1. Mistake, Duress, Undue Influence, Fraud, Misrepresentation, Unconscionability and Contract Interpretation

2.  Only a material Mistake of Fact allows a contract to be canceled.  Bilateral (Mutual) Mistakes can be rescinded by either party. Prof. Nichole Hatcher PA 130 Kaplan University2

3.  Unilateral Mistakes cannot be canceled unless: ◦ If other party to the contract knows or should have known that a mistake of fact was made. Prof. Nichole Hatcher PA 130 Kaplan University3

4.  Generally, contract is enforceable by either party.  “Caveat Emptor”  Exceptions: ◦ -Party knew of mistake ◦ -Fraud ◦ -Misrepresentation Prof. Nichole Hatcher PA 130 Kaplan University4

5.  Contract Voidable by Innocent Party.  Elements: ◦ Misrepresentation of Material Fact. ◦ Intent to Deceive/Gross Negligence. ◦ Reliance on Misrepresentation. ◦ Injury to the Innocent Party. Prof. Nichole Hatcher PA 130 Kaplan University5

6.  Misrepresentation can be express or implied. ◦ Concealment. ◦ Misrepresentation of future facts and statements of opinion are not fraud, unless person professes to be an expert. ◦ Misrepresentation of Law is not fraud, unless person has greater knowledge of the law. ◦ Silence is not fraud, unless serious problem or defect known or asked and person lied. Prof. Nichole Hatcher PA 130 Kaplan University6

7.  Intent to Deceive. ◦ Party has knowledge that fact is not as stated. ◦ Party makes a reckless statement with disregard of the truth. ◦ Party implies that statement is based on personal knowledge or investigation.  Gross negligence is considered intent. Prof. Nichole Hatcher PA 130 Kaplan University7

8.  Deceived party must have Justifiable Reliance. ◦ Depends on the knowledge and experience of the party relying. ◦ Must be “Reasonable reliance” Prof. Nichole Hatcher PA 130 Kaplan University8

9.  Proof of injury is universally required to recover damages, unless ◦ Only recovery is to rescind the contract. Prof. Nichole Hatcher PA 130 Kaplan University9

10.  Contract is Voidable. ◦ Confidential or Fiduciary Relationship. ◦ Relationship of dependence. ◦ Influence or Persuasion. ◦ Weak party talked into doing something not beneficial to him or herself.  Presumption of Undue Influence. Prof. Nichole Hatcher PA 130 Kaplan University10

11.  Forcing a party to enter into a contract under fear or threat makes the contract voidable.  Threatened act must be wrongful or illegal.  Threats: ◦ Threat to exercise legal rights (criminal or civil suit) are not included, unless the only purpose is to induce someone to do something against their will (i.e. Abuse of process ◦ Threat to induce terms. Prof. Nichole Hatcher PA 130 Kaplan University11

13.  What is a unilateral mistake? Are these usually approved by a court as a defense to contract formation?  What is economic duress?  What is undue influence?  What is abuse of process?  What is blackmail?  What is negligent misrepresentation?  What is mistake of value?

15. Prof. Nichole Hatcher PA 130 Kaplan University15 Suppose that you purchase a purebred Scottish Terrier puppy. You pay $800 for the dog because you think it comes from champion lines. The dog's owner did not discuss the dog's ancestors with you. If you discover, later, that the dog was not worth $800, but only $400, can you have the contract rescinded, or canceled, based on your mistake?  A. Yes, the dog was clearly not worth $800.  B. Yes, because you had a duty to investigate.  C. Probably not, because you made a mistake about the dog's value, not a mistake of a material fact.  D. Probably so, because you made a mistake of an immaterial fact.

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17. Prof. Nichole Hatcher PA 130 Kaplan University17 A misrepresentation of a material fact can occur:  A. by action alone.  B. by words alone.  C. by words or actions.  D. by fax alone.

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