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24 Cards in this Set

  • Front
  • Back
5 situations that invalidate assent
duress. undue influence, fraud, nonfraudulent misrepresentation, mistake
duress
wrongful act or threat that overcomes the free willl of a party
physical compulsion (physical duress)
coercion involving physical force; this renders contract void
improper threats
acts, including economic and social coercion, to compel a person to enter into a contract; this renders contract voidable by coerced party
undue influence
taking unfair advantage of a person by reason of a dominant position based on a confidential relationship; renders contract voidable
relationships of trust that could lead to undue influence
guardian-ward, trustee-beneficiary, agent-principal, spouses, parent-child, attorney-client, physician-patient, clergy-parishioner
fraud in the execution
a misrepresentation that deceives the other party as to the nature of a contract or document evidencing the contract; very rare, renders contract void
fraud in the inducement
intentional misrepresentation of material fact by one party to the other, who consents to enter into a contract in justifiable reliance on the misrepresentation
requirements for fraud in the inducement (5)
1. a false representation; 2. of a fact; 3. the fact is material; 4. representation is made with knowledge of falsity and intent to deceive; 5. representation is justifiably relied on
false representation (misrepresentation)
positive statement or conduct that misleads
nondisclosure as misrepresentation
if a person knows disclosure of a fact will correct a mistake by the other party on a basic assumption, if nondisclosure would not be acting in good faith/reasonable standards, or if the law imposes a duty of disclosure (ex. fiduciaries)
fact
event that actually took place or a thing that actually exists
materiality
of substantial importance; misrepresentations are material if they would be likely to induce a reasonable person to manifest assent
scienter
person misrepresenting a fact has knowledge of the falsity and intended to deceive the other party. knowledge of falsity can be actual knowledge, lack of belief in statement's truthfulness, or reckless indifference as to the truthfulness
justifiable reliance
a defrauded party is reasonable influenced by the misrepresentation
nonfraudulent misrepresentation
material, false statement that induces another to rely justifiably but is made without scienter
negligent misrepresentation
false representation made without due care in ascertaining its truthfulness; renders agreement voidable
innocent misrepresentation
false representation made without knowledge of its falsity but with due care; renders contract voidable
mistake
an understanding that is not in accord with existing fact
mutual mistake
both parties have a common but erroneous belief forming the basis of the contract; renders contract voidable by either party
unilateral mistake
only one of the parties is mistaken; courts are unlikely to grant relief unless the error is known or should be known by the nonmistaken party
assumption of risk of mistake
a party who has undertaken to bear the risk of mistake will not be able to avoid the contract, even if mistake would have otherwise permitted them to do so
effect of fault upon mistake
not a bar to avoidance unless the fault amounts to a a failure to act in good faith
mistake in meaning of terms
Restatement: if parties attach materially different meanings to their manifestations and neither party knows or has reason to know the meaning attached by the other then there is no mutual assent