Chapter 15 Mistakes, Fraud, and Voluntary Consent

adhesion contracts

A “standard-form” contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms.

duress

the unlawful use of threats, force, blackmail, or extortion against a party to compel them to enter into a contract without genuine, voluntary consent. Duress serves two important legal functions: it may be raised as a defense to block enforcement of the contract, or as a ground for rescission, meaning the victimized party may seek to have the contract canceled and voided entirely.

bilateral mistake

A mistake that occurs when both parties to a contract are mistaken about the same material fact.

innocent misrepresentation

A false statement of fact or an act made in good faith that deceives and causes harm or injury to another.

latent defects

A defect that is not obvious or cannot readily be ascertained.

negligent misrepresentation

Any manifestation through words or conduct that amounts to an untrue statement of fact made in circumstances in which a reasonable and prudent person would not have done that which led to the misrepresentation. A representation made with an honest belief in its truth may still be negligent due to (1) a lack of reasonable care in ascertaining the facts, (2) the manner of expression, or (3) the absence of the skill or competence required by a particular business or profession.

scienter

(pronounced sy-en-ter) Knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive.

undue influence

Persuasion that is less than actual force but more than advice and that induces a person to act according to the will or purposes of the dominating party.

unilateral mistake

A mistake that occurs when one party to a contract is mistaken as to a material fact.

voluntary consent

Knowing and voluntary agreement to the terms of a contract. If voluntary consent is lacking, the contract will be voidable.