Mod 8 - Conduct of Circumstances Invalidating Consent

5 elements of fraud

1. false representation

2. of a fact

3. that is material

4. knowledge of falsity/intent

5. justifiable reliance

puffery

vague, subjective praise no reasonable buyer would treat as fact

-"best coffee in the world"

financial projections

these are fraud only if bad faith

-predictions of future profit or success are generally opinion

material

would knowing the truth make a difference or influence a reasonable person

justifiable reliance

you are not deceived if you do not rely

what are the three ways to prove intent

1. actual knowledge of falsity

2. constructive knowledge of falsity

3. or reckless disregard for the truth

- if the speaker honestly believed the statement there's no fraud

what are the two ways to remedy fraud

-rescission

-benefit of the bargain

-common law you have to choose between

-UCC you can rescind and recover damages

rescission

restores the parties to their pre contract positions

-undoes the contract

benefit of the bargain damages

keep the deal and recover the difference between value as represented and value as delivered

what are the two types of nonfraudulent misrepresentation

-negligent misrepresentation

-innocent misrepresentation

-rescission is only remedy, money damagers are generally unavailable

negligent misrepresentation

false statement made without knowledge of its falsity, but without due care

-speaker should have known better

innocent misrepresentation

false statmenet made without knowledge of its falsity and with due care

-no fault at all

mutual mistake

both parties mistaken about a material fact - no real meeting of the minds

duress

wrongful coercion that induces a person to enter into a contract

undue influence

unfair persuasion during bargaining

what is true of duress and undue influence

both make the contract voidable, NOT void

-usual remedy is rescission