1. CHAPTER 7 Genuineness of Assent
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CHAPTER 7 Genuineness of Assent
7-1 Duress and Undue Influence
7-2 Mistake, Misrepresentation, and Fraud
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2. 7-1 Duress and Undue Influence
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7-1 Duress and Undue Influence
GOALS
Recognize when genuine assent is not present
Identify the two key elements in undue influence
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3. Chapter 7
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HOT DEBATE
Why would it be fair to allow Jack to withdraw from the contract?
Excitement left him unfocused
Salesperson’s omission
Why would it be fair for Jack to be bound by the contract?
Caveat emptor
Goods were marked as optional
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4. GENUINE ASSENT AND DURESS
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GENUINE ASSENT AND DURESS
Genuine assent
Complete agreement
May be lacking due to
Duress
Mistake
Fraudulent misrepresentation
Undue influence
Contract may be voided by person wronged
Contract is not voidable, though
Validity of contract refers to it being legally binding and enforceable. Must meet certain requirements
Genuine assent is a complete agreement between two competent parties.
A party who proves that he or she did not genuinely assent to the terms of the contract may void the contract.
Genuine assent may be lacking due to a mistake, fraudulent misrepresentation, undue influence or duress.
Contracts lacking genuine assent are voidable, not void.
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5. Genuine Assent and Duress
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Genuine Assent and Duress
Voidable:
If the injured party desires, he/she can cancel and avoid the contractual obligations
Rescission:
Requires that all parties to the contract must be brought back to the position they were in before the contract existed.
If genuine assent is found to be lacking by one of the parties to the contract (the injured party) they may choose to void the contract. In order for this to happen, a few things need to occur:
Rescission must happen: all of the parties to the contract are brought back to the position they had prior to the contract’s existence.
The contract must not have been ratified by the injured party.
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6. Genuine Assent and Duress
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Genuine Assent and Duress
Ratification
conduct that confirms the intent by the injured party to be held to the contract
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7. Grounds for Avoidance of Contract
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Grounds for Avoidance of Contract
Duress
Threats of illegal or tortious conduct
Threats to report crimes
Threats to sue
Economic threats
Duress is the improper threat or act to obtain an expression of agreement. Focus in court would be on the nature of the threat.
The threat of illegal or tortious conduct is always considered duress.
An act of violence
Threatening a crime
Committing a tort
Threatening a tort
To the victim, the victim’s immediate family or near relatives, or to the victim’s property
Threats to report a crime—considered extortion. Also is considered to be duress.
If the threat to sue is unrelated to the current contractual discussion, it will be considered duress.
Using the economic power one has over another person may be considered duress. The courts will not only look at the threat but also at the alternative available to a threatened party.
Read page 132 scenario and discuss
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8.    CHECKPOINT List the various forms of legal duress.
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CHECKPOINT
  
List the various forms of legal duress.
Threats of illegal or tortious conduct directed against a person’s immediate family, near relatives, or home
Legitimate threats to prosecute a crime or lawsuit
Threats of substantial economic harm
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9. UNDUE INFLUENCE AND ASSENT
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UNDUE INFLUENCE AND ASSENT
The relationship
Unfair persuasion
Undue influence is when the dominating party to a confidential relationship exerts irresistible pressure on the dominated party to enter into a contract that benefits them.
This brings into question whether the injured party was able to exercise free will in forming the contract.
A confidential relationship is where an inordinate amount of trust and confidence is place by a dependent party in the dominant party.
Contract may be voidable by the dominated party.
Best evidence of undue influence is often found in the contract itself.
How to prevent being accused of undue influence:
Act with total honesty
Disclose all important facts
Insist upon getting independent, outside counsel
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10.    CHECKPOINT What are the key elements in undue influence?
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CHECKPOINT
  
What are the key elements in undue influence?
A confidential relationship
Entry into an unfair contract
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