Law in Society Ms. Baumgartner

Section 1 Objectives  Recognize when genuine assent is not present  Identify the two key elements in undue influence

Genuine Assent & Duress  1 of the most important legal requirements of a contract to be legal and valid is genuine assent – true and complete agreement  Sometimes, genuine assent is hard to prove in court because of the following:  Duress (pressure/force when negotiating a contract—cannot threaten someone to agree to a contract with you)  Undue influence ( will define in later slide)  Mistake  Misrepresentation  Fraud

Genuine Assent & Duress  Without genuine assent a contract is typically voidable – the injured party can cancel the transaction  The party then has the legal right to get back what has already been put into the contract – rescission  For this to happen, a lack of genuine assent must be found before you ratify the contract  Ratification is conduct that confirms the contract

Genuine Assent & Duress  Genuine assent can be affected by the following:  Duress – use of an improper act or threat to obtain an expression of agreement  THREATS OF ILLEGAL OR TORTIOUS CONDUCT  Threat could be to the physical life, liberty, or property of victim or their relatives  You cannot threaten someone or inflict bodily harm on someone to agree to a contract  THREATS TO REPORT CRIMES  You cannot threaten to report a crime they committed to force the criminal to contract with you.  THREATS TO SUE  Only duress if the threat to sue is unrelated to the actual suit…….man threatens to sue wife for custody of children if she doesn’t sign over valuable pieces of jewelry/watches  ECONOMIC THREATS  Threats to a persons business or finances

Answer question:  The following question is listed next in your notes. Answer it based on notes you took so far:  List the various forms of legal duress

Undue Influence & Assent  Undue influence – occurs when 1 party to the contract is in a position of trust and wrongfully dominates the other party  The dominated person then does not exercise free will in accepting the contract  The 2 key elements in undue influence are:  The relationship – trust, confidence, or authority must exist between the parties to the contract  Attorney/client  Husband/wife  Parent/child  Patient/doctor  Wrongful/unfair persuasion – lack of free will must exist  EX: Elderly parent dependent on child for care, may sign over bank accounts or their house for free or half its value

Answer question:  The following question is listed next in your notes. Answer it based on notes you took so far:  What are the key parts in undue influence?

7-1 Assessment Questions  Complete 7-1 assessment questions #1-8 and DO NOT continue until all 7-1 notes and questions are answered completely.

Section 2 Objectives  Recognize the types of mistakes that can make a contract voidable or void  List the criteria for a statement to be treated as a misrepresentation  Define fraud and describe the remedies for it

7.2 Types of Contractual Mistakes  Two types of mistakes: 1. Unilateral – occurs when one party holds an incorrect belief about the facts or law related to the contract.  Failure to read a contract before signing  Misunderstanding from a hurried or careless reading  Signing a contract written in a foreign language  Usually cannot get out of contract Example: if you send an offer and type amount incorrectly—you are bound by the amount printed in offer

Types of Contractual Mistakes cont 2. Mutual (bilateral) – occurs when both parties have a incorrect belief about an important fact or the applicable law  May be voided by either party  Important facts that influence the parties’ decisions about a contract are called material facts  If a mutual mistake of the fact occurs, the contract is void – without legal effect (totally invalid) Ex: Both parties believe that a property is 48 acres, when in fact it is 28. Contract can be voided once mistake is uncovered.

Answer question:  The following question is listed next in your notes. Answer it based on notes you took so far:  Name the types of mistakes that can make a contract void or voidable

What is Misrepresentation?  In many contract negotiations, the parties make statements that turn out to be untrue  Innocent misrepresentation - party to a contract does not know that a statement he/she made is untrue (“I didn’t know!”)  Fraudulent misrepresentation – deliberate false representation or concealment of a material fact, which is meant to and which does persuade another to enter into an unfavorable contract Ex: If a car dealer is unaware that the previous owner replaced the odometer and the can has 150,000 miles instead of 70,000.

What is Misrepresentation?  Statements are treated as misrepresentation by the law only if: 1. The untrue statement is fact or there is active concealment  Opinion vs. fact – sales talk or expert opinion  Active concealment – seller of house paints ceiling to cover up water damage; sticker over a scratch on a new LED TV 2. The statement is material to the transaction if the defendant knew this plaintiff would rely on the statement and intentionally made a false statement  A used car dealer tells a customer that the oil had been changed every 3000 miles, when it was changed every 5000 miles instead. 3. The victim reasonably relied on the statement

Answer Question:  The following question is listed next in your notes. Answer it based on notes you took so far:  What are the 3 criteria for a statement to be treated as a misrepresentation?

Fraud & Remedies for Fraud  Fraud – intentional misrepresentation of an existing, important fact  All 3 elements of misrepresentation must be proven to show fraud PLUS 2 additional elements: 1. Intent – deliberately lies or conceals a material fact 2. Injury – usually financial; must be proof of injury  Remedies (verdicts) for fraud cases:  Rescission – cancel contract and recover what has been paid or given  Damages - $$$$$$ (actual and/or punitive)

Answer Question:  The following question is listed next in your notes. Answer it based on notes you took so far:  What are the remedies (solutions) for fraud?

7-2 Assessment Questions  Answer assigned questions on a separate sheet of paper. FOLLOW directions and be complete with your answers!