Genuine Agreement “meeting of the minds”

Genuine Agreement Genuine Agreement exists when a valid offer and a valid acceptance has been made along with consideration, capacity and legality Circumstances that make an agreement defective: mistake, fraud, innocent misrepresentation, duress, economic duress, undue influence

Fraud Deliberate deception to secure an unfair or unlawful gain.

Fraud (Cont.) People who are induced to enter into contracts by fraud can rescind (cancel), sue for money damages & punitive damages- damages designed to punish.

5 Elements of Fraud To succeed in a lawsuit for fraud, the party bringing the suit must prove 5 elements: False Representation Of Fact Representation Known To Be False False Representation Intended To Be Relied Upon False Representation Reasonably Relied Upon Resulting Loss

1. False representation of material, existing fact Material fact- is one that is important; it matters to one of the parties. Under some circumstances, individuals can make false representation by choosing not to reveal important information. This is known as concealment or passive fraud.

Opinions & a promise of something to happen in the future are not material facts. Opinions are sometimes called “sales talk”, sales puffing or sales puffery and are allowed.

Other Examples Of Material False Representations: Painting Over Rust Spots On Car Turning Back Mileage Of Odometer

2. Representation Known To Be False Party Making The Representation Must Know That It Is False. This may be shown by: Proving actual knowledge Showing the statement was made recklessly

3. False Representation Intended To Be Relied Upon To prove fraud, the person making the misrepresentation must intend that the other party will rely upon the information as part of the contract negotiations.

4. False Representation Actually Relied Upon To prove fraud, the false representation must be reasonably relied upon by the other party when the agreement is made. Example: If the person asking about the Mustang was accompanied by an antique car expert, and the expert informs them that the car isn’t the year the seller claims and that it is worth much less that they are asking, they cannot bring suit because they didn’t actually rely upon the false information.

5. Resulting in loss Innocent Party Must Actually Suffer Some Monetary Loss

Innocent Misrepresentation- Misrepresentation is the act of making an innocent statement that turns out to be false, when the person honestly believed the statement was true at the time it was made. Injured party has the right to rescind a contract Injured party CANNOT sue for damages

MISTAKES People sometimes enter into contracts believing that certain information is true when it is actually not, or that information is not true when it really is.

Unilateral Mistake A: Unilateral mistake – an error on the part of one of the parties to the contract. A person usually cannot get out of a contract because of a unilateral mistake. There are two types of unilateral mistakes:

1. Mistake as to the nature of the agreement People who sign an agreement are bound to it, even if they have not read it or are mistaken about what it says.

2. Mistake as to the identity of a party If you make an offer by letter to one party, but the wrong person mistakenly receives the offer, the mistake may be cause to void the contract Face to face dealings cannot be voided.

Remedies for Unilateral Mistakes

b. Bilateral mistake (mutual mistake) Both parties to a contract are mistaken about some important fact. The contract may be avoided by either party.

b. Bilateral mistake (mutual mistake) (Continued) 1. Mistake As To The Possibility Of Performance If both parties believe that the duties can be performed, when in fact, they cannot. 2. Mistake As To The Subject Matter If both parties are mistaken as to the identity of the subject matter EX: Bob agreed to sell his car. Unknown to both parties, the car had been in a wreck over night. 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.

Duress- Overcoming a person’s will by use of force or by threat of force or bodily harm.

$$$$$$ Economic Duress Is the threatening of a person’s business or income to cause him or her to enter a contract. When actual physical force is used, the contract is void. (physical duress) When a threat is used, the contract is voidable.

Undue influence Is unfair and improper persuasive pressure exercised by one person in a relationship of trust with another person Usually exerted by stronger person upon a weaker person (due to ill health, old age)

An attorney’s personal experience with undue influence http://www.youtube.com/watch?v=_I_HX4L_Ick