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Business Law Chapter 14
Business Law Chapter 14
17
Law
Undergraduate 4
04/17/2011

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Term
Five Types of contracts Voidable in equity due to inequity of enforcement:
Definition
1. Mutual Mistake of Fact: Voidable by any party
2. Material misrepresentation: typically voidable by the deceived person
3. Duress: typically void under state law
4. Undue influence: typically voidable by the person
5. Unconsciounability: voidable by the person
Term
Rescission
Definition
A court cancels the contract and each party must receive the status quo (e.g., give back $ or property to return the other party as closely as possible to the pre-contract situation or status quo)
Term
Reformation
Definition
If there is an oral agreement of the parties and a mistake in writing it up (scrivener's error), the court revises the contract to conform to the actual agreement (problem is proof)
Term
Misrepresentation - Types of Remedies (Innocent)
Definition
Mistake without fault -> recession only
Term
Misrepresentation - Types of Remedies (Negligent)
Definition
Mistake because of failure to use reasonable care -> rescission or actual damages
Term
Misrepresentation - Types of Remedies (Fraudulent)
Definition
Actual and punitive damages on one hand or rescission on the other
Term
Fraud in the execution
Definition
Victim is told he's signing something else
Term
Fraud in inducement
Definition
Deception as to the understood subject matter of contract, not as to document itself (voidable)
Term
Misrepresentation of a material fact
Definition
1. Material -> important to deal
2. Must be misrepresentation of past of present material fact; not expression of opinion, future event, value, general quality, or legal opinion
Term
Three exceptions -> a misrepresentation of fact is unnecessary for fraud if there is:
Definition
1. An opinion misusing a position of trust, such as where there is a confidential relationship between seller and buyer
2. A seller's opinion where seller has superior knowledge upon which seller expects reliance
3. Concealment of serious defect of which seller knows but buyer has no reasonable way of finding out
Term
Fraud in the Inducement: Intent to deceive by the defendant
Definition
1. Defendent has knowledge of falsity or
2. Defendant has reckless disregard for the truth: making a statement at a time when the speaker has serious doubts about the truth of it.
Term
Fraud in the Inducement: Reliance
Definition
There must be justifiable (reasonable) reliance by the plaintiff
Term
Fraud in the Inducement: Injury to Plaintiff
Definition
If seeking monetary damages, must prove monetary loss
Term
Three elements of Duress:
Definition
1. An unlawful or wrongful threat
2. Causing involuntary acceptance
3. Because circumstances permit no alternative
Term
Undue Influence
Definition
Duress involves coercion undue influence, wrongful persuasion
Term
Three Elements of Undue Influence:
Definition
1. Confidential, family, or trust relationship
2. Weaker party lacked free will because of influence
3. A contract results between the parties
Term
Unconscionability - Contracts which are grossly unfair
Three elements to Prove...
Definition
1. Unequal bargaining power (usually consumer, not commercial)
2. Dictation of terms of contract by stronger party -> an Adhesion Contract
3. Terms manifestly unfair or oppressive
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