d where the other person is entitled to know the fact because of a relation of

D where the other person is entitled to know the fact

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(d) where the other person is entitled to know the fact because of a relation of trust and confidence between them. Restatement §162. When a Representation is Fraudulent or Material. (1) A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker a. Knows or believes that the assertion is not in accord with the facts, or b. Does not have the confidence that he states or implies in the truth of the assertion, or c. Knows that he does not have the basis that he states or implies for the assertion (2) A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, of if the maker knows that it would be likely to induce the recipient to do so. Restatement §163. When a Misrepresentation Prevents Formation of a Contract. If a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent. Restatement §164. When a Misrepresentation Makes a Contract Voidable.
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Contracts I – Professor Goodrich Summer 2006 39 of 41 (1) If a party’s manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient. Laidlaw v. Organ. Seller of Tobacco asked Buyer if there were any changes in the price. Buyer knew of an increase but didn’t say anything. Seller sold the tobacco, found out that the price increased and then stole the tobacco back. The Buyer had no duty to disclose because there was no prejudice to the access of information. If the price was the basis for the information that induced the sale at the contract price, then the sale could be invalidated. (2) If a party’s manifestation of assent is induced by either a fraudulent or a material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith with without reason to know of the misrepresentation either gives value or relies materially on the transaction. (C) Duress and Undue Influence Duress “gun to the head”; “hold up” situation; improper threat which leads the victim w/ no reasonable choice except to accept the offer; any threat that overbears the will of the other party Restatement §174. When Duress by Physical Compulsion Prevents Formation of a Contract. If conduct that appears to be a manifestation of assent by a party does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as manifestation of assent.
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