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Lecture 8

ACTG 2P40 Lecture 8: Feb 7 ACTG 2P40 Chapter 8

5 Pages
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Department
Accounting
Course Code
ACTG 2P40
Professor
Katharine Book

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Description
5 Short answer (10 marks) 5 Long answer (10 marks) bigger concepts Bullet points are fine Chapter 8: Impeaching Contracts: Misrepresentation, undue influence, and duress Misrepresentations it is not a breach of contract argument. It was a term that was important that they should let you off the contract. It is intended to make up for circumstances, that even if it was important that you can get out. 1. Representations vs Terms in a Contract - Term: obligations which govern the contractual relationship - Representation: statements of fact or opinion made during the formation of contract - Terrible tutor, not breach of contract. Strong enough to cut off steel, term of contract? Or representation? What sort of price did they agree to? - Misrepresentation is to give remedy that the keeping the person on the contract will be unfair. Classification as Terms or Representations: 1. Stage of negotiations Parole Evidence rule: consider terms of the written contract itself. Negoitation that were different from the written document, it will not be considered. - Said at the end of a nego. 2. Written contract 3. Special skills or knowledge due diligence: to be satisfied to think that they are getting what they are getting. Cannot get out of the deal caveat emptory: obligation as the buyer to ask everything about the house and get an inspection. The seller cannot lie. The purchasers responsibility to make sure that the product is in good condition. The court will not help you, you should have helped yourself - Due diligence: reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something. - Every part is original, you may not be able to check those facts bc those people have that skill or professional experience so u assume is correct. 4. Importance of the statement The less important it is, the more it is not misrepresentation. Negligence Misrepresentation- negligence ** EXAM 2. Types of misrepresentation a. Fraudulent Misrepresentation: False statement made with the knowledge it was false or with reckless disregard for its truth which is intended to be acted upon. It is clearly important and they know so that it gets you into the bargain. Difficult to prove. E.g. company puts up for sale bc they are losing money, financial statement is wrong bc accountant says they are making money. They hand over statement where buyer thinks they are making money, but they are not. Hard to prove bc they did not. Reckless disregard for the truth: how could you be losing money and the statement says you are making money. It does not make sense and they should have investigated for it. - Rescission: the revocation, cancellation, or repeal of a law, order, or agreement.- Punitive damages: punishment damages- only for this type of misrepresentation - There was an intention to mislead or did not care that they were misleading the person b. Innocent Misrepresentation*** Exam (bc most common) & Assignment Representation which turns out it be false where the party made the statement honestly and to the best of their knowledge believed it to be true. They were just misinformed. Harder to undo a contract. There is a four part test to get rescission Requirements: 1. Misrepresentation must be a statement of fact, cannot be an opinion. Statement of opinion cannot form misrepresentation. Must determine whether the person had the knowledge of making this mistake. E.g. you need to perform the due diligence- cannot rely on the other person if you have the ability to check those facts. Joe says I sell you 20 papers, but doesnt. You can hire your own person and you have to do that. If you dont do that or learn the facts, then the court will not help you. A person lies about the fact that you cant check because they have special knowledge of the circumstance. 2. Statement of fact and is false Material- if you knew about it at first then you would not have entered the contract from the beginning. It was so important. You have communicated it to the other side. They knew that you relied on the information. Silence cannot be misrepresentation because there is no obligation
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