Inducements and Coercion

Inducements and Coercion One cannot induce, coerce or misrepresent another person into a contract Duress = when instead of acting through personal choice/will/desire, a person acts through fear of personal suffering Example: If you don’t sign this contract, I will kill you Misrepresentation Innocent misrepresentation = untrue statement that is honestly believed to be true

Inducements and Coercion Fraudulent misrepresentation = untrue statement that is made with knowledge that it is false. It has 3 elements: Knowledge that statement is false False statement is made to induce party into contract Innocent party must act on the misrepresentation Negligent misrepresentation = statement found to be untrue made by person who is in position of trust that is relied on by another person For instance, a salesperson makes a statement and a buyer relies on it and suffers from it Negligence is the most common tort

Inducements and Coercion Common mistake = when both parties to the contract know and accept the intention of one another For instance, if the buyer and seller both believe the property includes right of way to the seashore when nothing actually supports this belief. This error will not create an easement and is viewed by the law as a common mistake between the two parties Mutual mistakes = when both parties are mistaken about the same material fact For instance, a seller owns two lakes on opposite sides of Lake Ontario. The seller believes he is selling the property on the north shore, while the buyer believes he is buying the property on the south shore. They are agreeing based on a mutual mistake

Inducements and Coercion Unilateral mistake = when only one party makes a mistake and the other party knows it For instance, if you think you are entering into a contract with Jen but you are actually entering into a contract with Emily who is using Jen’s identity to misrepresent who she is. It is your mistake that you are entering into a contract with Jen when you are entering into a contract with Emily, and Emily knows about this mistake

Inducements and Coercion If a contract is missing an important element, it may be void or voidable Void = if a fundamental aspect is missing The mistake must go to the heart of the contract Void contracts are a nullity at law and have no effect or force As far as the law goes, such a contract never existed No party can enforce it or have obligation under it

Inducements and Coercion Voidable = if the mistake is not fundamental The mistake does not go to the heart of the contract Contract is originally valid but capable of being rejected by party who is offended at a later time Voidable contracts are binding and valid until they are rendered void It is the choice of the offended party to uphold or avoid the contract