Transcript Chapter 7 Genuineness of Assent

CHAPTER 7
GENUINENESS OF ASSENT
Law in Society
Ms. Baumgartner
Section 1 Objectives
 Recognize when genuine assent is not
present
 Identify the two key elements in undue
influence
Genuine Assent & Duress
 1 of the most important legal requirements of
a contract to be legal and valid is genuine
assent – true and complete agreement
 Sometimes, genuine assent is hard to prove in
court because of the following:
 Duress (pressure/force when negotiating a
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contract—cannot threaten someone to agree to a
contract with you)
Undue influence ( will define in later slide)
Mistake
Misrepresentation
Fraud
Genuine Assent & Duress
 Without genuine assent a contract is typically
voidable – the injured party can cancel the
transaction
 The party then has the legal right to get back what
has already been put into the contract – rescission
 For this to happen, a lack of genuine assent must be
found before you ratify the contract
 Ratification is conduct that confirms the contract
Genuine Assent & Duress
 Genuine assent can be affected by the following:
 Duress – use of an improper act or threat to obtain an
expression of agreement
 THREATS OF ILLEGAL OR TORTIOUS CONDUCT
 Threat could be to the physical life, liberty, or property of victim
or their relatives
 You cannot threaten someone or inflict bodily harm on someone
to agree to a contract
 THREATS TO REPORT CRIMES
 You cannot threaten to report a crime they committed to force
the criminal to contract with you.
 THREATS TO SUE
 Only duress if the threat to sue is unrelated to the actual
suit…….man threatens to sue wife for custody of children if
she doesn’t sign over valuable pieces of jewelry/watches
 ECONOMIC THREATS
 Threats to a persons business or finances
Answer question:
 The following question is listed next in your
notes. Answer it based on notes you took so
far:
 List the various forms of legal duress
Undue Influence & Assent
 Undue influence – occurs when 1 party to the contract
is in a position of trust and wrongfully dominates the
other party
 The dominated person then does not exercise free will
in accepting the contract
 The 2 key elements in undue influence are:
 The relationship – trust, confidence, or authority must exist
between the parties to the contract
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Attorney/client
Husband/wife
Parent/child
Patient/doctor
 Wrongful/unfair persuasion – lack of free will must exist
 EX: Elderly parent dependent on child for care, may sign
over bank accounts or their house for free or half its value
Answer question:
 The following question is listed next in your
notes. Answer it based on notes you took so
far:
 What are the key parts in undue influence?
7-1 Assessment Questions
 Complete 7-1 assessment
questions #1-8 and DO NOT
continue until all 7-1 notes and
questions are answered
completely.
Section 2 Objectives
 Recognize the types of mistakes that can
make a contract voidable or void
 List the criteria for a statement to be treated
as a misrepresentation
 Define fraud and describe the remedies for it
7.2 Types of Contractual
Mistakes

Two types of mistakes:
1. Unilateral – occurs when one party holds an
incorrect belief about the facts or law related
to the contract.
 Failure to read a contract before signing
 Misunderstanding from a hurried or careless reading
 Signing a contract written in a foreign language
 Usually cannot get out of contract
Example: if you send an offer and type amount
incorrectly—you are bound by the amount printed in
offer
Types of Contractual
Mistakes cont
2. Mutual (bilateral) – occurs when both parties have
a incorrect belief about an important fact or the
applicable law
 May be voided by either party
 Important facts that influence the parties’ decisions
about a contract are called material facts
 If a mutual mistake of the fact occurs, the contract is void
– without legal effect (totally invalid)
Ex: Both parties believe that a property is 48 acres,
when in fact it is 28. Contract can be voided once
mistake is uncovered.
Answer question:
 The following question is listed next in your
notes. Answer it based on notes you took so
far:
 Name the types of mistakes that can make a
contract void or voidable
What is Misrepresentation?
 In many contract negotiations, the parties make
statements that turn out to be untrue
 Innocent misrepresentation - party to a contract does not
know that a statement he/she made is untrue (“I didn’t
know!”)
 Fraudulent misrepresentation – deliberate false
representation or concealment of a material fact, which
is meant to and which does persuade another to enter
into an unfavorable contract
Ex: If a car dealer is unaware that the previous owner
replaced the odometer and the can has 150,000 miles
instead of 70,000.
What is Misrepresentation?
 Statements are treated as misrepresentation by
the law only if:
1. The untrue statement is fact or there is active
concealment
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Opinion vs. fact – sales talk or expert opinion
Active concealment – seller of house paints ceiling to
cover up water damage; sticker over a scratch on a new
LED TV
2. The statement is material to the transaction if the
defendant knew this plaintiff would rely on the
statement and intentionally made a false statement

A used car dealer tells a customer that the oil had been
changed every 3000 miles, when it was changed every
5000 miles instead.
3. The victim reasonably relied on the statement
Answer Question:
 The following question is listed next in your
notes. Answer it based on notes you took so
far:
 What are the 3 criteria for a statement to be
treated as a misrepresentation?
Fraud & Remedies for Fraud
 Fraud – intentional misrepresentation of an
existing, important fact
 All 3 elements of misrepresentation must be
proven to show fraud PLUS 2 additional
elements:
1. Intent – deliberately lies or conceals a material fact
2. Injury – usually financial; must be proof of injury
 Remedies (verdicts) for fraud cases:

Rescission – cancel contract and recover what has
been paid or given
 Damages - $$$$$$ (actual and/or punitive)
Answer Question:
 The following question is listed next in your
notes. Answer it based on notes you took so
far:
 What are the remedies (solutions) for fraud?
7-2 Assessment Questions
 Answer assigned questions on a
separate sheet of paper. FOLLOW
directions and be complete with
your answers!