Chapter 14 - Mistakes, Fraud, and Voluntary Consent

Chapter 14 - Mistakes, Fraud, and Voluntary Consent - Law...

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Law & Society I Key : M W 9:30AM, Snell 213 Normal, dark blue, size 12 font: Every header found in text John Exley, ID: 0160294 Normal, black, size 12 font: Excerpts from text 10.03.08 Bold, black, size 12 font: Vocabulary from text Chapter 14: Mistakes, Fraud, and Voluntary Consent Pages 286-299 In this chapter, we examine the kinds of factors that may indicate a lack of voluntary consent. Section 1 – Mistakes Only a mistake of fact may allow a contract to be avoided. Mistakes of Fact o Bilateral (Mutual) Mistakes of Fact A bilateral (or mutual) mistake occurs when both parties are mistaken as to an existing material fact (that is, a fact important to the subject matter of the contract)….When a bilateral mistake occurs, normally the contract is voidable by the adversely affected party and can be rescinded, or canceled. o Unilateral Mistakes of Fact A unilateral mistake occurs when only one of the contracting parties is mistaken about a material fact. Generally, a unilateral mistake does NOT afford the mistaken party any right to relief from the contract and the contract is normally enforceable. …There are at least two exceptions to the general rule. First , if the other party to a contract knows or should have known that a mistake of fact was made, the contract may not be enforceable. The second exception arises when a unilateral mistake of fact was due to a mathematical mistake in addition, subtraction, division, or multiplication and was made inadvertently and without gross ( extreme ) negligence. Mistakes of Value If a mistake concerns the future market value or quality of the object of the contract, the mistake is one of value , and the contract normally is enforceable. Mistakes of value can be bilateral or unilateral but do not serve as a basis for avoiding a contract either way. …Each party to a contract is considered to have assumed the risk that the value will change in the future or prove to be different from what he or she thought. Without this rule, almost any party who did not receive what she or he considered a fair bargain could argue mistake . Section 2 – Fraudulent Misrepresentation When an innocent party is fraudulently induced to enter into a contract, the contract normally can be avoided because that party has not voluntarily consented to its terms. Typically, fraudulent misrepresentation consists of the following elements:
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Chapter 14 - Mistakes, Fraud, and Voluntary Consent - Law...

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