BL-Chapt14 - Mistakes, Fraud, and Voluntary Consent Chapter...

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Unformatted text preview: Mistakes, Fraud, and Voluntary Consent Chapter Introduction 14-1 Mistakes 14-1a Mistakes of Fact 14-1b Mistakes of Value 14-2 Fraudulent Misrepresentation 14-2a Misrepresentation Has Occurred 14-2b Intent to Deceive 14-2c Reliance on the Misrepresentation 14-2d Injury to the Innocent Party 14-3 Undue Influence 14-3a How Undue Influence May Occur 14-3b The Presumption of Undue Influence 14-4 Duress 14-4a The Threatened Act Must Be Wrongful or Illegal 14-4b Economic Duress 14-5 Adhesion Contracts and Unconscionability 14-5a Standard-Form Contracts 14-5b Unconscionability and the Courts Chapter Recap Page 1 of 22 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=14... Chapter Introduction An otherwise valid contract may still be unenforceable if the parties have not genuinely agreed to its terms. As mentioned in Chapter 10, lack of genuineness of assent, or voluntary consent, can be used as a defense to the contract's enforceability. Voluntary consent may be lacking because of a mistake, misrepresentation, undue influence, or duressin other words, because there is no true "meeting of the minds." Generally, a party who demonstrates that he or she did not truly agree to the terms of a contract can choose either to carry out the contract or to rescind (cancel) it and thus avoid the entire transaction. In this chapter, we examine the kinds of factors that may indicate a lack of voluntary consent. Page 2 of 22 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=14... 14-1 14-1a Mistakes Mistakes of Fact Drama of the Law: Mistake: Plausible Pepper Price Published in Paper Exhibit 141. Mistakes of Fact Bilateral (Mutual) Mistakes of Fact We all make mistakes, so it is not surprising that mistakes are made when contracts are formed. In certain circumstances, contract law allows a contract to be avoided on the basis of mistake. It is important to distinguish between mistakes of fact and mistakes of value or quality . Only a mistake of fact may allow a contract to be avoided. Mistakes of fact occur in two forms bilateral and unilateral . A bilateral, or mutual, mistake is made by both of the contracting parties. A unilateral mistake is made by only one of the parties. We look next at these two types of mistakes and illustrate them graphically in Exhibit 141. 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. It is a "mutual misunderstanding concerning a basic assumption on which the contract was made." When a bilateral mistake occurs, normally the contract is voidable by the adversely affected party and can be rescinded, or canceled. For example, Gilbert contracts to sell Magellan three tracts of undeveloped land for $6 million on the basis of a surveyor's report showing the layout and acreage....
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BL-Chapt14 - Mistakes, Fraud, and Voluntary Consent Chapter...

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