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24 Cards in this Set
- Front
- Back
5 situations that invalidate assent
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duress. undue influence, fraud, nonfraudulent misrepresentation, mistake
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duress
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wrongful act or threat that overcomes the free willl of a party
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physical compulsion (physical duress)
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coercion involving physical force; this renders contract void
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improper threats
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acts, including economic and social coercion, to compel a person to enter into a contract; this renders contract voidable by coerced party
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undue influence
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taking unfair advantage of a person by reason of a dominant position based on a confidential relationship; renders contract voidable
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relationships of trust that could lead to undue influence
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guardian-ward, trustee-beneficiary, agent-principal, spouses, parent-child, attorney-client, physician-patient, clergy-parishioner
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fraud in the execution
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a misrepresentation that deceives the other party as to the nature of a contract or document evidencing the contract; very rare, renders contract void
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fraud in the inducement
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intentional misrepresentation of material fact by one party to the other, who consents to enter into a contract in justifiable reliance on the misrepresentation
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requirements for fraud in the inducement (5)
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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
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false representation (misrepresentation)
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positive statement or conduct that misleads
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nondisclosure as misrepresentation
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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)
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fact
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event that actually took place or a thing that actually exists
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materiality
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of substantial importance; misrepresentations are material if they would be likely to induce a reasonable person to manifest assent
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scienter
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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
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justifiable reliance
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a defrauded party is reasonable influenced by the misrepresentation
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nonfraudulent misrepresentation
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material, false statement that induces another to rely justifiably but is made without scienter
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negligent misrepresentation
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false representation made without due care in ascertaining its truthfulness; renders agreement voidable
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innocent misrepresentation
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false representation made without knowledge of its falsity but with due care; renders contract voidable
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mistake
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an understanding that is not in accord with existing fact
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mutual mistake
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both parties have a common but erroneous belief forming the basis of the contract; renders contract voidable by either party
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unilateral mistake
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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
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assumption of risk of mistake
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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
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effect of fault upon mistake
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not a bar to avoidance unless the fault amounts to a a failure to act in good faith
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mistake in meaning of terms
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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
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