Chapter 7 Genuine Assent- O Determining whether a true and complete agreement exists

Terms to consider: O Valid O Legally binding enforceable agreement O Void O Unenforceable by law O Voidable O The right for an injured party to backout O Rescission O The right for an injured party to get back consideration O Ratification O Conduct suggesting the injured party intends to be bound to a contract

Duress- improper threats or acts to obtain an agreement (voidable) O Threats of illegal conduct O A criminal or civil wrong to create an agreement O Threats to report crimes O Used to coerce the criminal to create an agreement O Threats to sue O Threat of an unrelated lawsuit to create an agreement O Economic threats O Using economic power over another to create an agreement O Courts look at the threat and alternatives to see if Duress exists

Undue Influence- One party is in a position of trust and wrongfully dominates the other O 2 components analyzed by law: O The relationship O Unfair persuasion

Mistakes in contracts O Unilateral mistake O One party holds an incorrect belief about the terms of a contract O If misrepresentation or fraud is not present, the contract is considered valid O Recognized unilateral mistake O The other party should bring mistake to light O Courts may grant rescission

Mistakes in contracts O Induced unilateral mistake O The other party has encouraged the mistake O Voidable O Ex. Cubic zirconia in a tray of diamonds O Mutual (bilateral) mistake O Both parties hold an incorrect belief about the terms of a contract O Void if: O Material fact (important) O Not applicable to the law (ignorance of law is not a defense)

Misrepresentation in contracts O Innocent misrepresentation O Party unknowingly misrepresented information O Fraudulent misrepresentation O Party knowingly misrepresented information Both forms make a contract voidable

Elements of innocent misrepresentation: O 1. Untrue statement of fact O Based on past or existing information O Fact rather than opinion O Experts opinion can be viewed as fact O Active concealment- substitute for false statement O Silence- contracts require full disclosure O Ex. Last night’s flood

Elements of innocent misrepresentation: O 2. Materiality- significant information O Three ways statement can be material O A. statement would cause a reasonable person to contract O B. statement was important to contract O C. defendant knew statement was false (makes it material regardless of importance)

Elements of innocent misrepresentation: O 3. Reasonable reliance- victim relied on the statement O Ex. Seller says one thing, but inspection proves it wrong (no reliance)

Elements of fraud O The prior three elements along with the following are necessary to prove fraud O 4. Intent to deceive O 5. Injury resulted from the misrepresentation

Remedies: O Innocent misrepresentation- usually results in rescission O Fraud- O Rescission O Compensatory damages O Compensation for loss O Punitive damages O To deter the defendant from injuring again