Contracts Ii

Front 1

Misrepresentation

Back 1

Misrepresentation- is an assertion not in accord with the facts atht the time of contracting with regard to something basic or material to the K.

Front 2

What are two types of misrepresentation?

Back 2

Fraud in Factum- fraud in the execution, person is not aware of what they are doing. Some sort of trickery. Examples, blind person signing a letter when really a promisorry note.
Fraud in the Inducement- (more common) – falls into the definition of mistake.

Front 3

Fraud in the Inducement
Four elements

Back 3

• Was there a misrepresentation
• Is the Misrepresentation material or fraudulent
• Person must rely on misrepresentation
• Was the reliance justified?
o Material misrepresentation
o Fraudulent misrepresentation
• if the person does not infact believe you can not use misrepresentation to avoid the K.
• if a statement of opinion by a person with superior knowledge or by fiduciary may be considered an assertion of fact

Front 4

Material Misrepresentation

Back 4

- the misrepresentation would cause a reasonable person to enter into a contract
- it would cause this person to enter into the contract
- The four elements
o Misrepresentation
o Material
 Reasonable person
 This person
o Did rely?
o Was it justified to rely?
• Objective test – r.p
• Yes? Don’t avoid the K
• No. Avoid the K

Front 5

Fraud
Four Elements

Back 5

Four Elements
- misrepresentation
- fraudulent
o Scienter ( intent)
o Misrepresentor knows they have no basis for making the assertion
- did rely?
- Was reliance justified?
o Subjective test- good faith.

Front 6

Duress –

Back 6

has a wrongful act or a threat of a wrongful act overcome the freewill of the party
Freewill test? Subjective
Excetpion- Economic duress- objective test
Wrongful act? Violence, Imprisonment, You as an attorney can not threaten crimininal, You can threaten civil, wrongfully withholding goods (tugboat)

Front 7

Undue influence

Back 7

- common theme abuse of a fiduciary relationshiop ( arise in families and client relationships)
1- victims weaknesses
2- another party taking advantage to get an
3- unfair bargain

Weakensses
1- age
2- immaturity
3- death of a child
4- substance abuse

Front 8

VOKES v. ARTHUR MURRAY, INC

Back 8

Law or Rule(s): A statement made by a party having superior knowledge may be regarded as a statement of fact, although it would be considered as opinion if the parties were dealing on equal terms.
Court Rationale: It can be reasonably inferred that Dfs had “superior knowledge” as to whether Pl had “dance potential” and as to whether she was noticeably improving. The undenied averments in Pl’s complaint that the flowering eulogiums heaped upon her by Dfs proceeded more to hear the ring of the cash drawer than from any honest or realistic appraisal of her dancing prowess or a factual representation. Even in a K’ual situation where a party owes no duty to disclose facts w/i his knowledge or to answer inquiries respecting such facts, the law is if he undertakes to do so, he must disclose the whole truth.

- you find very few fraudulent misrepresentation cases because it is very hard to prove intent?
- Would a reasonable person have believed this intenst? NO
- Would this individual? Yea they knew they had hooked
- Did she rely? Yes?
- Was she justified? Would a reasonable person have relied on this assurtian of fact? No. The court felt bad cause normally you have to show.
- The court did not directly go down these few things
o Notes
 You can have misrepresentation by conduct. Where the D takes affirmative steps to conceal a problem.
 Simple non disclosure may also suffice as an assertion of an existing fact
 Is it ever fraud to keep silent? The courts are split

Front 9

Superior Knowledge

Back 9

where the misrepresentor has superior knowledged of the situation, the courts have deemed opinions as fraudulent

Front 10

COUSINEAU V. WALKER

Back 10

- trial court said that there was no reliance and they also said they weren’t material to the K at the TC
A K may be rescinded if there was a misrepresentation, which was fraudulent or material; and which induced the recipient to make the K; the recipient must have been justified in relying on the misrepresentation
Court Rationale: 1st the Pl must have relied on the misrep. Pl is in the gravel business and came across the property by its listing “1 million in gravel,” and the following listing “80K cubic yds.” Pl purchased equipment and entered into K for the removal of the gravel.
2nd the statements must be material to the transaction such that it would cause a R P to enter into K. A R P would likely consider the existence of gravel an important piece in developing property. Df’s agent testified that the statements were placed b/c gravel was this property’s best points and a selling point.
3rd the Pl must have been justified in relying upon the material misrep. A buyer is entitled to rely on an express warranty when factual statements are provided as to specific attributes. A purchaser of Land may rely on material misreps made by the Seller and is not obligated to ascertain whether such reps are truthful. Pl may have exhibited poor judgment, he was not so unreasonable in view of Df’s description of the prop that recovery should be denied.
- Footnote five are his same factors for misrepresentation.
- What about exercising due care and act in good faith? C acted in good faith and was reasonable so they rejected that notion
- UCC has rejected the Caveat emptor- if you make factual statements about the good that are sold they are considered to be good and not puffing.

Front 11

PROBLEM 117

Back 11

- Hebeas corpus? It is a writ to have the body. The person who is restraining you has to bring you to the court.
- What is the assertion not accord with the facts? Not admitted to the flight school.
- Fraudulant or material? Fradulant. If you join the military one of the forms that you fill out is a medical. He indicated that he had fever.
- A federal court is not going to want to say that the federal government lied so they are going to go with material
- Would a reasonable person have relied? Yes. This individual? Yes
- Did he rely? Yes.
- It was a misrepresentation. We should void the K and grant the writ of hapeas corpus.

