Genuine Agreement

Business Law Genuine Agreement

The Opening Scene • Alena • Hana • Viktor • Jake • Mr. Benes

Fraud and Misrepresentation • Fraud: A deliberate deception intended to secure an unfair or unlawful gain • Rescind: Cancel or sue for money damages

Elements of Fraud • 1. False representation of fact • 2. Knowledge of the falsity by the party making the false representation • 3. Intent to deceive by the party making the false representation • 4. Reasonable reliance by the innocent party • 5. Actual loss suffered by the innocent party

False Representation of Fact • Material Fact: A fact that is important; it matters to one of the parties • Does allow salespeople to use a certain amount of “sales talk”, called “sales puffing” or “sales puffery” • Concealment: Not revealing important information

Representation Known to Be False • Must be aware that the representation is false • Buying a used car that has been in an accident, but salesperson tells you that it hasn’t

False Representation Intended to Be Relied Upon • Must show that the false representation was made with the intent that it be relied upon • 1964 Mustang, really a 65 but not selling the car

False Representation Actually Relied Upon • Must be reasonably relied upon by the other party when the agreement is made • Page 131 Example 3

Resulting Loss • Must suffer a monetary loss • If you do a favor for someone in exchange for an item, say mow lawn for a CD. You find out that the CD does not work, scratched, you can’t make a claim for fraud

Innocent Misrepresentation • Misrepresentation: Untrue statement of facts • The law gives you the right to rescind the contract • IF you buy a bike that is broken but the owner does not know this, you can cancel the deal and get money back but cannot be entitled to damages because owner did not know.

Mistake, Duress, and Undue Influence • Unilateral Mistake: An error on the part of one of the parties to the contract • Example 5 page 133 • Mistake as to the Nature of the Agreement: • Agree to mow someone's lawn and the contract says every week, but you were orally told once a week, must mow every week.

Mistake as to the Identity of a Party: • Two people with the same name and the offer is sent to the wrong person

Bilateral Mistake: • Both parties to a contract are mistaken about an important fact • Mistake as to the Possibility of Performance: • When both parties believe the agreement can be performed, when in fact, they cannot. In this type of situation, either party may get out of the contract • Example 7 page 136

Mistake as to the Subject Matter: • Mistaken about the identity of the subject matter • Example 8 page 136

Duress • Duress: Overcoming a person’s will by use of force or by threat of force or bodily harm • Economic Duress: Threats to a person’s business or income that cause them to enter a contract without real consent • Physical Duress: Physical violence is used • Emotional Duress: Threats

Undue Influence • Undue Influence: Occurs when a person uses unfair and improper persuasive pressure to force another person to enter into an agreement • Dependency Relationship: Dependent on the other party because of ill health, old age, or mental • Unfair or Improper Pressure: Excessive pressure to force the dependent into a contract • Beneficial Contract: Benefits the independent party at the expense of the dependent party

Genuine Agreement