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Agenda Cans Scholarships Recap (Duress & Undue Influence) Presentation on Mistakes Progress Reports

Scholarships Writers of the future INROADS.org www.writersofthefuture.com/ All HS Students $500-$5000 INROADS.org Internship Minorities Business and Engineering

Bell Ringer What are the 6 elements of a contract? Offer and Acceptance Genuine Assent Capacity Consideration Legality Writing** Which of these elements do you think are affected by duress and undue influence

What is Genuine Assent? True and complete agreement Must be free of? Duress Undue influence Mistake Misrepresentation Fraud

CHAPTER 7 Genuineness of Assent 11/17/2018 CHAPTER 7 Genuineness of Assent 7-1 Duress and Undue Influence 7-2 Mistake, Misrepresentation, and Fraud

7-1 Duress and Undue Influence GOALS Recognize when genuine assent is not present Identify the two key elements in undue influence Chapter 7

What is Legal Duress? Legal Duress an improper threat or act to obtain an expression of agreement (contract) 4 forms of legal duress

7-2 Mistake, Misrepresentation, and Fraud GOALS Recognize the types of mistakes that can make a contract voidable or void List the criteria for a statement to be treated as a misrepresentation Define fraud and describe the remedies for it Chapter 7

FOCUS 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? Chapter 7

Answer No genuine assent bc both parties were mistaken NOTE: Mutual Mistakes of a contract about value do not void a contract. Picasso Example No contract exist because a mutual mistake of fact about the identity of the subject matter No genuine assent bc both parties were mistaken Chapter 7

Two types CONTRACTUAL MISTAKES? Unilateral mistakes Mutual mistakes Chapter 7

Unilateral Mistakes One party holds an incorrect belief Facts or Law Generally, does not affect the validity of contract Most common unilateral mistake of fact: Failure to read contract Misunderstanding terms Legalease Chapter 7

Example Chapter 7

Mutual Mistakes Also called bilateral contract Both parties have an incorrect belief Fact or applicable Law Important facts that influence a person decisions are called Material facts Mutual mistakes of fact as to the identity of subject matter voids the contract Chapter 7

EXAMPLE Buyer and Seller think property is 41 acres After the purchase is made they discover the land is only 28 acres Is their a mutual mistake? Is the contract void? Chapter 7

Answer There is a mutual mistake The contract is not binding When a mutual mistake of law is made the contact is still binding. EX. Miszoned property agreement Chapter 7

What type of mistake was made? Is the contract voidable by Bugliosi? I need a volunteer to read: Bugliosi saved $40,000 to buy the new car of his dreams. At the dealership, the sales staff convinced him to purchase option until his $40,000 was totally exhausted. When he went to register the car, he found that the state expected him to pay an 8% sales tax on the purchase price. Bugliosi thought the $3,600 of sales tax was part of the $40,000 purchase, like a retail store. What type of mistake was made? Is the contract voidable by Bugliosi? Chapter 7

Answer Bugliosi made a unilateral mistake of law. Contract is valid Chapter 7

ASSIGNMENT: Use the internet to find examples of mistaken contracts that were voided or proved valid. State whether the mistakes were unilateral or mutual mistakes. Find 8 examples. Chapter 7

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Misrepresentation

Essential Question What are the 3 criteria for a statement to be treated as a misrepresentation? Chapter 7

Agenda Cans Recap (Mistakes) Presentation-Misrepresentation & Fraud Progress Reports Assessment

7-2 Mistake, Misrepresentation, and Fraud GOALS Recognize the types of mistakes that can make a contract voidable or void List the criteria for a statement to be treated as a misrepresentation Define fraud and describe the remedies for it Chapter 7

Recap: 2 Types of MISTAKES Unilateral Mistake of Fact Unilateral Mistake of Law Mutual Mistake or Fact Mutual Mistake of Law Chapter 7

MISTAKE RECAP (Valid or NON-Valid) Unilateral Mistake of fact Valid Unilateral Mistake of law Valid Mutual Mistake or Fact Not-Valid* Mutual Mistake of law Valid Chapter 7

WHAT IS MISREPRESENTATION? Untrue statement of fact Chapter 7

Innocent misrepresentation Bill is selling his daughter’s car to Ted Ted asked if the car has ever been in an accident Bill says yes, because he didn’t know his daughter crashed it Chapter 7

Fraudulent Misrepresentation Knowingly issue an untrue statement of fact Active concealment Silence Materiality Reasonable reliance Innocent and Fraudulent misrepresentation is cause to void a transaction Chapter 7

1.) Untrue Statement of Fact Must be a FACT Not an opinion Past or existing fact Opinion Examples: “Best”, “Really good”, “Well” Future statements are opinions Opinions given by experts are viewed as facts. Chapter 7

Active Concealment Substituting a false statement for a fact Chapter 7

Silence Three situations where silence is not allowed Material Fact When a true statement is made false by subsequent events When one party knows the other has made a false assumption Chapter 7

Materiality 3 Ways to determine Materiality Reasonable person test In the defendant knew the plaintiff would rely on the statement If the defendant knew the statement was false Lies make non-material facts material Chapter 7

Reasonable Reliance There is no misrepresentation unless the victim reasonably relied on information Chapter 7

NOTE Caveat Emptor: Buyer beware Debating Chapter 7

Volunteer Bambi sold Traci an almost new tanning bed for $700. In the negotiations for the sale, Tracy asked Bambi if the beds could fit the new D3 lights that had just come on the market, because her doctor ordered that she use those specific lights. Bambi had examined the D3 lights in the store the previous week and assured Tracy they fit. A few days after the sale, Tracy realized that the lights fits but the beds voltage wasn’t strong enough to power the lights effectively. Can Tracy void the sale as a consequence? Chapter 7

Answer Yes. Tracy gets her money back. Innocent Misrepresentation Chapter 7

Assignment Check Edmodo Chapter 7

Chapter 7 11/17/2018 What are the three criteria for a statement to be treated as a misrepresentation? Chapter 7

FRAUD The misrepresentation must be intentional or reckless The misrepresentation or concealment must injure Chapter 7

REMEDIES FOR FRAUD Rescission Damages Punitive damages Chapter 7

What are the remedies available for fraud? Chapter 7

What happens if lack of genuine assent is proven? Contract typically voidable If the injured party chooses, he/she can cancel the obligation They get back whatever they have put into it Enforcing voidable action is called rescission

Rescission Requires promptness Must occur before ratification Conduct/changes suggesting you intend to be bound by the contract