Chapter 6 Genuine Agreement

Fraud  A deliberate deception to secure an unfair or unlawful gain  May rescind (cancel) the contract or sue for damages  May also collect punitive damages which are a way to punish the wrongdoer

For a successful lawsuit, you must have…

False Representation of Fact  Material Fact: one of importance  Excludes Sales Puffery  Concealment: not saying something that they should say ** Especially important when you are considered an expert. **

Representation Known to be False  The parties must know the fact is not true. p.130 Example 1

False Representation Intended to be Relied Upon  It must be information or facts that the parties can reasonably rely upon.

False Representation Actually Relied Upon

Resulting Loss  Must have a monetary loss.

Innocent Misrepresentation  When the person actually believes a fact is true, but it is not.  An injured party may rescind the contract p. 132 Example 4

Mistake

Unilateral Mistake  An error on the part of one of the parties to the contract  This is NOT a reason to get out of the contract. Two types of Unilateral Mistakes…

Mistake in the Nature of the Agreement  Both parties are responsible for contract when signed, even if they have not read it.

Mistake in the Identity of a Party  This MAY be cause for voiding a contract.  This is not the case in a face-to-face meeting. p. 134 Example 6

Bilateral Mistake  Both parties are mistaken about some important fact Possibility of Performance  Both parties believe it can be performed when it cannot. Subject Matter  When both parties are mistaken as to the identity of the subject matter

Duress  Use of force or by threat of force or bodily harm  These are either void or voidable Physical force – void Threat of force – voidable  Economic Duress: threats to a person’s business or income

Undue Influence  Unfair and improper persuasive pressure exercised by one person in a relationship of trust with another person. i.e.: poor health, old age, mental immaturity