Business Law Ch 13 Terms

assent

necessary to create an enforceable contract, determined by relevant facts surrounding the negotiation and formation of a contract

genuineness of assent

needs to be real and not a mistake, fraud, or duress

mistake

occurs when one or both parties to a contract have an erroneous belief about the subject matter, value, or some other aspect of the contract, may be unilateral or mutual, law permits rescission

rescission

an action to undo a contract

unilateral mistake

mistake in which only one party is mistaken about a material fact regarding the supplier matter of a contract, mistaken party will not be permitted to rescind the contract unless..
1. other party knew it was a mistake
2. clerical or mathematical error tha

mutual mistake of fact

mistake made by both parties concerning a material fact that is important to the subject matter of a contract, if there has been a mutual mistake the contract may be rescinded on the grounds that no contract has been formed because there has been no "meet

mutual mistake of value

exists if both parties know the object of the contract but are mistaken as to its value, contract remains enforceable
ex - andy warhol painting selling at $100, cannot recover painting

fraudulent misrepresentation

event that occurs when one person consciously decides to induce another person to rely and act on a misrepresentation, the contract is not genuine and the contract is voidable by the innocent party

proving fraud

following elements must be shown:
- wrongdoer made false representation of material fact
- wrongdoer intended to deceive the innocent party
- innocent party justifiably relied on the misrepresentation
- innocent party was injured

material representation of fact

may occur by words or by conduct of party, must have been a significant factor in inducing the innocent party to enter into the contract but does not have to be the sole factor

intent to deceive

person making the misrepresentation must have either had knowledge that representation was false or made it without sufficient knowledge of the truth, scienter "guilty mind

reliance on the misrepresentation

not actionable unless the innocent party to whom the misrepresentation was directed acted on it, innocent must justify his or her reliance

injury to the innocent party

innocent party must prove that the fraud caused him or her economic injury, measure of damages is the difference between the value of the property as represented and the actual value of the property

fraud in the inception

or fraud in the factum, occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing
ex - heather brings her professor a grade card to sign, prof signs card in front without reading card, on front however a

fraud in the inducement

innocent party knows what he or she is signing or doing but has been fraudulently induced to enter into the contract, voidable by the innocent party
ex- lyle tells candice that he is forming a partnership to invest in drilling for oil in and oil field and

fraud by concealment

occurs when one party takes specific action to conceal a material fact from another party
ex - steel inc. contracts to buy used equipment from united inc. united does not show steel the repair invoices for repairs to the equipment even though steel asked

silence as misrepresentation

ordinarily, silence is not a misrepresentation unless 1) nondisclosure would cause bodily injury or death, 2) there's a fiduciary relationship btwn contracting parties, 3) fed and state statutes require disclosure.. restatement (second) of contracts speci

misrepresentation of law

usually not actionable as fraud, innocent party cannot generally rescind the contract because each party to a contract is assumed to know the law that applies to the transaction, major exception: misrepresentation will be allowed as grounds for rescission

innocent misrepresentation

occurs when a person makes a statement of fact that he or she honestly and reasonably believes to be true even though it is not, it is not fraud, aggrieved party may rescind but may not sue, usually mutual mistake

duress

occurs when one party threatens to do some wrongful act unless other party enters into a contract, not enforceable against innocent party, if physically harm then physical duress, if victim of duress signs contract, it cannot be enforced against the victi

undue influence

a situation in which one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to enter into a contract, the persuasion by the wrongdoer must overcome the free will of the innocent party
1) fid