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MGMT 310 CH.15

by: Leona Thompson

MGMT 310 CH.15 310

Leona Thompson
GPA 3.2

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About this Document

Mistakes, Fraud, Voluntary Consent
Business Management Law
Professor Amelia Nelson
Class Notes
Law, Managment
25 ?




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This 2 page Class Notes was uploaded by Leona Thompson on Thursday April 21, 2016. The Class Notes belongs to 310 at University of New Mexico taught by Professor Amelia Nelson in Spring 2016. Since its upload, it has received 36 views. For similar materials see Business Management Law in Business, management at University of New Mexico.


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Date Created: 04/21/16
Chapter 15: Mistakes, Fraud, and Voluntary Consent Section 1 Voluntary Agreement to a preposition or an act of another. The lack of Voluntary Consent can be used as a defense against the contract.  A valid contract is unenforceable if the parties have not agreed to its terms. Mistake of Fact- this is the only thing that makes a contract voidable and it must involve material of fact. 1. Bilaterial Mistake- both parties mistaken (“no true meeting of the mines”). Contract can be rescinded by either party. 2. Unilateral Mistake- One party mistaken. Contract enforceable Mistake of Value- when the value of the object is worth a different amount in the future Section 2 Fraudulent Misrepresentation- when someone misrepresents something knowing they are acting in fraud. 1. A misrepresentation of a material fact must occur. Misrepresentation by Conduct- when a party takes a specific action to conceal a fact that is material to the contract Statements of Opinion and Representations of Future Facts- are not subject to claims of fraud. Misrepresentation of Law- does not entitle a party to relief from a contract. Except when the misrepresenting party is in a profession that is known to require greater knowledge than the average individual Misrepresentation by Silence- Failure to disclose material facts about its value.  Latent Defects- disclose information about a material’s defects if buyer is unable to see it  Fiduciary relationship- between partners e.g. physician & patient, attorney & client 2. There must be an intent to deceive. Scienter- also known as “guilty knowledge”, a party knowingly puts forth false statements about their knowledge or personal investigation of material without regard to whether it is true or false. Innocent Misrepresentation- (NOT FRAUD) if a person makes a statement that she or he believes to be true but that actually misrepresents material facts. Contract can then be rescinded but there will be NO monetary damages. Negligent Misrepresentation- misrepresentation through carelessness although the party highly believed it to be true e.g. operator of a weight scale weighs materials but the scale has not been checked for years and it is defect 3. The innocent party must justifiably rely on the misrepresentation. Justifiable Reliance- The deceived party must have a justifiable reliance for relying on the misrepresentation. If a party knows for a fact that something is not true but they still entered into the contract then it cannot be a justifiable misrepresentation. 4. To collect damages, a party must have been harmed as a result of the misrepresentation. Section 3 Undue Influence- In a contract, when one party can greatly influence another party then it lacks voluntary consent so this contract becomes voidable.  A contract entered into under excessive or undue influence lacks voluntary consent and is therefore voidable.  Those under the care of psychiatrists, Elderly people, Minors, Mentally incompetent people, Those under the care of physicians, under the care of psychologists, under guardianships  If a contract enriches the dominant party, the court will often presume undue influence Section 4 Duress- the use of threats to force a party into a contract is not voluntary. It must render the person incapable of exercising free will in order for it to fall under Duress. It is also a defense to the enforcement of a contract and recission  Economic duress- economic need is not sufficient to constitute duress Section 5 Adhesion Contracts- A “standard-form” contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms. Contains FINE PRINT  unconscionability under Section 2–302 of the Uniform Commercial Code (UCC) applies only to contracts for the sale of goods  seller takes advantage of a buyer


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