Chapter 13 Flashcards
(75 cards)
Voluntary Consent
Legal excuse to get out of a contract
1. Mistake
2. Fraudulent misrepresentation
3. Undue influence
4. Duress
Mistakes
Bilateral and Unilateral
Bilateral Mistake
- Two parties made the mistake
- Voidable contract by either party
- Materially different meanings interpreted for one word
Raffels v Wichelhaus
Origins of the concept of mistake. English merchant (Wichelhaus) who needs to buy cotton. He is communicating with a farmer in Bombay, India (Raffels) through telegraph. He wants to buy the field of cotton “to arrive Peerless” - the communication in the telegram. Peerless is the name of the ship, the buyer, the English merchant believes that the ship arrives with no cotton. The English merchant has already purchased another shipment of cotton from someone else, he doesn’t want to pay for the cotton that has now arrived from Raffels
What kind of mistake is Raffels v Wichelhaus?
A mutual misunderstanding
Peerless: each party attaches a materially different meaning to the same word
Does the English merchant have to pay for the shipment from Raffels?
The English merchant gets the cotton and doesn’t have to pay for the shipment
Example of a mutual mistake of fact
A Van Gough original painting. Hailey believes that the painting is an original. The art dealer believes that the painting is original. Sends to appraiser, the paining is fake. The contract should be rescinded.
Unilateral Mistake Example
Will not lead to a rescission of a contract. John wants to sell her car for $17,250, but this email on the deal has a price of $12,750. Mary accepts the deal. John realizes his mistake, no rescission.
Unilateral Mistake
One party makes the mistake
Exceptions to the Unilateral Mistake Example
Mary knew or should have known of John’s mistake. Mary knows that John rejected an offer yesterday of $16,000
Mathematical miscalculation: usually itemized invoice is totaled incorrectly at the end
Exceptions ot Unilateral Mistakes
- The other party knew of the mistake or should have known of the mistake and failed to correct it; OR
- The mistake was made of an inadvertent mathematical error and the mistaken party was not grossly negligent
BOTH exceptions lead to rescission
Mistakes of Value
Will not lead to the rescission of a contract. Value is not the same thing as opinion, but similar
(Based on future market conditions, quality, etc.)
Elements of Fraud
- A misrepresentation of material fact;
- Made with intent to deceive; AND
- Innocent party justifiably relies on the misrepresentation
What must the innocent party prove if they are seeking damages and NOT just rescission of the contract in a fraudulent misrepresentation case?
Harm
I contract to sell a piece of land. The contract includes both the surface and the mineral rights to the land. 6 months after the land is sold, the buyer strikes oil. Can I sue to get more money for the land claiming mistake?
No
Mistake of Value (unless it is like the ship deal, a land deal will be a mistake of value)
Simmons finds a stone in his paster. He believes the stone to be a quartz worth about $10 and contracts to sell the stone to Jenson, who also believes the stone to be a quartz. Just before delivering the stone, it is discovered that the stone is really a diamond worth $100,000. Can Simmons get out of the contract with Jenson?
Mutual Mistake of Fact
The type of stone is a fact, rescind the contract
Statements of Opinion and Representations of Future Facts
Statements of opinion are usually not fraudulent
*Future predictions are really hard to base a case off of, unless it is by an expert
Experts: real estate agent/broker selling land, attorney helping buy the land
Intent to Deceive requires
Scienter
Scienter
Covers more than just lying
Sarvis v Vermont State Colleges
Sarvis commits felony band fraud. When he gets out of jail he gets a job at Vermont College. Carefully, he crafts his resume to say “semi-retired” for the time he was in jail. He concealed the fact that he was in jail. His probation officer called Vermont College and they fire Sarvis. He sues the college for a breech of contract, they sue back for fraud.
Justifiable Reliance
If a reasonable person would not have fallen for it, they wouldn’t be able to prove justifiable reliance
What concept does Sarvis v Vermont State Colleges demonstrate?
Intent to Deceive - Scienter
(Undue Influence) When a party, who is in a dominant position of a confidential relationship, secures an unfair advantage in a contract with a weaker, dominated party, the contract is…
Voidable and may be disaffirmed by the dominated party
(Undue Influence) When is there a rebuttable presumption of undue influence?
When the parties are in a familiar or fiduciary relationship based upon trust and confidence, and the contract is extremely unfair to the dominated party
