Chapter 14: Voidable Contracts Voidable contract – Contract that can be canceled by one of the parties, despite meeting all other legal requirements Terms used for cancellation of contract: avoidance, disaffirmance, and rescission Most common grounds for the rescission of a contract: lack of reality of consent and lack of legal capacity Reality of Consent - When a contract that appeared to have consent from both parties becomes voidable if it turns out that apparent consent of one or both of the parties was not genuine - Contracts tainted with fraud, misrepresentation, mistake, duress, or undue influence can be rescinded by the innocent parties - Courts will allow rescission on the ground that there was “no reality of consent” Fraud Essence of fraud: Deception, the intentional misleading of one person by another Most common type of fraud occurs when one person simply lies to another about a material fact, as a result of which a contract is made The representation must: 1. Be false 2. Concern a fact 3. Be material 4. Be relied upon 5. Be made with knowledge of its falsity (or reckless disregard for truth) 6. Be made with the intent to deceive Elements of fraud - When a court is called upon to decide in a given case whether the conduct of one of the parties was fraudulent, its usual approach is to see if certain required elements are present – If so, fraud has been established and the victim will be afforded relief - To be successful in a fraud action, the plaintiff is required to show all of the following: o D made a misrepresentation of a material fact, statement was made with the intent to deceive (D knew or should have known statement was false), P reasonably relied on the misrepresentation, P suffered an injury as a result - Misrepresentation of a material fact – broadly interpreted to include any word or conduct that causes the innocent person to reach an erroneous conclusion of fact - Statement of fact – an actual event, circumstance, or occurrence; the misstatement must be a fact to be fraudulent Predictions –
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- Spring '08
- Contract Law