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Law 122 - Chapter 9 - My Notes.docx

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Law and Business
LAW 122
Theresa Miedema

Chapter 9 Representations and Terms Contractual Terms – is a provision in an agreement that creates a legally enforceable obligation Pre-Contractual Representation – is a statement one party makes by words or conduct with the intention of inducing another party to enter into a contract Misrepresentation  If a non-contractual statement is false, we say that one of the parties has made a misrepresentation  When a contractual statement is not fulfilled, we say that one of the parties is in breach of contract Misrepresentation – is a false statement of fact that causes that recipient to enter into a contract o A misrepresentation occurs only if the speaker claimed to state a fact A Statement of Future Conduct – is not a statement of fact as it is only an indication of a person’s future intentions o A statement of future conduct is a misrepresentation if it is made fraudulently or if the future conduct is described in terms of a present intention Types of Pre-Contractual Statements Inducing Contracts Non-Factual Statements Factual Statements (not actionable as misrepresentation) (actionable as misrepresentation) Opinion based on speculation Expert opinion Description of another’s future intent Description of one’s present intent Statement of law Statement of legal consequences Six occasion when the failure to speak will amount to misrepresentation: o When silence would distort a previous assertion o When a statement is a half-truth o When the contract requires a duty of utmost good faith o When a special relationship exists between the parties o When a statutory provision requires disclosure o When facts are actively concealed The Legal Consequences of Misrepresentation  The remedy of rescission  The right to damages Rescission – is the cancellation of a contract, by the parties or the court, with the aim of restoring the parties, to the greatest extent possible, to their pre-contractual state Restitution – involves a giving back and taking back on both sides Affirmation – Occurs when the misled party declares an intention to carry out the contract or otherwise acts as though it is bound by it 1. A person who has been misled to said to “affirm” the contract only if the person discovered the misrepresentation prior to the declaration or act of affirmation 2. Rescission may be barred if restitution is impossible 3. Rescission may be unavailable if it would affect a third party Damages – are intended to provide monetary compensation for the losses that a person suffered as a result of relying upon a misrepresentation Types of Misrepresentation Innocent Misrepresentation – is a statement a person makes carefully and without knowledge of the fact that it is false Negligent Misrepresentation – id a false, inducing statement made in an unreasonable or careless manner Fraudulent Misrepresentation – occurs when a person makes a statement they know is false or that they have no reason to believe is true or that is reckless Types of Misrepresentation and Their Legal Effect Elements of Proof Available Remedies Innocent Misrepresentation  False statement of fact or  Rescission of contract misleading silence  Inducing contract Negligent Misrepresentation  False statement  Rescission of contract  Made in an unreasonable or  Damage in tort careless manner  Inducing a contract  Causing a loss that is not always sufficiently remedied by rescission Fraudulent Misrepresentation  False statement or misleading  Rescission of contract silence  Damage in tort  Made without honest belief in
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