1. Genuine Agreement
If the offeror makes a valid offer, and the offeree has made a valid acceptance, then a genuine agreement has been reached.
The courts describe this type of agreement as “a meeting of the minds.”

2. 6.1
Genuine Agreement
Several circumstances might create a defective agreement:
Fraud
Misrepresentation
Mistake
Duress
Undue Influence

3. Pre-Learning Question
How would you define fraud?

4. Fraud
Fraud is a deliberate deception intended to secure an unfair or unlawful gain.

5. Remedies for Fraud You may rescind, or cancel, the contract.
You may sue for money damages.

6. The Elements of Fraud
To succeed in a lawsuit for fraud, the following five elements must be demonstrated:
A false representation of fact.
Knowledge of the falsity by the party making the false representation.

7. The Elements of Fraud
Intent to deceive by the party making the false representation.
Reasonable reliance by the innocent party.
An actual loss must be suffered by the innocent party.

8. False Representation of Fact
Fraud requires a false representation of a material, existing fact.
A material fact is one that is important; it matters to one of the parties.

9. False Representation of Fact
Under some circumstances, individuals can make false representation by choosing not to reveal important information.
This is known as concealment, or passive fraud.

10. Representation Known to Be False
To be held accountable for fraud, the party making the false representation must be aware that it is false. This may be shown by:
proving actual knowledge
showing the statement was made recklessly

11. Intended to Be Relied Upon
False Representation
Intended to Be Relied Upon
To prove fraud, the person making the misrepresentation must intend that the other party will rely upon the information as part of the contract negotiations.

12. False Representation Actually Relied Upon
To prove fraud, the false representation must be reasonably relied upon by the other party when the agreement is made.

13. Resulting Loss
In proving fraud, the innocent party must show some monetary loss.

14. Pre-Learning Question
How is misrepresentation different from fraud?

15. Innocent Misrepresentation
Misrepresentation is the act of making an innocent statement that turns out to be false, when the person honestly believed the statement was true at the time it was made.

16. Remedy for Misrepresentation
the right to rescind the contract
you may not win damages

17. After Mrs. Grayson died, her neighbor, Joel, asked her son, Tom, if he would sell her TV. Before giving Tom $100, Joel asked, “It works, doesn’t it?” and Tom answered, “As far as I know.” However, when Joel plugged it in, it did not work.

18. Can Joel claim there was false representation? Why or why not?

19. ANSWER
Probably not. “As far as I know,” would probably be considered innocent misrepresentation.