lecture notes ch. 14

Lecture notes ch 14 - Chapter 14 Title:BusLawSeal.eps Creator:Adobe Illustrator(R)13.0 Preview:ThisEPS picturewasnotsaved withapreview(TIFFor

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Chapter 14 Mistakes, Fraud, and Voluntary Consent C HAPTER O UTLINE I. Mistakes There is a difference  between mistakes as to judgment of market  conditions (believing  something will be worth more than it ultimately proves to be) and mistakes as to facts  (believing something is something other than what it is).  Only under a mistake of fact can a  contract be avoided. A. M ISTAKES OF F ACT 1. Bilateral (Mutual) Mistakes of Fact
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When parties to both sides of a contract are mistaken as to the same material  fact, either party can rescind the contract at any time. C ASE S YNOPSIS Case 14.1: Roberts v. Century Contractors, Inc. Bobby Roberts was an employee of Century Contractors, Inc., when a pipe struck him in a work- related accident in July 1993.  On the basis of a diagnosis by Dr. James Markworth of Southeastern  Orthopedic Roberts accepted $125,000 and payment of medical expenses, and waived any right to further  claims.   When the diagnosis turned out to have been a mistake, Roberts filed a claim for workers’  compensation, seeking to set aside the settlement due to a mutual mistake of fact. A North Carolina  state agency gave Roberts what he sought.  Century appealed. A state intermediate appellate court affirmed. “[W]here a mistake is common to both parties and  concerns a material past or presently existing fact, such that there is no meeting of the minds, a contract  may be avoided.” Markworth’s diagnosis was “material to the settlement of this claim” and both parties  relied on it.  Later, however, it was proven wrong. .................................................................................................................................................. Notes and Questions Could it be successfully argued that at the time of the agreement with Century, Roberts had assumed the risk that he may not have reached MMI, and thus the agreement could not be avoided?   Century made this argument, and the appellate court  agreed that “a party who assumed the risk of a mistaken fact cannot avoid a contract.” In this case,  however,   Roberts   “testified   that   he   based   his   decision   to   sign   the   settlement   agreement   on   Dr.  Markworth’s diagnosis and that he would not have settled his case if Dr. Friedman had told him that” he  had not reached MMI.
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A NSWERS TO Q UESTIONS AT THE E ND OF C ASE 14.1 1. Why did the court consider Markworth’s misdiagnosis a bilateral mistake rather than a unilateral mistake?  Markworth’s misdiagnosis was the basis on which both parties agreed  to a settlement, according to the court. Roberts testified that he would not have agreed to this settlement  had he known that his injury was not at maximum medical improvement. In that circumstance, Century  would also have negotiated a different agreement.
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This note was uploaded on 09/05/2011 for the course LAW 3000 taught by Professor Ms.zarac.sette during the Spring '11 term at Hawaii Pacific.

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Lecture notes ch 14 - Chapter 14 Title:BusLawSeal.eps Creator:Adobe Illustrator(R)13.0 Preview:ThisEPS picturewasnotsaved withapreview(TIFFor

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