Genuine Genuine AssentAssentChapter 7Chapter 7

Genuine AssentGenuine Assent►True and complete True and complete intent to enter into a intent to enter into a contractcontract

Without it, contracts Without it, contracts are typically are typically voidablevoidable

VoidableVoidable – if the – if the injured party desires, injured party desires, they can cancel their they can cancel their obligation and get obligation and get back what they have back what they have already put inalready put in

►RescissionRescission – when the – when the injured/forced party injured/forced party cancels their obligation cancels their obligation of a contractof a contract

►RatificationRatification – suggesting – suggesting you intend to be bound you intend to be bound by contractby contract

DuressDuress►Occurs when one party Occurs when one party uses improper threat or uses improper threat or act to obtain a contractact to obtain a contract

► Creates a VOIDABLE Creates a VOIDABLE contractcontract

Types of DuressTypes of Duress

1.1. Threats of illegal conductThreats of illegal conduct

2.2. Threats to report crimesThreats to report crimes

3.3. Threats to sueThreats to sue

4.4. Economic threatsEconomic threats

Undue InfluenceUndue Influence►Occurs when one party is Occurs when one party is in a position of trust and in a position of trust and wrongfully dominates and wrongfully dominates and deceives the other partydeceives the other party

►VOIDABLE by the victimVOIDABLE by the victim

Mistake, Mistake, MisrepresentatiMisrepresentati

on & Fraudon & Fraud

Unilateral MistakeUnilateral Mistake►Occurs when only Occurs when only one party holds an one party holds an incorrect belief incorrect belief about the facts of a about the facts of a contractcontract

Mutual (bilateral) Mutual (bilateral) MistakeMistake

►Both parties have an Both parties have an incorrect belief about an incorrect belief about an important fact of a contractimportant fact of a contract

►Also known as “Mutual Also known as “Mutual Mistake”Mistake”►Contract is VOIDContract is VOID

Material FactsMaterial Facts are the are the important facts that important facts that influence a persons influence a persons decision to enter decision to enter into a contractinto a contract

Two types of Two types of MisrepresentationMisrepresentation

►Innocent Misrepresentation Innocent Misrepresentation (involuntary)(involuntary)

►Fraudulent Fraudulent Misrepresentation Misrepresentation (voluntary)(voluntary)

Requirements of Requirements of MisrepresentationMisrepresentation

1.1. Untrue statement is one of Untrue statement is one of fact or fact or active concealmentactive concealment

2.2. Statement is material to Statement is material to the transactionthe transaction

3.3. Victim reasonably relied Victim reasonably relied on statementon statement

FraudFraud►Based on misrepresentationBased on misrepresentation

►Must be proven to show…Must be proven to show…All elements of misrepresentationAll elements of misrepresentation IntentIntent InjuryInjury

Remedies for FraudRemedies for Fraud►Rescission (cancel the Rescission (cancel the

contract)contract)

►DamagesDamagesRecovery from lossRecovery from loss

►Punitive DamagesPunitive DamagesForms of punishment (above Forms of punishment (above and beyond recovery from loss)and beyond recovery from loss)