1. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 7 Genuineness of Assent 7-1 7-1Duress and Undue Influence 7-2 7-2Mistake, Misrepresentation, and Fraud

2. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 2 7-1Duress and Undue Influence GOALS Recognize when genuine assent is not present Identify the two key elements in undue influence

3. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 3 GENUINE ASSENT Genuine assent 3 rd requirement of a contract Without genuine assent contract is voidable. Rescission – cancel obligation and get back what has already been put into the contract Ratification – confirmation of intent to be bound by the contract.

4. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. DURESS This is one of the grounds for avoidance due to lack of genuine assent. Examples of duress include: Threats of illegal or tortious conduct (commit act of violence) Threats to report crimes (extortion) Threats to sue Economic threats (disruption to your business) Video duress Chapter 7 SLIDE 4

5. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 5 UNDUE INFLUENCE AND ASSENT When the dominating party to a relationship exerts pressure to a weaker person to enter into a contract that benefits the dominator. (confidential relationships) Attorney/client Barbara LiebermanBarbara Lieberman Parent/child Child/parent Physician/patient

6. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 6 7-2Mistake, 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

7. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 7 WHAT ARE THE TYPES OF CONTRACTUAL MISTAKES? Unilateral mistakes Mutual mistakes

8. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 8 Did not read before signing VALID & ENFORCEABLE Incorrect Belief Contract is VOID VALID Incorrect Belief Contract is VALID FACT LAW MUTUAL (BILATERAL) UNILATERAL

9. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 9 WHAT IS MISREPRESENTATION? Untrue statement of fact (not an opinion) Active concealment Silence Materiality (statement causes person to contract) Reasonable reliance (not relying on statement)

10. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 10 FRAUD AND REMEDIES FOR FRAUD The misrepresentation must be intentional or reckless Induce someone to enter into contract The misrepresentation must injure (cause loss) No injury-no fraud video mistake/misrepresentation

11. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Remedies for Fraud Rescission – anything received must be returned Damages – only awarded if fraud is proven Punitive damages – punishment May receive more in addition to actual damages in order to punish person committing the fraud Chapter 7 SLIDE 11

12. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 12 PREVENT LEGAL DIFFICULTIES In making contracts... Research important transactions before entering into them. Verify claims of the seller by outside means or through firsthand personal experience. Do not rush into a decision. Take time to review and understand the advantages and disadvantages of the proposed contract. Legitimate proposals will usually survive a delay. Continued on the next slide

13. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 SLIDE 13 PREVENT LEGAL DIFFICULTIES Do not hesitate to ask questions about vague or uncovered issues. Forcing the other party to make statements about them may lay the groundwork for proving fraud or misrepresentation later. If the other party does not properly answer your questions, proceed with great caution or abandon the negotiations. If you believe you have been defrauded, act promptly to rescind the contract.