Front 12

PROBLEM 118

Back 12

- Fraudulant Misrepresentation. Maintenance free for six months and that that he would fix it.
- Did he know what he was saying was not true.
- Did she rely? Yes. IN good faith? Yes. Was she justified? Yes

Front 13

Trade commission

Back 13

• Private right of action- P sue D, Basis of jurisdiction:statue
o the only person that can sue using the federal trade commission act is the federal govt
o there is no private right in the federal trade commission
o 49 states have their own federal trade acts. (consumer protection statutes or little FTC acts) Under these acts you have a right to sue under state federal acts

Front 14

DURESS

Back 14

has a wrongful act or a threat of a wrongful act overcome the will of another. If yes, duress is present.
What is free will? What is the standard that is used to decide? Formally, it was an objective test.
- Economic Duress- is a reasonable person test.
- Free will- the party intended to do what they did, imprisonment or threat of imprisonment, one thing you may not threaten that you will criminally prosecute someone I will turn you into the authorities. You can threaten civil suit, and administrative action but not criminal prosecution if you are an attorney.
- You don’t have the power to say if someone is prosecuted or not. It is the state not the individual
- Also a wrongful act is extorsion.

Front 15

Duress

TOTEM MARINE TUG v. ALYESKA

Back 15

One essential element of economic duress is that the Pl show the other party, by wrongful acts or threats, intentionally caused him to involuntarily enter into a particular transaction. In many cases a threat to breach K, or w/h payment of debt = wrongful act. Some cts require bad faith accompany the wrongful act. Economic D does not exist merely b/c a person has been the victim of a wrongful act, in addition the victim must have no reasonable alternative choice but to agree to the other party’s terms, or that he had no adequate remedy if the threat were to be carried out. An available alternative or remedy may not be adequate where the delay involved in pursuing the remedy would cause immediate and irreparable loss to one’s economic or business interest. As a matter of law, and upon exam of the materials presented in opposition to Df’ M 4 Summary, Pl has made a sufficient showing as to each of the elements of economic D to w/stand that motion

Front 16

UNDUE INFLUCENCE

Back 16

- vicitims weaknesses
- another party taking advantage of those weaknesses
- weaknesses? Illness, altimers, age, immaturity apart from age, trama, death of a child or spouse, divorce, substance abuse. Those things that undermine a person’s ability to make sound decisions
- Common theme- a fiduciary relationship with their clients, you are not supposed to abuse this relationship.

KASE v. FRENCH

Avoidance of the K : Undue Influence
- You can ask for a trial without jury. The judge can act as the finder of fact and the jury.
- The appeal court job was to find if the trial of facts clearly erronesous. The trial courts were found not clearly erroneous
The B o’ P never shifts from the one claiming undue influence, but the B o’ P does transfer to the other side when evidence shows a relationship of trust and confidence. The Dfs had duty to go forward w/ evidence and in fact went forward w/ evidence showing that the transaction was free from undue influence. The indica of undue influence are : person susceptible to undue influence, opportunity to exert undue influence and effect wrongful purpose, disposition to do so for improper purpose, and result clearly showing effect of undue influence. Mrs McWilliams was at all times mentally alert, able to care for herself, and in good health. The K shows the absence of undue influence. McWilliams lived in the home w/ Dfs rent free for over two yrs. Upon her entering a nursing home Df signed a financial responsibility agreement for her care. The presence of independent legal advice is an important factor. Mrs McWilliams engaged her atty of some yrs to draft the Deed.
- Someone’s weaken circumstances, does not make her stupid it just makes her old.
- Someone taking advantage to reach an unfair bargain.
- He seems to be that it should have gone the other way.

Front 17

Undue influcence

Ordorizzi v. Bloomfield

Back 17

The Facts in the amended complaint are insufficient to state a COA for duress, menace, fraud, or mistake, but they do set out sufficient elements to justify rescission b/c of undue influence. Undue Influence is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature, and which overcomes the will w/o convincing the judgment. In essence it involves excessive pressure to persuade one vulnerable to such pressure, pressure applied by a dominant subject to a servient subject. U I may consist of total weakness of mind, physical condition, emotional anguish/turmoil, exhaustion, or a combination. Thus weaknesses determine that a lessened capacity of the object to make a free K exists. The application of excessive strength by a dominant over a servient subject is the second element. The representatives of the Dist undertook to achieve their objective by overpersuasion and imposition to secure Pl’s signature, but not his consent to his resignation through high pressure carrot and stick technique.


Undue influence is high pressure, a pressure which works on mental, moral, or emotional weakness to such an extend that it approaches the boundaries of coercion. In this sense , undue influence has been claeed overpersuasion.

Front 18

Odrozzi v. Bloomfield

Back 18

Undue influence is high pressure, a pressure which works on mental, moral, or emotional weakness to such an extend that it approaches the boundaries of coercion. In this sense , undue influence has been claeed overpersuasion.
Pg 560-
i. discussion of the transaction at an unusual or inappropriate time
ii. consummation of the transaction in an unusual place
iii. Insistent demand that the business be finished at once
iv. Extreme emphasis on untoward consequences of delay
v. The use of multiple persuaders by the dominant side against a single servient party
vi. Absence of third-party advisers or attorneys.
vii. Statements that there is no time to consult financial advisers or attorneys
• They forced the decision out of him 561- how it should have been done. After he was released he should have called him in an directed him to the provisions of the code, tell him that he could talk to a lawyer.
• The different between ligimate persuasion and excessive pressure, like the difference between seduction and rape, rests to a considerable extent (he pissed of f about it)

PROBLEM 120
- Undue influence? She is in a weakened state.