MJ BLTS Lecture Outline 10E_Chapter 12 - MISTAKE Mistake...

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MISTAKEMistake: The parties entered into a contract with differentunderstandings of one or more materialfacts relating to the subjectmatter of the contract.Unilateral Mistake: A mistake by one of the contractingparties will generally not excuse performance of the contractunless:(1)the other partyto the contract knew or should haveknownof the mistake; or(2)the mistake is one of mathematics only.Mutual Mistake of Fact: A mistake by both contractingparties as to some material fact generally empowers eitherparty to rescind.As was true with contracts entered into by persons lackingcontractual capacity, contracts entered into under a mistake offact are voidable, not void.Ch. 12: Contracts: Defenses to Contract Enforceability - No. 1Business Law Today: Standard Edition (10th ed.)
MATERIAL MISREPRESENTATIONFraudulent Misrepresentation: An innocent party induced by amisrepresentation of one or more material facts to enter into acontract may usually avoid the contract because she did notgenuinely assent. In order to do so, she must establish that theother party(1)misstated or omitteda material fact(2)on which a reasonable person would relyin decidingwhether and on what terms to enter into the contract;(3)knowingthat it was conveying false information, or withreckless disregardfor its truthfulness, and with the intent todeceivethe innocent party; and(4)on which the innocent partyreliedto her detriment.Most courts do not require the innocent party to prove aninjury if the only remedy she seeks is rescissionof thecontract. However, in order to recover damages, theinnocent party must prove that the misrepresentation causedher loss.Negligent Misrepresentation:A material misrepresentation madewithout knowledgethat it its false, reckless disregardfor itstruthfulness, or any intentto deceive.Ch. 12: Contracts: Defenses to Contract Enforceability - No. 2Business Law Today: Standard Edition (10th ed.)
TYPES OF MISREPRESENTATIONPredictions and Expressions of Opinion:Generally, these willnot excuse the innocent party, unless the person making theprediction or stating the opinion has superior knowledge of thesubject matterand knows or has reason to know that the innocentparty intends to relyon the statement.

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