.org/


10/27

A Question of EthicsSuppose that you are showing your car to Tim

Jorgenson, a potential buyer. You know that if

Jorgenson takes your car out for a ride, he will

notice that the front end rattles at speeds inexcess of thirty-five miles per hour and that

the brakes grind badly. Jorgenson, however,

does not take the car on a test drive and,

therefore, fails to detect any defects. Would

you have an ethical duty to tell Jorgenson

about the cars problems? Explain.

88--11


11/27

88--22

1. To destroy mutual assent on a claim of

fraud, the complaining party must

prove the existence of only four of the

five elements of fraud.

Topic Quiz

FALSE


All five elements of fraud must be

proven.


12/27

88--22

2. All forms of sales puffery are

considered fraud.

Topic Quiz

FALSE


There is some puffery that is not fraud.


13/27

88--22

3. Passive fraud occurs when oneparty does not say something

about certain facts that he or

she is under an obligation toreveal.

Topic Quiz

TRUE



14/27

Mistakes

Unilateral Mistakes

Bilateral Mistakes

The Nature of Mistakes

88--33


15/27

88--33

1. A unilateral mistake will always

destroy assent.

Topic Quiz

FALSE


The mistake may be corrected and

assent maintained.


16/27

88--33

2. Mutual mistakes will allow the offeror,

but not the offeree to rescind a

contract.

Topic Quiz

FALSE


The offeror or offeree can rescind.


17/27

88--33

3. A mutual mistake as to the value of the

subject matter of a contract is a

mistake of fact which will allow

rescission.

Topic Quiz

FALSE


Mistake of opinion, not fact.


18/27

Duress and Undue Influence

Physical and emotional duress

Economic duress

Undue Influence

88--44


19/27

LawLINKS

Chapter 8Chapter 8

A detailed list of business law resources can

be found at

http://www.law.uc.edu/CCL/

The site is sponsored by the University ofCincinnati College of Law.


20/27

88--44

1. In order to establish economic duress,

the complaining party mustdemonstrate the existence of only two

of the three elements of economic

duress.

Topic Quiz

FALSE


All three must exist.


21/27

88--44

2. Rescission is permitted in a case

involving physical or emotional duress,but not in a case involving economic

duress.

Topic Quiz

FALSE


Yes, also in the case of economic duress.


22/27

88--44

3. Undue influence occurs when

the dominant party in aconfidential relationship uses

excessive pressure to persuade

the weaker party to enter acontract that greatly benefits

the dominant party.

Topic Quiz

TRUE



23/27

88--11 Offer and acceptance together create mutual

assent.

Fraud involves a deliberate deception about a

material fact that leads a party into an

agreement that is damaging to that party.

88--22

SUMMARY

88--33 Unilateral mistakes, that is, mistakes made by

one party, do not allow for rescission or

renegotiation.


24/27

88--44 Duress and undue influence rob a person of the

ability to make an independent, well-reasoned

decision to enter freely into a contract.

SUMMARY (continued)


25/27

Chapter 8Chapter 8Key Terms

active fraud bilateral mistakebusiness compulsion concealment

confidential relationship duress

economic duress emotional duress

fiduciary relationship fraud

liable material fact

misrepresentation mutual assent

mutual mistake nondisclosure

passive fraud physical duress

rescission sales puffery

undue influence unilateral mistake


26/27

Investigating on the Internet

Chapter 8Chapter 8

Access the website sponsored by the

National Fraud Information Center at:

http://www.fraud.org/

and write a report on how to disclosetelemarketing fraud.


27/27

Endof Presentation

Documents

Buslaw08-Mutual Assent and Defective Agreement