We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published bySara Nolan
Modified over 3 years ago
Copyright © 2004 McGraw-Hill Ryerson Limited 1 PART 3 – THE LAW OF CONTRACTS Chapter 10 – Failure to Create an Enforceable Contract Prepared by Douglas H. Peterson, University of Alberta
Copyright © 2004 McGraw-Hill Ryerson Limited 2 FAILURE TO CREATE AN ENFORCEABLE CONTRACT Mistake Misrepresentation Undue Influence Duress
Copyright © 2004 McGraw-Hill Ryerson Limited 3 INTRODUCTION Even if a contract contains all the essential requirements of a contract it may fail for other reasons Contract may be defeated due to: Mistake Misrepresentation Undue Influence Duress
Copyright © 2004 McGraw-Hill Ryerson Limited 4 MISTAKE A state of affairs in which a party (or both parties) has formed an erroneous opinion as to the identity or existence of the subject matter, or of some other important term An error that destroys consensus Contract does not express parties true intentions Untrue impression of an essential element Failed to reach a true meeting of the minds Legal perspective has a narrow interpretation
Copyright © 2004 McGraw-Hill Ryerson Limited 5 MISTAKE Types of Mistake Mistake of Law Mistake of Fact Mistake of Law Generally cannot recover for a mistake of law One is bound to know the law Only if statute provided for recovery of money paid
Copyright © 2004 McGraw-Hill Ryerson Limited 6 MISTAKE OF FACT Mistake about the existence of the subject matter Mutual mistake by the parties Generally renders the contract void because impossible to perform Subject matter of contract did not exist at time the contract was formed Usually based on a false assumption
Copyright © 2004 McGraw-Hill Ryerson Limited 7 MISTAKE OF FACT Mistake as to identity of one of the parties May allow a party to avoid contractual liability Depends if the identity of the person is an essential element of the contract Personal services contract Mistaken party must prove both: The mistake was known to the other contractual party; and The mistake was material (one that matters to the mistaken party in an important way)
Copyright © 2004 McGraw-Hill Ryerson Limited 8 MISTAKE OF FACT Mistake as to true nature of contract Non Est Factum – it is not my doing A defense that may allow illiterate or infirm persons to avoid liability on a written agreement if they can establish that they were not aware of the true nature of the document, and were not careless in its execution
Copyright © 2004 McGraw-Hill Ryerson Limited 9 MISTAKE OF FACT Non Est Factum Very narrow form of mistake Radical difference between what person thought they were signing and what they signed Must have been led to believe that document was of a different nature than what was signed Show were not careless Some infirmity prevented examination of the document Not apply if mistake is to a matter of degree of a term 25% interest instead of 10%
Copyright © 2004 McGraw-Hill Ryerson Limited 10 UNILATERAL AND MUTUAL MISTAKE Unilateral mistake – mistake made by one party to the agreement Usually when one party misleads the other or is a aware of the mistake Akin to misrepresentation Allows it to exist or actively encourages the false assumption
Copyright © 2004 McGraw-Hill Ryerson Limited 11 UNILATERAL AND MUTUAL MISTAKE Mutual mistake – mistake made by both parties Mistake common to both parties Usually with respect to: Existence of the subject matter Mistakes as to identity Mutual mistake Courts use rules of interpretation Will chose the reasonable interpretation
Copyright © 2004 McGraw-Hill Ryerson Limited 12 UNILATERAL AND MUTUAL MISTAKE Rectification Mistake that renders performance impossible Can correct mistakes or errors in written contracts when they are obvious When verbal agreements reduced to writing Written agreement does not reflect true agreement Must show Obvious mistake No intervening negotiations or changes
Copyright © 2004 McGraw-Hill Ryerson Limited 13 MISREPRESENTATION A statement or conduct which is false at the time it is made Types Innocent Fraudulent By means of Non-disclosure Remedy – injured party can Rescind the contract (equitable remedy) Sue for damages (tort remedy) Rescission – the revocation of a contract
Copyright © 2004 McGraw-Hill Ryerson Limited 14 MISREPRESENTATION Must be a statement of fact and not opinion Must be material Induced the party to enter into the contact Reliance Party relied on the misrepresentation Pre-contractual If placed in the contract it is a term
Copyright © 2004 McGraw-Hill Ryerson Limited 15 INNOCENT MISREPRESENTATION Representation of a material fact a party honestly believes to be true but discovered to be false after the formation of the contact If material injured party may avoid the contract Courts attempt to put parties back into the positions they were before the contract Sometimes not possible Goods consumed, value declines, sold to a third party Innocent misrepresentation can become fraudulent if mistake is discovered and not disclosed
Copyright © 2004 McGraw-Hill Ryerson Limited 16 FRAUDULENT MISREPRESENTATION A false statement of fact made by a person who knows, or should know,, that it is false, and made with the intention of deceiving another Deceit – a tort that arises when a party suffers damage by acting upon a false representation made by a party, with the intention of deceiving the other
