Ch. 14 Mistakes, Fraud, and Voluntary Consent Flashcards Preview

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Flashcards in Ch. 14 Mistakes, Fraud, and Voluntary Consent Deck (18)
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1

Mistakes of fact

the only type of mistake that makes a contract voidable. they occur in two forms (1) bilateral: made by both of the contracting parties (2) unilateral: made by only one of the parties

2

Bilateral mistakes of fact

mutual misunderstanding concerning a basic assumption in which the contract was made. this can make the contract voidable

3

unilateral mistakes of fact

occurs when only one of the parties makes a mistake about a material fact this doesnt usually award the mistaken party any exceptions to the contract, the contract usually remains enforceable

4

What are the two exceptions to the enforcing of a unilateral mistake of fact?

(1) the other party should have been aware of the mistake and done something to amend it (2) or the error was made mathematically and was made inadvertently without gross negligence

5

mistakes of value

the mistake concerns the future market or quality of the object of the contract, the mistake generally remains enforceable. this is generally because value is variable and can change quickly

6

fraudulent misrepresentation

generally refers only to misrepresentation that is consciously false and is intended to mislead another

7

What elements does a fraudulent misrepresentation typically consist of?

(1) a misrepresentation of a material fact (2) must be an intent to deceive (3) innocent party must justifiably rely on the misrepresentation

8

Statement of fact

the misrepresentation must involve a material fact and not merely a statement of opinion

9

statements of opinion

and representations of future facts (predictions) are not generally subject to claims of fraud. unless the opinion comes from an expert that the innocent party is relying on for info, the contract may be available for reformation

10

reformation

an equitable remedy granted by a court in which the terms of the contract are altered to reflect the true intentions of the parties

11

misrepresentation by conduct

arises when a party takes specific action to conceal a fact that is material to the contract

12

misrepresentation of law

generally does not allow for relief of a contract, people are more often expected to know local laws and be able to apply them and should not rely on non law people to provide them information on a subject they are not professionally required to know anything about. the exception is if the misrepresentation of law is applied by a person in a profession in which they are required to know more about a subject than the average citizen

13

misrepresentation by silence

parties not required to come forth with info so contracts are generally not set aside due to silence of info. however if a party requests pertinent info from the other party and they lie, this contract become subject to fraudulent misrepresentation

14

latent defects

defects that cannot be readily ascertained, these are typically required of a parry to disclose

15

fiduciary relationship

a relationship founded on trust and confidentiality such as between a physician to patient or a lawyer to client. there is a duty to disclose material facts

16

scienter

"guilty knowledge". signifies that there was intent to deceive. this occurs when a party clearly knows that a fact is not as stated, a party makes a statement that he or she believes is not true, or a party says or implies that a statement is made on some basis when it is not

17

innocent misrepresentation

a person makes a statement that he or she believes to be true but us actually misrepresents material facts

18

negligent misrepresentation

when a party makes a misrepresentation due to carelessness and fails to uncover the facts with reasonable care or the correct skill and competence