Law For Personal And Business Use Chapter 8 – Genuine Agreement

Contracts: Quick Review What is needed to create a contract? Offer Acceptance Chapter 8 – Genuine Agreement

Quick Review Continued What are the 3 requirements of an Offer? Intent to Create a Legal Obligation Complete and Certain Communicated Chapter 8 – Genuine Agreement

Quick Review Continued What are the 6 ways an offer can be ended? Revocation Rejection End of a Stated Time End of a Reasonable Time Counteroffer Death or Insanity Chapter 8 – Genuine Agreement

Quick Review Continued What are the two ways an offer can be kept open? Firm Offer Option Chapter 8 – Genuine Agreement

Quick Review Continued What are the 3 requirements of an Acceptance? Only by offeree Exactly as offered Communicated Chapter 8 – Genuine Agreement

Quick Review Concluded What appears to be the result of a valid offer and a valid acceptance A valid enforceable Contract But……there’s more to the story! Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement What Else is Needed? Genuine Agreement Evidenced by words or conduct between parties Also called Genuine or Mutual Assent May be lacking due to: Duress (8-1) Undue Influence (8-1) Fraud (8-2) Misrepresentation (8-2) Certain Mistakes (8-2) Chapter 8 – Genuine Agreement

What Happens if there is no Genuine Assent? Lack of Genuine Assent can make a Contract Voidable Voidable contracts can be avoided (rescinded) by the injured party. Injured party can then rescind and back out of contract Chapter 8 – Genuine Agreement

What is Rescission? Backing out of the transaction by Asking for return of anything given Giving back anything received Rescission must be prompt Shortly after discovering lack of genuine assent Must occur before ratification Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement What is Ratification? Conduct suggesting Intent to be Bound Stating you want to be Bound Certain Acts Sell/Give Away Continue to Use Waiting beyond a reasonable time Chapter 8 – Genuine Agreement

What Happens if You Ratify? Results in a Valid Enforceable Contract Ratification cannot be withdrawn Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement What Is Duress? Improper threat or act to obtain agreement Threats of illegal conduct Threats to report crimes Must report crimes, cannot use extortion Threats to sue When made for purpose unrelated to suit Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement What Is Duress? Improper threat or act to obtain agreement (continued) Economic threats Courts look at both threat and alternatives available to threatened party If threatened party had no choice but to contract, duress exists Chapter 8 – Genuine Agreement

What Is Undue Influence? When one party to contract is in position of trust and wrongfully dominates other party Must have relationship Relationship of trust Authority or confidence must exist between parties Formal relationship is not necessary Elderly/handicapped and caretaker Chapter 8 – Genuine Agreement

What Is Undue Influence? Must have unfair persuasion To prevent claim, stronger party should: Act with complete honesty Fully disclose important facts Insist weaker party obtain legal counsel Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement Review Think About Legal Concepts, p. 118 Think Critically About Evidence, p. 118 Label and include in notebook Chapter 8 – Genuine Agreement

What Creates Lack Of Genuine Assent? Mistake Not always Misrepresentation Fraud Chapter 8 – Genuine Agreement

What Is A Unilateral Mistake? One party holds incorrect belief about fact(s) related to content Generally, this does not affect validity of contract Contract still valid if: Failed to read contract Hurried or were careless in reading of contract Signed when contract written in language not understood Chapter 8 – Genuine Agreement

What Is A Unilateral Mistake? Contract is voidable if: Recognized unilateral mistake Major mistake and other party is aware Induced unilateral mistake One party encourage or influenced other to make mistake Chapter 8 – Genuine Agreement

What Are Mutual Mistakes? Both parties have incorrect belief about important fact Mistake about subject matter Contract is void Mistake of law Contract is valid Ignorance of law no excuse Mistake about material facts Must have reasonably relied on statement Chapter 8 – Genuine Agreement

What Is Misrepresentation? Innocent misrepresentation Fraudulent misrepresentation Both defenses make the contact voidable Chapter 8 – Genuine Agreement

How Are Statements Treated As Misrepresentations? If untrue statement is one of fact or there is active concealment Must be fact, not opinion When experts express opinion, considered fact Concealing important mistake or problem Silence misleads Chapter 8 – Genuine Agreement

How Are Statements Treated As Misrepresentations? If statement is material: Statement would cause reasonable person to contract Defendant knew plaintiff would rely on statement Defendant knew statement was false If plaintiff reasonably relied on statement Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement What Is Fraud? Must be based on misrepresentation Untrue statement of fact Materiality Reasonable reliance Must also prove: Intent Injury May have intentional misrepresentation but if no injury, no liability for fraud Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement What Is Fraud? Misrepresentation intentional when person: Deliberately lies or conceals material fact Recklessly makes statement not knowing if it is true or false Intends to induce victim to contract Chapter 8 – Genuine Agreement

What Remedies Are There For Fraud? Rescission Contracts voidable Compensatory damages May be recovered in amount that was lost Punitive damages Money awarded in amount that punishes to make example of party who committed fraud Punitive available because fraud is intentional tort Chapter 8 – Genuine Agreement

What Remedies Are There For Fraud? Victim can file for one or both forms of damages Victim may be awarded one or both forms of damages Chapter 8 – Genuine Agreement

Chapter 8 – Genuine Agreement Review Think About Legal Concepts, p. 123 Think Critically About Evidence, p. 123 Label and include in notebook Chapter 8 – Genuine Agreement