Copyright © 2004 McGraw-Hill Ryerson Limited 17 FRAUDULENT MISREPRESENTATION In addition to right of rescission injured party can sue for damages under tort of deceit Lose right to rescission and damages if take benefits under the contract Right of rescission may be defeated by third party rights Requirements Proof of fraud False representation made knowingly, without belief in its truth or Made with reckless disregard (carelessness)
Copyright © 2004 McGraw-Hill Ryerson Limited 18 MISREPRESENTATION BY NON- DISCLOSURE General rule – no duty to disclose material facts Exception: contracts of utmost good faith Active concealment of facts Partial disclosure renders the part disclosed as false Treated as fraud or intention to deceive
Copyright © 2004 McGraw-Hill Ryerson Limited 19 CONTRACTS OF UTMOST GOOD FAITH One of the parties is presumed to have means of knowledge which are not assessable to the other Insurance Require full disclosure by insurance applicant Insurer knows very little Need proper disclosure to asses risk and set premium Statutes have imposed limits on innocent non- disclosure to disallow insurers from avoiding liability on the contract
Copyright © 2004 McGraw-Hill Ryerson Limited 20 CONTRACTS OF UTMOST GOOD FAITH Partnership Fiduciary relationship Special relationship contracts Special trust or confidence exists between parties
Copyright © 2004 McGraw-Hill Ryerson Limited 21 UNDUE INFLUENCE A state of affairs whereby a person is so influenced by another that the persons judgment is not his or her own Reduces free will to bargain Voidable contracts Presumed in certain relationships
Copyright © 2004 McGraw-Hill Ryerson Limited 22 UNDUE INFLUENCE Special Relationships solicitor – client doctor – patient trustee – beneficiary parent – child spiritual advisor – parishioner
Copyright © 2004 McGraw-Hill Ryerson Limited 23 UNDUE INFLUENCE Presumption of undue influence if special relationship exists Onus shifts to dominant party to show lack of undue influence Satisfy onus by showing Fairness of bargain (price paid) Full disclosure was made prior to formation of contract Weaker party free to get independent advice Weaker party may avoid the contract and courts grant rescission
Copyright © 2004 McGraw-Hill Ryerson Limited 24 UNDUE INFLUENCE Weak party must seek rescission within reasonable period of time after coming out from influence or right may be lost Where presumption does not exists Spouses Court looks to degree of domination and fairness of bargain struck Guarantees given for another spouses indebtedness
Copyright © 2004 McGraw-Hill Ryerson Limited 25 DURESS The threat of injury or imprisonment for the purpose of requiring another to enter into a contract or carry out some act Threat to person or close relative Threat to person and not persons goods or chattels
Copyright © 2004 McGraw-Hill Ryerson Limited 26. LAW OF CONTRACT FAILURE TO CREATE A LEGAL RELATIONSHIP FLAW EFFECT ON AGREEMENT ADDITIONAL RIGHTS OF INJURED PARTY AGREEMENT Mistake Innocent Misrepresentation Fraudulent Misrepresentation Undue Influence Duress Void/Voidable Voidable Also Tort of Deceit
Copyright © 2004 McGraw-Hill Ryerson Limited 27 SUMMARY Contract requires true meeting of minds In spite of essential elements of a contract being present contract may be invalid due to other reasons Mistake – contract may be void/voidable Identity of parties Existence of subject matter Nature of agreement
Copyright © 2004 McGraw-Hill Ryerson Limited 28 SUMMARY Misrepresentation If party induced and it is a material matter contract voidable at option of injured party If fraudulent may sue for damages under tort of deceit Undue influence or Duress Contract voidable Injured party must rescind and not continue to take benefits under the contract
Prepared by Douglas Peterson, University of Alberta 11-1 Part 3 – The Law of Contract Chapter 11 Failure to Create an Enforceable Contract.
Part 3 – The Law of Contract Chapter 11 – Failure to Create an Enforceable Contract Prepared by Michael Bozzo, Mohawk College © 2015 McGraw-Hill Ryerson.
CHAPTER 7 GENUINENESS OF ASSENT. 7-1 Duress and Undue Influence Genuine Assent and Duress An agreement will be treated as valid (legally binding and enforceable)
Chapter 12 Genuineness of Assent. Introduction Voluntary assent by the parties is necessary to create an enforceable contract. Assent is determined by.
Duress & Undue Influence Genuine agreement also called genuine assent or mutual assent may be lacking due to fraud, misrepresentation, undue influence,
Copyright © 2005 Pearson Education Canada Inc. Business Law in Canada, 7/e, Chapter 7 Business Law in Canada, 7/e Chapter 7 Factors Affecting the Contractual.
Copyright © 2008 Pearson Education Canada8-1 Chapter 8: Factors Affecting the Contractual Relationship.
CHAPTER 5: CONTRACTUAL DEFECTS Emond Montgomery Publications 1.
FREE CONSENT Contract is voidable at the option of the party whose consent is not free Coercion Undue influence : Deemed to dominate when: real or.
