CHAPTER 7 Genuineness of Assent

1. CHAPTER 7Genuineness of Assent 7-1 Duress and Undue Influence 7-2 Mistake, Misrepresentation, and Fraud

2. 7-1 Duress and Undue Influence GOALS • Recognize when genuine assent is not present • Identify the two key elements in undue influence Chapter 7

3. FOCUS Scenario • The Thompsons were told that if they did not sign a contract to repay a $2,000 loan at 40 percent interest, their son would be in danger of physical harm. Afraid that their son would be hurt, the Thompsons signed the contract. Questions • Is the contract enforceable? • Why or why not? Chapter 7

4. GENUINE ASSENT AND DURESS • Genuine assent • Duress • Threats of illegal conduct • Threats to report crimes • Threats to sue • Economic threats Sign this or else!! Chapter 7

5. UNDUE INFLUENCE AND ASSENT Undue influence is wrongfully dominating another party when you are in a position of trust. • The relationship • Unfair persuasion Chapter 7

6. 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

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

8. WHAT ARE THE TYPES OF CONTRACTUAL MISTAKES? • Unilateral mistakes: only one person is mistaken (see What’s Your Verdict) • Mutual mistakes: neither party reallyunderstands thecontract details BOTH OF THESE TYPES OF MISTAKES DO NOT NECESSARILY INVALIDATE THE CONTRACT!!!

9. WHAT IS MISREPRESENTATION? • Untrue statement of fact • Active concealment: concealing something in order to substitute for a statement of fact (i.e. paint over a huge crack in the wall in order to sell a house) • Silence: three situations when you HAVE to break silence • Omitting important info • True statement is made false • When seller knows buyer has made a basic mistaken assumption Chapter 7

10. WHAT IS MISREPRESENTATION? (cont) • Materiality: 3 ways untrue statement can be material • Statement causes person to contract (i.e. miles on a vehicle vs. miles since rebuilt) • Defendant knows plaintiff would rely on the statement (i.e. plaintiff buys car based on maintenance record and seller mis-stated maintenance) • Defendant knew the statement was false • Reasonable reliance: no misrep. Unless defendant relied on information Chapter 7

11. FRAUD • The misrepresentation must be intentional or reckless: deliberately lied or concealed fact • The misrepresentation or concealment must injure: proof of injury (i.e. purchased a car for $10,000 that had an unknown defect and was actually worth $5,000) SEE HERE!! Chapter 7

12. REMEDIES FOR FRAUD • Rescission: rescind the contract and get money or item back • Damages: Recover actual damages • Punitive damages:damages awardedin order to preventfrom happeningagain. Alaska Fraud Protection Chapter 7