Business Law Chpt. 7

valid

A legal and enforceable contract is said to be

void

A contract that has no legal effect is said to be

genuine assent

Consent not clouded by fraud, duress, undue influence, or mistake is

rescission

The process of restoring to the parties what they have put into the contract

Duress

Use of an improper act or threat to obtain an expression of agreement

ratification

approval of a voidable contract

unilateral mistake

one party holds an incorrect belief about the facts related to a contract.

Fraudulent misrepresentation

deliberate false representation or concealment of a material fact, which is meant to, and which does induce another to make an unfavorable contract

ratification

conduct or actions that confirms you intend to be bound by the voidable contract

mutual mistake

Both parties have an incorrect belief about an important fact in a contract

punitive damages

Money a court requires a defendant to pay in order to punish a person who inflicted an injury

Fraud

Intentional misrepresentation of an existing important fact

innocent misrepresentation

It is an untrue statement made by someone who had reasonable grounds for believing that his false statement was true

voidable

Contract in which the injured party can withdraw from the transactionn

undue influence

Overpowering of another's freewill by taking unfair advantage to induce the person to make an unfavorable contract

Give examples of two threats/situations that may make the contract voidable

• Threat to commit a crime/tort.

• duress

• Misrepresentation or fraud

State the three elements that must be proven before any statement in a contract is treated as misrepresentation

• The untrue statement is one of fact or there is active concealment​

• The statement is material to the transaction or is fraudulent​

• The victim reasonably relied on the statement

Fraud is misrepresentation at a higher level. What TWO other elements mus t be proven in order for the court to award damages for fraud

• intent

• injury

What are the THREE remedies for fraud?

• compensatory damages

• rescission

• punitive damages

Give THREE examples of relationships that could be a part of situations involving undue influence.

• parent and child

• doctor and patient

• attorney and client

Mark was shopping for a used car. Ben, the mechanic, was selling a car that Mark thought was in good condition. He asked Ben to tell him if the car his driving properly. Ben said, "It is in good shape." In fact, it needed major repairs. Is Ben's statement a misrepresentation?

Yes it is Misrepresentation, as Ben is a mechanic his opinion is taken as an expert opinion, These are regarded as facts in the court of Law.

Joe was shopping for a used computer. He found one and asked the seller if the hard drive can store over 8 gigabytes of information. The seller said, "it has enough storage space for an average user." In fact, it had only 6 gigabytes. Is the seller's statement a misrepresentation

No because the seller's reply didn't mention the actual amount of storage, only an opinion that it had enough storage space for an average user which isn't a factual statement more an opinion

Manny rented an apartment and later discovered that the house is infested with termites. He asked the landlord to fix the problem, but he refused. Manny said that he would move out unless the landlord either get a pest controller or lower the rent. The landlord lowered the rent. Does Manny's conduct make the modification to the contract voidable due to duress

No Manny’s conduct does not make the modification to the contract voidable to duress, because Manny did not use unlawful pressure or threats, he made a reasonable demand because the apartment was unlivable due to termites. Asking the landlord to fix the issue or lower the rent is not considered duress, but fair response to the situation

Punitive damages may be awarded if fraud can be proven

True

Misrepresentation is an element of both innocent misrepresentation and fraud

True

Unilateral mistakes of law generally have no effect on the rights of parties under the resultant contract

True

Avoidance of contract affected by legal duress must be timely and occur before ratification

True

Contracts created or modified by duress are voidable

True

A formal relationship between parties to the contract must always be shown to prove undue influnence

False