Chapter 14

Chapter 14 - Chapter 14 Genuineness of Assent Basic...

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Chapter 14 Genuineness of Assent
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Basic Requirements of a Contract Agreement Consideration Contractual Capacity Legality
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Genuineness of Assent Contracts, although valid, may be unenforceable because even though there is an agreement, there is no genuine “meeting of the minds.” This lack of true or genuine assent might be due to any of the following: mistake misunderstanding misrepresentation unconscionability
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Mistake When parties enter into a contract, they make certain assumptions about the nature of deal, including the benefits and burdens of the transaction. When one or more of those assumptions turns out to be wrong, the mistaken party often seeks to be excused from performance . . . .
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Mistakes Two categories of mistake: Mistake in judgment as to quality or value Mistake of fact Mistakes in judgment as quality or value do not allow a contract to be avoided. Mistakes of fact sometimes allow a contract to be avoided.
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Mistakes A mistake, in the sense we use the term here, is an erroneous belief—a belief not in accord with the facts as they exist at the time of contract formation. A poor prediction of events that are expected to occur is not a mistake. Additionally, when two parties impute different meanings to the same language, that is more properly termed a misunderstanding .
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Mistakes in Judgment Mistakes in judgment as to quality or value A belief that some aspect of the transaction is worth more or less, or is of higher or lower quality, than is actually the case. Parties to a contract are generally held to bear the risk of mistakes of this sort. Mistakes of this kind will not result in contract avoidance.
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Mistake of Fact Mistake of fact A belief that some aspect of the transaction is other than it actually is, but not related to quality or value. Mistakes of fact sometimes allow a party to avoid his contractual obligations. Such mistakes can be either Unilateral (only one party to the contract is mistaken) Bilateral (both parties are mistaken).
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Unilateral Mistakes of Fact If only one party has made a mistake of fact, then the mistaken party will be allowed to avoid the contract if: 1. The mistake was a basic assumption on which the contract was formed. 2. Requiring performance would be unconscionable. 3a. There is no reliance by the non-mistaken party. OR
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Case Example Robert Pfister owned some stock that was no longer traded but he wished to sell. They thought it had little value, but contacted a broker to evaluate it. The broker told him it was worth $4,950. Pfister suspected a mistake and asked to have the value rechecked. The $4,950 value was confirmed and Pfister sold the stock to the broker who did the research. Later, it was determined that the
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This note was uploaded on 04/10/2008 for the course BUS 340 taught by Professor Langenderfer during the Spring '08 term at Meredith.

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Chapter 14 - Chapter 14 Genuineness of Assent Basic...

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