1. Genuine Agreement
Contracts Part 2

2. 8-1 Duress and undue influence
If one party uses physical threats to obtain the other’s signature on a contract there is no genuine agreement.

3. Genuine Agreement
genuine assent or mutual assent – may be lacking due to:
Fraud
Misrepresentation
Undue influence
Duress
Mistake
The absences of genuine agreement makes what appears to be a contract voidable. Which means the injured part can rescind.
This must be prompt in order to be effective and happen before ratification.

4. Duress
Occurs when one part uses an improper threat or act to obtain an expression of agreement
Threats of illegal conduct – threat of crime or tort is always duress the actual crime or tort or threats may be to the physical life, liberty or property of the victim the victims immediate or close family/relatives.
Threats to report crimes – using something you saw to push someone into a contract with you. You must according to law report any crimes you see being committed. Could be arrested for extortion
Threats to sue – is a protected part of our legal system, unless there is no real intent to sue and you are trying to gain something unrelated to the suit.
Economic Threats – must be able to cause substantial injury, courts look at both the threat and the alternatives available.

5. Undue Influence Key Elements: Relationship
Wrongful or Unfair Persuasion
Occurs when one party to the contract is in a position of trust and wrongfully dominates the other party. The dominated person does not exercise free will in accepting unfavorable terms.
Relationship
A relationship of trust, confidence, or authority must exist between the parties to the contract. Does not need to be a formal relationship.
Wrongful or Unfair Persuasion
Best example is in unfair terms of the contract. The stronger party needs to act with scrupulous honesty and full disclosure and insist that the weaker party obtain independent counsel.
**Contract becomes voidable by the victim.

6. 8-2 Mistake, Misrepresentation and Fraud

7. Unilateral Mistake
happens when one party holds an incorrect belief about the facts related to a contract. Generally this does NOT affect the validity of the contract.
Mistakes from not reading a contract before signing are this.
Careless or hurried reading
Signing a contract in a language you do not understand is binding
If the unilateral mistake is major enough and the other party is aware of it at the time of the signing, a court may grant recession to the injured
Induced Unilateral Mistake – if one party has encouraged or induced the mistake the contract is voidable.

8. Mutual Mistakes (bilateral mistakes)
both parties have an incorrect belief about an important fact.
Material Facts- important facts that influence a parties decision about a contract.
If a mutual mistake happens the contract is void

9. Misrepresentation When stated material facts turn out to be untrue.
Innocent Misrepresentation – when neither party new the true information and there was no intent to deceive.
Fraudulent Misrepresentation – When one party knows the material information to be untrue.
Both cases make the contract voidable

10. Statements are treated as Misrepresentation only if:
The untrue statement is one of fact or there is active concealment
The statement is material to the transaction or is fraudulent
The victim reasonably relied on the statement
Statements are treated as Misrepresentation only if:
The untrue statement is one of fact or there is active concealment
Must be fact and not opinion about something past or existing, experts opinions will be treated as facts
Purposefully hiding information or traits
Silence – the seller may remain silent in most situations except where there is:
Half-truths are used
A true statement is made falls by subsequent events
When one party knows the other has made a basic mistaken assumption.
The statement is material to the transaction or is fraudulent
Statements are material if:
The statement would cause a reasonable person to contract
If the plaintiff knew THIS defendant would rely on the statement
The Defendant knew the statement was false.
The victim reasonably relied on the statement
Even if the statement is material there is NO misrepresentation unless the victim reasonably relied on it

11. Fraud and Remedies for Fraud
Fraud is based on misrepresentation if there is no misrepresentation then there is no fraud. All elements of misrepresentation must be present.

12. Intent and Injury
Intent – when a person deliberately lies or conceals a material fact, recklessly makes a false statement of fact, without knowing if it is true or false. Must also be intended to induce the victim to contract
Injure – In order to be fraud there must be proof of injury. If there if intentional misrepresentation but no injury there is no liability for fraud

13. If a fraud exists the courts will grant the victim assistance beyond recession

14. Remedies for Fraud Rescission Damages Punitive Damages
– If the victim can prove fraud the courts will allow recovery of damages and punitive damages
Rescission – the voiding of a contract because of misrepresentation or fraud.
Anything you received usually must be returned
Damages – Are available if fraud is proven. The defrauded party may choose to ratify instead or rescind then the contract is enforceable
Punitive Damages – Money to punish the wrong doer, in this case it would be the person who has committed the fraud.