Presentation on theme: "BELL QUIZ ON CHAPTER 5 What is any agreement that is enforceable by law? There are six elements of a contract. Name TWO. How many promises does a bilateral."— Presentation transcript:
1 BELL QUIZ ON CHAPTER 5What is any agreement that is enforceable by law?There are six elements of a contract. Name TWO.How many promises does a bilateral contract contain?Who is the person making the offer?There are five ways to terminate an offer. Name TWO.
2 ANSWERS TO BELL QUIZ CHAPTER 5 ContractOffer, acceptance, genuine agreement, consideration, capacity, legalityTwoOfferorRevocation, rejection, counteroffer, expiration of time, death or insanity
4 Chapter 6 Genuine Agreement Section 6.1 Fraud and Misrepresentation Mistake, Duress, and Undue Influence
5 Why It’s ImportantLearning the elements of fraud may prevent you from being victimized or help you claim your rights if you are defrauded.
6 Genuine AgreementIf the offeror makes a valid offer, and the offeree has made a valid acceptance, then a genuine agreement has been reached.The courts describe this type of agreement as “a meeting of the minds.”
7 6.1Genuine AgreementSeveral circumstances might create a defective agreement:FraudMisrepresentationMistakeDuressUndue Influence
8 FraudFraud is a deliberate deception intended to secure an unfair or unlawful gain.
9 Remedies for Fraud You may rescind, or cancel, the contract. You may sue for money damages.You may also try to collect punitive damages which is designed to punish the wrongdoer for their conduct.
10 The Five Elements of Fraud A false representation of fact.Knowledge of the falsity by the party making the false representation.
11 The Five Elements of Fraud Intent to deceive by the party making the false representation.Reasonable reliance (trust) by the innocent party.An actual loss must be suffered by the innocent party.
12 False Representation of Fact Fraud requires a false representation of a material, existing fact.A material fact is one that is important; it matters to one of the parties.
13 False Representation of Fact Under some circumstances, individuals can make false representation by choosing not to reveal important information.This is known as concealment, or passive fraud.
14 Representation Known to Be False To be held accountable for fraud, the party making the false representation must be aware that it is false. This may be shown by:proving actual knowledgeshowing the statement was made recklesslyExample 1 page 130
15 Intended to Be Relied Upon False RepresentationIntended to Be Relied UponTo prove fraud, the person making the misrepresentation must intend that the other party will rely upon the information as part of the contract negotiations.Example 2 page 131
16 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 3 page 131
17 Resulting LossIn proving fraud, the innocent party must show some monetary loss.
18 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.
19 Remedy for Misrepresentation the right to rescind the contractyou may not win damages
20 After Mrs. Grayson died, her neighbor, Joel, asked her son, Tom, if he would sell her TV. Before giving Tom $100, Joel asked, “It works, doesn’t it?” and Tom answered, “As far as I know.” However, when Joel plugged it in, it did not work.
21 Can Joel claim there was false representation? Why or why not?
22 ANSWERProbably not. “As far as I know,” would probably be considered innocent misrepresentation.
23 Mistake, Duress, and Undue Influence Section 6.2Mistake, Duress, and Undue Influence
24 Why It’s ImportantRecognizing how mistake, duress, and undue influence can affect agreements will help you make better decisions in such situations.
25 Genuine AgreementIn addition to fraud and misrepresentation, mistake, duress, and undue influence can also create a defective agreement.
26 MistakePeople 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.
27 Unilateral MistakeA unilateral mistake is an error on the part of one of the parties to the contract.Through words or actions, one party has created reasonable expectations on the part of the other party to the contract.
28 Unilateral MistakeThose expectations should not be blocked because one of the parties has made an error, or mistake.A person usually cannot avoid a contract because of such a mistakeExample 5 page 133
29 Unilateral Mistake There are two types of unilateral mistakes. Mistake as to the nature of the agreementMistake as to the identity of a party
30 Nature of the Agreement Mistake as to theNature of the AgreementPeople who sign an agreement are bound to it, even if they have not read it or are mistaken about what it says!!!
31 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.
32 Mistake as to the Identity of a Party If you make the same offer face-to-face with a person whose identity you have mistaken, your mistake as to the identity will not prevent a binding contract.
33 Remedies for Unilateral Mistakes 6.2Remedies for Unilateral MistakesUnilateral MistakeType of MistakeRemedyMistake as to thenature of theagreement.identity of a partyRescission will notbe granted.Rescission may begranted.
34 Bilateral MistakeWhen both parties to a contract are mistaken about some important fact, this is called a bilateral mistake, or mutual mistake.When this mistake occurs, either party may avoid the contract.
35 Bilateral Mistake There are two types of bilateral mistakes. Mistake as to the possibility of performanceMistake as to the subject matter
36 Possibility of Performance Mistake as to thePossibility of PerformanceIf both parties enter into a contract believing that the duties described in the agreement can be performed, when in fact, they cannot, either party may avoid the contract.Example 7 page 136
37 Mistake as to the Subject Matter Both parties can be mistaken as to the identity of the subject matter when they enter into a contract. The contract may be avoided by either one of the parties.Example 8 page 136
38 Remedies for Bilateral Mistakes 6.2Remedies for Bilateral MistakesBilateral MistakeType of MistakeRemedyMistake as topossibility ofperformance.Mistake as to thesubject matter.Rescission will begranted.
39 DuressDuress is overcoming a person’s will by use of force or threat of force or bodily harm.
40 Types of DuressPhysical duress is when actual physical violence is used to force a person to enter a contract.Emotional duress is when the threat of physical force is used to force a person to enter a contract.
41 Types of DuressEconomic duress is when threats to a person’s business or professional reputation are used to force a party to enter a contract.
42 Undue InfluenceUndue influence occurs when a person uses unfair and improper persuasive pressure to force another person to enter into an agreement.
43 Undue InfluenceCircumstances such as ill health, old age, and mental immaturity may put a person in a weaker position.
44 Elements of Undue Influence 6.2Elements of Undue InfluenceElementDescriptionA dependencyrelationshipOne party in arelationship isdependent on theother party.
45 Elements of Undue Influence 6.2Elements of Undue InfluenceElementDescriptionUnfair or improperpressureThe independent personuses excessive pressureto force the dependentperson to enter acontract.
46 Elements of Undue Influence 6.2Elements of Undue InfluenceElementDescriptionA beneficial contractThe contract benefitsthe independent partyat the expense of thedependent party.End of Chapter 6