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18 Cards in this Set

  • Front
  • Back

Assent may be lacking due to mistake, fraudulent misrepresentation, under influence, or duress.

Lack of Voluntary consent

- A defense to the enforcement of a contract

A party who demonstrates he/she did not genuinely agree to the terms of a contract can choose to either (a) carry out the contract or (b) rescind it and cancel the entire transaction.

General Rule for lack of Voluntary Consent.

May allow a contract to be avoided thru rescission

Mistake of Fact

- 2 Types

1. Unilateral Mistake

2. Bilateral (mutual) mistake

Will not allow a contract to be avoided through rescission.

Mistake of Value or Quality

When only one party is mistake as to a material fact (a fact important to the contract's subject matter)

Unilateral Mistake of Fact

- Contract is typically enforceable against mistake party (mistaken party cannot rescind)

- Unless other party knew or should have known that a mistake of fact was made or a major mathematical mistake was made

Ex. Fozzie Bear intends to sell his motor home to Beeker for $18,000. When he learns of Beeker's interest, Fozzie emailed Beeker but, because of a typo, offered him the motor home for $8,000.

Unilateral Mistake of Fact example

Mutual misunderstanding by both parties to the contract concerning an important assumption on which the contract was made.

Bilateral (Mutual) Mistake of Fact

Lack of Voluntary Consent:

- Not a basis for Rescission

Mistake of Value or Quality

Grandpa sells an antique suitcase as a garage sale for $250. Neither Grandpa or the buyer believe it is extremely valuable. However, later from watching an antique show a party finds out it is actually worth $30,000. Can Grandpa Rescind the contract?

Mistake of Value or Quality Example

- No, Both parties had knowledge of the value

Three Elements needed for Fraud

1. A misrepresentation if a material fact occurred

2. Intent to deceive

3. Innocent party justifiably relied on the misrepresentation

A tort and a defense to the enforcement of a contract.

- Affects authenticity of innocent party's consent to a contract

Fraudulent Misrepresentation

- To collect damages, innocent party must have been harmed

The innocent (defrauded) party can either (a) rescind the contract and be restored to his/her original position or (b) enforce and carry out the contract and seek damages for any harms resulting from the fraud.

General Rule for Fraud

Lack of Voluntary Consent: Fraud

Can occur by words or actions

- EX. Customer at art gallery asks to see paintings by a certain painter bit is led by art gallery owner to paintings done by another artist

Can occur by conduct: party takes specific action to conceal a material fact

- EX. Seller of horse concealed medical condition to the buyer

First element of Fraud: A Misrepresentation of a material fact occurred

- Ordinarily, misrepresentation doesn't occur in these circumstances but it's possible in limited cases.

- Statements of Opinion

- Misrepresentation of law when party is in profession known to require greater knowledge of the law than average person

- Misrepresentation by silence, although neither party typically has a duty to come forward and disclose facts

Lack of Voluntary Consent: Fraud

- Scienter: knowledge of misrepresenting party that he/she/it has misrepresented facts

- A fact is not how it was stated; statement known not to be true

- Reckless statement without regarding to whether it is true or false

- Statement said or implied that was made on some basis, such as personal knowledge or investigation when it was not.

Element two of Fraud: Intent to be Deceive

- Convict hired for business law professor position at Vermont State College two weeks after his release from prison; his probation officer alerted the college, which immediately fired him; employment contract not upheld

Lack of Voluntary Consent: Fraud

- Misrepresentation must be an important factor in inducing party to enter into contract

- Reliance is not justified if the innocent party (a) knows the true facts or relies on obviously extravagant statements (b) and has a way of finding out the true facts

Element three of Fraud: Innocent party justifiably relied on the misrepresentation.

Lack of Voluntary Consent:

- To collect damages caused by fraud, innocent party must have been harmed

- To rescind the contract entered into under fraudulent circumstances, innocent party doesn't need to prove harm because parties will be restored to original position

- Damages are typically = to value of the property had it been delivered as presented, minus actual price paid for the property

- Punitive damages can also be awarded

Fraud and Proving harm to Innocent Party

Lack of Voluntary Consent

Threats used to force a party to enter into a contract. A defense to the enforcement of the ensuing contract.


- Must be proof of illegal/wrongful threat and must render the person incapable of exercising free will

- Also grounds for rescission of a contract

- threat to exercise a legal right (sue) ordinarily doesn't constitute duress.

Lack of Voluntary Consent:

Exerted by one party over the other party to a contract is a defense to the enforcement of the ensuing contract.

- The party being taken advantage of doesn't have to exercise free will in entering into a contract

- Must be clear and convincing evidence that the person didn't act out of their free will.

Undue Influence

- Can occur within context of confidential or fiduciary relationships

- Parent-child, husband-wife, attorney-client, doctor-patient etc.