25-1 Chapter 13 Genuineness of Assent and Undue Influence.
CHAPTER PowerPoint ® Presentation Prepared By Susan McManus, Mount Royal College CHAPTER PowerPoint ® Presentation Prepared By Susan McManus, Mount Royal.
© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 13 Genuineness of Assent Chapter 13 Genuineness of Assent.
Understanding Business and Personal Law Fraud and Misrepresentation Section 6.1 Genuine Agreement BELL QUIZ ON CHAPTER 5 1.What is any agreement that is.
Chapter 11 Conduct Invalidating Assent. Assent Free and willing intent to be bound to a contract. Where a person has not freely assented to the terms.
Introduction to English Law of Obligations (2014/2015) dr Jan Halberda.
Contract Law for Paralegals: Traditional and E-Contracts © 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Genuineness of Assent.
Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 1 Chapter 7 Genuineness of Assent Chapter 7 Genuineness of Assent 7-1.
ES 2.00 UNDERSTAND CONTRACT LAW Obj Understand the elements and characteristics of a contract 2.01 B Genuine Agreement.
Contract Law Factors Affecting Contracts Ending a Contract.
Law for Business and Personal Use © South-Western Publishing G O A L S Duress and Undue Influence Define genuine agreement and rescission Identify when.
© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 16: Remedies for Breach of Traditional and Online Contracts.
Copyright Guy Harley 2004 Mistake. Copyright Guy Harley 2004 Mistake A party cannot get out of a contract because they made a mistake Exceptions:
Chapter 7 Genuine Assent- O Determining whether a true and complete agreement exists.
Genuine Agreement “meeting of the minds”. Genuine Agreement Genuine Agreement exists when a valid offer and a valid acceptance has been made along.
Genuine Assent. Recognize when genuine assent is not present. Identify the two key elements in undue influence.
Business Law Chapter 5: Mutual Assent. What is Mutual Assent? Mutual assent is the term that we use to encompass not only the offer and the acceptance,
Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall 1 GENUINENESS OF ASSENT AND UNDUE INFLUENCE © 2010 Pearson Education, Inc., publishing as Prentice-Hall.
2. Genuine Assent – true and complete agreement Contract agreement cannot be based on: - one party deceiving another - an important mistake - use of unfair.
Chapter 7. Genuine Assent True and complete agreement Required for a contract to be valid If missing contract is VOIDABLE (cancels obligation)
1 VITIATING FACTORS Objectives: 1. Misrepresentation 2. Mistake 3. Duress and Undue Influence 4. Illegal and Void Contracts.
Business Law and the Regulation of Business Chapter 11: Conduct Invalidating Assent By Richard A. Mann & Barry S. Roberts.
Genuineness of Assent Chapter 5. Genuineness of Assent ► A contract may be voidable if the parties have not genuinely assented to its terms. Assent may.
Contract Law: Genuine Agreement Objective 3.01 Understand requirements of each element of a contract.
Genuine Agreement Chapter 8 in the business law text.
Genuine Assent Chapter 7. Genuine Assent ► True and complete intent to enter into a contract Without it, contracts are typically voidable.
Law in Society Ms. Baumgartner. Section 1 Objectives Recognize when genuine assent is not present Identify the two key elements in undue influence.
Understanding Business and Personal Law Fraud and Misrepresentation Section 6.1 Genuine Agreement If the offeror makes a valid offer, and the offeree has.
Understanding Business and Personal Law Fraud and Misrepresentation Section 6.1 Genuine Agreement Pre-Learning Question How would you define fraud? How.
Genuine Agreement A valid offer has been made by the offeror, and a valid acceptance has been exercised by the offeree.
Bell Ringer What is fraud? What is an innocent misrepresentation? Did anyone do anything fun over break?
Chapter 13 Capacity and Genuine Assent Twomey, Business Law and the Regulatory Environment (14th Ed.)
GENUINE AGREEMENT. Defective Agreements When something goes wrong and what seems to be a valid contract really isn’t Fraud Misrepresentation Mistake Duress.
Genuine Assent. 6 PARTS OF A VALID CONTRACT Offer and Acceptance Genuine Assent Consideration Capacity Legality Writing.
Slides developed by Les Wiletzky Wiletzky and Associates Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany.
Mistake, Duress, Undue Influence, Fraud, Misrepresentation, Unconscionability and Contract Interpretation.
CHAPTER Microsoft ® PowerPoint ® Presentation Prepared By Gail McKay, LLB, Thompson Rivers University © 2008 McGraw-Hill Ryerson Ltd., All Rights Reserved.
Copyright Guy Harley Revision. Copyright Guy Harley Void, Voidable & Unenforcable Void Where one or more of essential elements of contract.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.
Law for Business and Personal Use © Thomson South-Western CHAPTER 7 Genuineness of Assent 7-1Duress and Undue Influence 7-2Mistake, Misrepresentation,
© 2017 SlidePlayer.com Inc. All rights reserved.