CHAPTER 13 AND 14.docx

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MGMT 644

CHAPTERS 13 and 14 ASSENT AND UNDUE INFLUENCE CHAPTER 13 Assent (agreement): the requirement that the party’s agreement to a contract be genuine. Genuine assent may be missing because party’s entered into a traditional/e-contract based on mistake, fraudulent misrepresentation, duress or undue influence. Unilateral Mistakes: occurs when only one party is mistaken about material fact regarding subject matter of contract. Usually mistaken party cannot back out of contract and contract will be enforced. Ex: buyer purchases an automobile thinking that the engine is a v-8 when in fact it’s a v-6, this does not excuse buyer from contract. Mutual Mistake - Mutual Mistake of Fact: a mistake made by both parties to a contract concerning a material fact that is important to the subject matter of the contract. Both parties can get out of contract. Not Mutual Mistake of Value: exists if both parties know the object of the contract but are mistaken as to its value. Ex: If Helen sells a painting to quant for $200 and then quant finds out that it’s actually worth $2million, Helen cannot recover painting. Fraud: when a person makes an assertion about a given fact and he knows it is not true, he is committing fraud. The innocent party’s agreement to contract is not genuine & the contract is voidable by the innocent party. Ex: If you wanted to buy my house and I ask if I had foundation work on it and I lied and said no, you can prove and say I lied. You lied to someone and someone else believes you. Key Elements of Fraud: to prove fraud 1. Lie about a material fact: misrepresentation must have been a significant factor in inducing the innocent party to enter into the contract. 2. Intent to Lie: to prove fraud, person making the misrepresentation must have either had knowledge that the representation was false or made it without sufficient knowledge of truth. 3. Reasonable Reliance: you have to reasonably rely on lie. 3. Damages: to recover damages, innocent party must prove that the fraud caused him/her economic injury. The measure of damages is the difference between the actual value of the property and the value represented. Ex: you can get difference of house with foundation problems or without foundation problems or get out of contract. Fraud in Inception: when the person does not know what he/she signed or that they were even signing. You can get out of contract. Lie about fact that there was actually a contract. Fraud in the Inducement: you knew you were signing contract but you did not know there was fraud involved like house with bad foundation. Fraud of Concealment: purposely conceal damage Silence as Misrepresentation: If you go buy a car and you don’t ask questions about it, law does not impose other person to tell you about damage. Not saying what is wrong because no one asked. I can keep silent; I don’t have to tell you about damage. Misrepresentation of Law: generally does not void contract. Innocent Misrepresentation: when I tell u something and I am not intending to lie. Not intentionally lying like I don’t know think foundation has ever been fixed, but in reality previous owners fixed it. Duress: when one party threatens to do a wrongful act unless other party enters into a contract. (When there is a gun pointed at your head to get into contract.) Undue Influence: when one person takes advantage of another person’s mental, emotional, or physical weakness & unduly p
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