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Question 1

What is fraud?

Answer 1

Agreement of one party was induced by material misrepresentation of the other party, so contract not enforced

Question 2

What are the major types of fraud?

Answer 2

• fraud in the inducement
• fraud in the execution
• promissory fraud
• misrepresentation

Question 3

What is fraud in the inducement?

Answer 3

False statements that induce a party to contract. They know they are contacting, but they don’t know the subject matter.

Question 4

What is the result of fraud in the inducement?

Answer 4

Voidable by party subjected to the fraud

Question 5

What is an example of fraud in the inducement?

Answer 5

Someone sells lakefront property that is really the meridian on the highway

Question 6

What is fraud in the execution?

Answer 6

Party deceives another into thinking the document is different than it is. Voids the contract

Question 7

What is an example of fraud in the execution?

Answer 7

Having someone sign a birthday card but it’s really a contract

Question 8

What is promissory fraud?

Answer 8

Party makes a promise with no intent to perform. Result is avoidance or reformation

Question 9

What is misrepresentation?

Answer 9

An express statement or deliberate concealment that makes the transaction voidable

Question 10

What are the different types of misrepresentation?

Answer 10

• misrepresentation of FACT
• erroneous statements of OPINION
• misrepresentation of LAW
• INTENTIONAL misrepresentation
• misrepresentation of PURPOSE

Question 11

Does a misrepresentation of fact constitute a breach?

Answer 11

Not unless the misrepresentation was material

Question 12

Can a party get relief for relying on another party’s opinion?

Answer 12

No, you can’t rely on trade talk, puffery, or opinion statements

Question 13

What are exceptions to the rule that you can’t rely on a statement of opinion?

Answer 13

• if there is a relationship of trust/fiduciary
• representer is an expert
• representer has superior access to knowledge of the facts that make the opinion false
• opinion is stated by a third person posing as a disinterested person
• opinion is so far from reality that no reasonable person could have it

Question 14

Why do misrepresentations of the law not make a contract voidable?

Answer 14

Because everyone is presumed to know the law. Exceptions: can rely on experts, relationships of trust/confidence, and superior position

Question 15

How is intentional misrepresentation treated?

Answer 15

As a tort and punitive damages can be given

Question 16

How is unintentional misrepresentation treated?

Answer 16

Avoidance is only possible if it was material

Question 17

How is misrepresentation of purpose treated?

Answer 17

That is immaterial because intentions can change over time

Question 18

When do you have to disclose information in a bargaining transaction?

Answer 18

• if required by statute
• if concealment present
• if partial disclosure is made, must disclose everything
• if supervening events make the disclosure no longer true, and you know it, must disclose new info
• fiduciary relationships: must disclose material facts

Question 19

What are the elements of misrepresentation?

Answer 19

• by other party or someone on their behalf
• statement made with knowledge of its falsity/intent to deceive
• person deceived had a right to rely
• person did rely

Question 20

What is UCC misrepresentation?

Answer 20

Any writing corrupted by fraud is void if it induced another to sign without knowledge of its character or essential terms (just need reliance)

Question 21

What are remedies for fraud?

Answer 21

• stand on the transaction and sue for DAMAGES

- avoid transaction and claim RESTITUTION

Question 22

What is restitution?

Answer 22

Disgorging of something that was taken, or compensation for an injury

Question 23

After discovering fraud, can the party ratify the contract?

Answer 23

Yes, the injured party can proceed with the transaction despite the fraud