Section 6.2

Mistake When a person.. believes that certain info is true when it is actually not. or that information is not true when it really is.

Unilateral Mistake A unilateral mistake –error by 1 person Two types of mistakes Nature – Can NOT avoid or cancel identity of a party – might be able to rescind Pg 134. Give an instance when you could cancel a contract due to a mistake as to the identity of the party.

Unilateral Mistake A person usually cannot avoid a contract because of such a mistake.

Mistake as to the Identity of a Party Can you void a contract if you send a letter to one party, but the wrong person mistakenly receives the offer? You may void the contract

NO Mistake as to the Identity of a Party If you make an offer face-to-face with a person whose identity you have mistaken, can you void the contract? NO

Jenny sent a letter offering baby-sitting services at a certain rate to Jill, a mother of toddlers in the neighborhood. The letter carrier mistakenly delivered the letter to another Jill, who happened to live across town and also had children. This other Jill liked Jenny's offer and accepted it. Is the contract voidable? Yes, it was not intended for that Jill.

If Jenny had made the same offer face to face with a person whom she thought was Jenny, but who really was not, could this mistaken identity allow her to void the contract? No, the mistaken identity would not prevent a binding contract.

Bilateral Mistake Both parties are mistaken about important fact (material fact) Either party may avoid the contract. TWO TYPES possibility of performance. subject matter.

Bilateral Mistake There are two types of bilateral mistakes. the possibility of performance. the subject matter.

Possibility of Performance Mistake as to the Possibility of Performance If both parties believe that the duties can be performed, when in fact, they cannot. EX: Bob agreed to sell his car. Unknown to both parties, the car had been in a wreck over night.

Mistake as to the Subject Matter If both parties are mistaken as to the identity of the subject matter EX: Ralph thought he was selling land on Indiana Ave in the South end and Ronald thought he was buying land on Indiana ave in the North end of tow. Both are mistaken and Either can cancel.

True or false—Both parties may avoid contracts involving unilateral and bilateral mistakes.

ANSWER False

Pre-Learning Question What do you think duress is?

Duress Duress is overcoming a person’s will by use of force or threat of force or bodily harm.

Types of Duress -Physical –Actual Physical Violence -Emotional– Threaten -Economic- Threats to business or professional reputation

Economic Duress (left side of room) Give an example of each. Economic Duress (left side of room) Threat to a business Threat to reputation Physical Duress (Back middle) Emotional Duress (Right side)

Baby-sitter Jenny sat with the children of one mother several times for an agreed price. One day the mother said that she wished to now pay 50 cents less per hour. The woman threatened to spread rumors around the neighborhood that Jenny was a careless babysitter if Jenny refused to agree to the pay cut. This was an attempt to reach an agreement by threatening economic harm to the baby-sitter’s future business.

Undue Influence Undue influence -the use of unfair and improper persuasive pressure to force another person to enter into an agreement.

Undue Influence ill health, old age, and mental immaturity may put a person in a weaker position.

Elements of Undue Influence 6.2 Elements of Undue Influence Element Description A dependency relationship One party in a relationship is dependent on the other party.

Elements of Undue Influence 6.2 Elements of Undue Influence Element Description Unfair or improper pressure Use of excessive pressure to force the dependent person to enter a contract.

Elements of Undue Influence 6.2 Elements of Undue Influence Element Description A beneficial contract benefits the independent party at the expense of the dependent party.

Gene Kelly a financial advisor tells an elderly investor that, due to the investor’s age and relatively small investment portfolio, he should invest in more aggressive stocks and should sign a contract to turn over the management of the portfolio to Mr. Kelly for the next three years. The investor is fearful that he will not have enough money to last through his retirement years and signs the contract. Although he pays Mr. Kelly sizeable management fees over the following three years, the portfolio loses value at a faster rate than if he had not altered his original strategy. What was used to persuade the investor UNDUE INFLUENCE

Reviewing What You Learned Section 6.2 Assessment Reviewing What You Learned What is the difference between unilateral and bilateral mistakes?

Reviewing What You Learned Answer Section 6.2 Assessment Reviewing What You Learned Answer Unilateral mistake: only one party is mistaken. Bilateral mistake: both parties are mistaken.

Reviewing What You Learned Section 6.2 Assessment Reviewing What You Learned What types of mistake will allow rescission of a contract?

Reviewing What You Learned Answer Section 6.2 Assessment Reviewing What You Learned Answer Mistake as to the identity of a party, mistake as to the possibility of performance, and mistake as to the subject matter.

Reviewing What You Learned Section 6.2 Assessment Reviewing What You Learned What are the requirements of economic duress?

Reviewing What You Learned Answer Section 6.2 Assessment Reviewing What You Learned Answer Economic duress requires threats to a person’s business or income that cause the person to enter a contract without real consent.

Reviewing What You Learned Section 6.2 Assessment Reviewing What You Learned What are the requirements of undue influence?

Reviewing What You Learned Answer Section 6.2 Assessment Reviewing What You Learned Answer Undue influence requires unfair and improper persuasive pressure exercised by one person in a relationship of trust with another person.

Critical Thinking Activity Types of Mistakes Section 6.2 Assessment Critical Thinking Activity Types of Mistakes Why is it important to be able to distinguish between unilateral and bilateral mistakes?

Critical Thinking Activity Answer Types of Mistakes Section 6.2 Assessment Critical Thinking Activity Answer Types of Mistakes Answers will vary, but should recognize that understanding the differences between unilateral and bilateral mistakes will help you know your rights and remedies in a contract.

Legal Skills in Action Undue Influence Section 6.2 Assessment Legal Skills in Action Undue Influence Suppose that a close friend has sent you an e-mail message saying that she believes her grandfather was tricked into signing over all of his property to his live-in caretaker.

Legal Skills in Action Undue Influence Section 6.2 Assessment Legal Skills in Action Undue Influence Your friend asks for your advice. Write an e-mail reply to explain the elements she would have to prove to demonstrate that her grandfather signed over his property because of undue influence.

Legal Skills in Action Answer Section 6.2 Assessment Legal Skills in Action Answer Undue Influence To prevail in a claim of undue influence, your friend would need to show that the parties had a relationship of trust, and that the caretaker exercised improper persuasion to take advantage of her grandfather .