chapter 8 Flashcards
(15 cards)
misrepresentation
False statement of fact that persuades someone to enter into a contract
The statement must be an allegation of fact or an opinion by an expert
Silence is not misrepresentation when there is no duty to disclose
The statement must be untrue and must have been the inducement that led to the contract
Withholding some information can amount to a misrepresentation
Plaintiff must be misled into doing something they otherwise would not have done
innocent misrepresentation
The person making it honestly believes it to be true.
Remedies are limited to rescission
Rescission puts both parties back into original positions
Rescission of contract is not available when:
Where a contract is affirmed
Impossible to restore
Where a third party is involved
Where plaintiff does not have clean hands
Fraudulent Misrepresentation
Fraud exists when the false statement was made
Knowingly
Without belief in its truth, or
Recklessly, not caring if true or false
Victim of intentional misrepresentation can sue for damages in addition to rescission
An innocent misrepresentation becomes fraudulent if not corrected when discovered Remedies: Rescission Damages Contract may be considered void
Negligent Misrepresentation
Often brought against experts or professionals Carelessly providing false information Must establish A duty of care Breach of that duty Causation Damages
duress
Duress, includes threats:
Of violence
Of imprisonment
Of criminal prosecution
To disclose scandalous information
To goods or property
Of loss of employment
Duress makes the contract voidable (not void)
The threat must be the main inducement to enter into the contract
Exercise of economic rights is not duress
Market shortages
undue influence
More subtle than duress Pressure from a dominant and trusted person negates free bargaining Contract is voidable Presumed in special relationships May be rebutted
Unconscionable Transactions
Bargaining positions of parties are drastically unequal
One party takes advantage of the other with grossly inadequate consideration
Contract is voidable
mistake
Error that destroys consensus
Being negligent is not mistake
Court is more likely to remedy a mistake of fact than of law
Unjust enrichment
Law is evolving on mistake creating a void or voidable contract
shared mistake
Fundamental mistake about subject matter of contract
Common to both parties
Rectification: Courts will correct obvious error
If what was written was different from the understanding
E.g. the decimal point is in the wrong place
misunderstanding
Neither party is aware of the other party’s misunderstanding about the terms of the agreement
Reasonable person test for the correct interpretation of the contract
If neither is reasonable then the contract is void
one-sided mistake
Unilateral mistake usually not relieved by the court in the absence of misrepresentation
Caveat emptor
An obvious error may not be snapped up
Rarely, a profound unilateral mistake will destroy consensus
Non Est Factum
It is not my act”
Mistake goes to the very nature of the document
Not merely its terms
Relief is to rescind the contract
Pleading negligence often defeats the defence of non est factum
Rules of Interpretation
Reasonable person test
Literal or liberal meanings imposed on written terms
Courts or statutes may imply terms
Parol Evidence Rule
Outside evidence will not change clear wording
privity of contract
Contract can only affect parties to it
Exceptions:
Original party can enforce contract when benefits bestowed on outsider
Trust created
Novation - a new party is substituted for an original party to the contract
Contractual Rights run with land
Contracts created through agents
Employees of party to agreement sheltered under a contractual benefit
Evolution of the law of product liability
assignment
The benefits (chose in action) received under a contract can be assigned or transferred to another Obligation cannot be assigned Any defence is transferred as well Vicarious performance does not relieve responsibility
Statutory assignment Do not have to sue in assignor’s name Qualifications for statutory assignment Absolute and unconditional assignment Must be in writing and complete Must give proper notice
Some things cannot be assigned:
Right to support payments
Right to sue (champerty)
Assignment of proceeds of law suit may be assigned
In some jurisdictions, workers’ compensation benefits
Contractual rights are involuntarily assigned automatically in the case of:
Death, to the executor or administrator
Bankruptcy, to the trustee in bankruptcy
Negotiable instruments
Freely passed from one person to another
