Contemporary Business Law

ByRichard A. Mann&Barry S. RobertsBusiness Law and the Regulation of Business, 11th ed. Chapter 11: Conduct Invalidating Assent 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.1Topics Covered in this ChapterA. DuressB. Undue Influence C. FraudD. Nonfraudulent MisrepresentationE. Mistake 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.2Duress Definition wrongful or unlawful act or threat that overcomes the free will of a partyPhysical Compulsion coercion involving physical force renders the agreement voidImproper Threats improper threats or acts, including economic and social coercion, render the contract voidable

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.3Undue Influence Definition taking unfair advantage of a person by reason of a dominant position based on a confidential relationshipEffect renders a contract voidable

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.4Fraud Fraud in the Execution a misrepresentation that deceives the other party as to the nature of a document evidencing the contract renders the agreement voidFraud in the Inducement renders the agreement voidable if the elements on the following slide are present 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.5Fraud in the InducementFalse Representation positive statement or conduct that misleadsFact the event occurred or the thing existsMateriality of substantial importanceKnowledge of Falsity and Intention to Deceive (scienter) includes: (a) actual knowledge, (b) lack of belief in statement's truthfulness, or (c) reckless indifference to its truthfulnessJustifiable Reliance a defrauded party is reasonably influenced by the fraud

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.6Nonfraudulent Misrepresentation Negligent Misrepresentation misrepresentation made without due care in ascertaining its truthfulness; renders agreement voidableInnocent Misrepresentation misrepresentation made without knowledge of its falsity but with due care; renders contract voidable

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.7Mistake Definition Understanding not in accord with factMutual Mistake both parties have a common but erroneous belief forming the basis of the contract; renders the contract voidable by either partyUnilateral Mistake courts are unlikely to grant relief unless the error is known or should be knownAssumption of Risk a party may assume the risk of a mistakeEffect of Fault upon Mistake not bar to avoidance unless the fault is a failure to act in good faithMistake in Meaning of Terms voids contract when seller and buyer use different meanings for same terms, unless they are aware of difference

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.8Conduct Invalidating Assent

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Click to edit Master title style 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.9