Chapter 7 Genuine Assent-

1. Chapter 7 Genuine Assent- • Determining whether a true and complete agreement exists

2. Terms to consider: • Valid • Legally binding enforceable agreement • Void • Unenforceable by law • Voidable • The right for an injured party to backout • Rescission • The right for an injured party to get back consideration • Ratification • Conduct suggesting the injured party intends to be bound to a contract

3. Duress- improper threats or acts to obtain an agreement (voidable) • Threats of illegal conduct • A criminal or civil wrong to create an agreement • Threats to report crimes • Used to coerce the criminal to create an agreement • Threats to sue • Threat of an unrelated lawsuit to create an agreement • Economic threats • Using economic power over another to create an agreement • Courts look at the threat and alternatives to see if Duress exists

4. Undue Influence- One party is in a position of trust and wrongfully dominates the other • 2 components analyzed by law: • The relationship • Unfair persuasion

5. Mistakes in contracts • Unilateral mistake • One party holds an incorrect belief about the terms of a contract • If misrepresentation or fraud is not present, the contract is considered valid • Recognized unilateral mistake • The other party should bring mistake to light • Courts may grant rescission

6. Mistakes in contracts • Induced unilateral mistake • The other party has encouraged the mistake • Voidable • Ex. Cubic zirconia in a tray of diamonds • Mutual (bilateral) mistake • Both parties hold an incorrect belief about the terms of a contract • Void if: • Material fact (important) • Not applicable to the law (ignorance of law is not a defense)

7. Misrepresentation in contracts • Innocent misrepresentation • Party unknowingly misrepresented information • Fraudulent misrepresentation • Party knowingly misrepresented information Both forms make a contract voidable

8. Elements of innocent misrepresentation: • 1. Untrue statement of fact • Based on past or existing information • Fact rather than opinion • Experts opinion can be viewed as fact • Active concealment- substitute for false statement • Silence- contracts require full disclosure • Ex. Last night’s flood

9. Elements of innocent misrepresentation: • 2. Materiality- significant information • Three ways statement can be material • A. statement would cause a reasonable person to contract • B. statement was important to contract • C. defendant knew statement was false (makes it material regardless of importance)

10. Elements of innocent misrepresentation: • 3. Reasonable reliance- victim relied on the statement • Ex. Seller says one thing, but inspection proves it wrong (no reliance)

11. Elements of fraud • The prior three elements along with the following are necessary to prove fraud • 4. Intent to deceive • 5. Injury resulted from the misrepresentation

12. Remedies: • Innocent misrepresentation- usually results in rescission • Fraud- • Rescission • Compensatory damages • Compensation for loss • Punitive damages • To deter the defendant from injuring again