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Lecture 3

MGMT 3100 Lecture 3 Notes .docx

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York University
MGMT 3100
Peter Mac Donald

MGMT 3100 : Lecture Three Notes (Contracts) -notions of misrepresentation, undue influence or duress, which allow for a contract to be unwound -Misrepresentation -example: the value of the company -material misrepresentation example: buying a car, and the mileage on the car is turned back, however a $5000 difference in the value of a company is not material -three types: -fraudulent misrepresentation -example: buying life insurance and not notifying the company of smoking history -negligent misrepresentation -example: a pharmaceutical company that states a new drug will help these problems without knowing for sure -when a homeowner assures that there is no mold without conducting inspection -innocent misrepresentation -example: the yacht, the owner (not an appraiser) did not know about osmosis of the boat -a misrepresentation must involve a question of fact as opposed to a statement of opinion for it to be actionable, or a statement of opinion rendered by an expert -does a vendor have an obligation to disclose all information to the buyer -yes if the vendor is aware that the information is material, then the buyer should be notified -news affecting the shares of Blackberry, should public be notified -due diligence, is the responsibility of the buyer -with the house example, it is the responsibility of the buyer’s lawyer to research the area, etc, if the lawyer is not due diligent, then the lawyer could be sued for fraud -with Blackberry, the information that results from a company meeting are not accessible by the public, unless the CEO discloses the information -unconscienceible misrepresentation -fiduciary obligation, a special relationship between a teacher and student, if student is purchasing a textbook from the teacher then he/she is obligated to notify the student if the textbook will be changing for the next semester -prospectus requirements for public companies -materiality, there are quantitative and qualitative tests -warranty regarding title -example: sporting life sells Canada Goose jackets, they have a loan for $1 million from the bank, and the bank has a floating charge on the inventory, if cannot repay the loan then Sporting life does not have rights to the inventory -warranty of description -example: -warranty of fitness -example: soccer cleats, if the soccer cleats do not perform as stated -warranty of merchantable quality -example: a jacket that is not of the quality that it claims to be -land -conduct due diligence (purchaser and lawyer) -duress and undue influence -Independent LegalAdvice -example: one spouse has extensive financial knowledge and the other spouse does not, they need a bank loan, and the bank asks for collateral (cottage), the courts will presume that the wife (knowledgeable spouse) undulling influenced the husband unless the husband obtained independent legal advice -case number 2 page 199 -the onus of prof (burden of proof, in a civil case always the plaintiff and goes to defendant) -there is a clear relationship between Smart, the lawyer and Hull the client -the issue is the question of undue influence -because of the confidential information that was disclosed to the lawyer, the client in fear gave in and gave the lawyer the boat -Hull has to prove the presumption of undue
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