study guide 3 - Genuineness of Assent knowing and voluntary...

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Genuineness of Assent - knowing and voluntary assent to the terms of a contract. If a contract is formed as a result of a mistake , misrepresentation, undue influence, or duress , genuineness of assent is lacking, and the contract will be voidable. Mistakes of Fact – allows a contract to be canceled, Bilateral (Mutual) MoF – both parties mistaken, contract can be rescinded by either party (voidable) Unilateral MoF – only one party mistake, contract is enforceable unless: other party knew or should have known that mistake was made, mistake was due to substantial math error, made inadvertently and w/o gross negligence MoValue – generally contract is enforceable by either party, except when it is of material fact (concerning future market value or quality of object), depends on time, place, other circumstances Fraudulent Misrepresentation – elements: misrep of material fact has occurred, intent to deceive , reliance on misrep, injury to innocent party (although fraud is a tort, it affects genuineness of the innocent party’s consent to the contract) – can be express or implied (concealment/not telling, Misrep of future facts and statements of opinion are not fraud unless person professes to be an expert, Misrep of law is not fraud unless person has greater knowledge of the law, silence is not fraud unless serious problem or defect known or asked and person lied) Scienter - knowledge by the misrepresenting party that material facts have been falsely represented or omitted w/ intent to deceive , gross negligen Misrepresentation has occurred: Misrep by Conduct, Misrep of Law, Misrep by Silence Reliance on Misrep – deceived party must have justifiable reliance (depends on knowledge & experience of the party relying) Injury to Innocent Party – no proof of injury is required when action is to rescind contract, proof of injury is universally required to recover damages Nonfradulent: occurs when a person makes a statement that he believes is true but actually misrps material facts, angry party can rescind contract but cant seek damages Innocent Misrep - false statement of fact or an act made in good faith that deceives and causes harm or injury to another Negligent Misrep – (same as scienter) (treated as fraud misrep even though the misrep was not purposeful) Any manifestation through words or conduct that amounts to an untrue statement of fact made in circumstances in which a reasonable & prudent person wouldnt have done (or failed to do) that which led to the misrepresentation (representation made w/ an honest belief in its truth may still be negligent due to 1) lack of reasonable care in ascertaining the facts 2) manner of expression 3) absence of the skill or competence required by a particular business or profession Undue Influence - arise from special relationships, such as fiduciary relationships, in which 1 party’s free will has been overcome by the undue influence of another, contract usually voidable
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