Unformatted text preview: Business Law and the Regulation of Business Regulation
Chapter 11: Conduct Invalidating Assent Chapter By Richard A. Mann & Barry S. Roberts Topics Covered in this Chapter Topics
A. Duress B. Undue Influence B. C. Fraud C. D. Nonfraudulent Misrepresentation E. Mistake Duress
Definition – wrongful or unlawful act or threat that overcomes the free will of a party. of s Physical Compulsion – coercion Compulsion involving physical force renders the agreement void. agreement s Improper Threats – improper threats Threats or acts, including economic and social coercion, render the contract voidable. voidable.
s Undue Influence
Definition – taking unfair advantage of a person by reason of a dominant position based on a confidential relationship. relationship. s Effect – renders a contract voidable. renders
Fraud in the Execution – a misrepresentation that deceives the other party as to the nature of a document evidencing the contract renders the agreement void. renders s Fraud in the Inducement – renders the agreement voidable if the elements on the following slide are present. on
s Fraud in the Inducement Fraud
s s s s s False Representation – positive statement or conduct that misleads. or Fact – the event occurred or the thing exists. exists. Materiality – of substantial importance. of Knowledge of Falsity & Intention to Deceive – (scienter) iincludes (a)actual ncludes Deceive knowledge, (b)lack of belief in statement's truthfulness, or (c)reckless indifference to its truthfulness. its Justifiable Reliance – a defrauded party is reasonably influenced by the fraud. reasonably Nonfraudulent Misrepresentation Nonfraudulent
Negligent Misrepresentation – misrepresentation made without due care in ascertaining its truthfulness; renders agreement voidable. renders s Innocent Misrepresentation – misrepresentation made without knowledge of its falsity but with due care; renders contract voidable. care;
s Understanding not in accord with fact.
Mutual Mistake – both parties have a common but erroneous belief forming the basis of the contract; renders the contract voidable by either party. party. Unilateral Mistake – courts are unlikely to grant relief unless the error is known or should be known by the nonmistaken party. be Assumption of Risk – a party may assume the risk of a mistake. risk Effect of Fault upon Mistake – not a bar to avoidance unless the fault amounts to a failure to act in good faith. to s s s Conduct Invalidating Assent Conduct
Conduct Duress by physical force Duress by improper threats Undue influence Fraud in the execution Fraud in the inducement Mutual mistake of fact Effect Void Voidable Voidable Void Voidable Voidable Nonfraudulent misrepresentation Voidable ...
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