1. Law for Business and Personal Use © South-Western Publishing G O A L S Duress and Undue Influence Define genuine agreement and rescission Identify when duress occurs Describe how someone may exercise undue influence LESSON 8-1

2. Law for Business and Personal Use © South-Western Publishing GENUINE AGREEMENT Genuine agreement is an agreement to enter into a contract that is evidenced by words or conduct between the parties.

3. Law for Business and Personal Use © South-Western Publishing RESCISSION Rescission is backing out of the transaction by asking for the return of what you gave in the transaction, and offering to give back what you received.

4. Law for Business and Personal Use © South-Western Publishing DURESS Duress occurs when one party uses an improper threat or act to obtain an expression of agreement Threats of illegal conduct Threats to report crimes Threats to sue Economic threats

5. Law for Business and Personal Use © South-Western Publishing WHAT IS UNDUE INFLUENCE? Undue influence occurs when one party to the contract is in a position of trust and wrongfully dominates the other party. There are two key elements in undue influence The relationship Unfair persuasion

6. Law for Business and Personal Use © South-Western Publishing G O A L S Mistake, Misrepresentation, and Fraud Describe the kinds of mistakes that can make a contract void or voidable Determine when misrepresentation has occurred Identify when fraud has occurred Discuss the remedies for mistake, misrepresentation, and fraud LESSON 8-2

7. Law for Business and Personal Use © South-Western Publishing WHAT IS A UNILATERAL MISTAKE? A unilateral mistake occurs when one party holds an incorrect belief about the facts related to a contract. Recognized unilateral mistake Induced unilateral mistake

8. Law for Business and Personal Use © South-Western Publishing WHAT ARE MUTUAL MISTAKES? When there is a mutual mistake both parties have an incorrect belief about an important fact. Mistake about the subject matter Mistake of law

9. Law for Business and Personal Use © South-Western Publishing WHAT IS MISREPRESENTATION? For a statement to be treated as misrepresentation, three elements are required Untrue statement of fact Active concealment Silence Materiality Reasonable reliance

10. Law for Business and Personal Use © South-Western Publishing INNOCENT MISREPRESENTATION Innocent misrepresentation occurs when a party to a contract does not know that a statement he or she made is untrue.

11. Law for Business and Personal Use © South-Western Publishing FRAUDULENT MISREPRESENTATION Fraudulent misrepresentation occurs when a party to a contract knows that a statement he or she made is untrue.

12. Law for Business and Personal Use © South-Western Publishing FRAUD AND REMEDIES FOR FRAUD Misrepresentation must be intentional or reckless The misrepresentation or concealment must injure Remedies for fraud Rescission Damages Punitive damages