blaw 1320 week 10 contractual defects, construction, exlusion clauses

mistake

an error that destroys consensus. it can interrupt:

• major terms of the contract

• an assumption upon which the contract is based

• expected result of the contract

shared/common mistake

both parties have the same mistake about a fundamental aspect of the contract

mistunderstanding

both parties have a different understanding of the contract

unilateral/one sided mistake

one side has made a mistake, the other has not

non est factum

“it is not my fact.” when the signed agreement is materially different than what the other had signed

misrepresentation

a false statement of fact that persuades someone to enter into a contract

elements of misrepresentation

1. a person makes a false statement of fact

2. the other person relies on that statement or induces them to enter the contract

3. damages are suffered

misreperesentation - misfeasances

when someone performs a lawfuly duty improperly or carelessly

misrepresentation remedies

• if the false statement is made part of the contract, then the party can claim for “breach of contract”

• if its not part of the contract hte defaulr remedy is “recission” - putting the parties in the position they were before the contract

innocent misrepresentation

the person making the innocent misrepresentation honesly belives it to be true and they were not careless

fraudulent misrepresentation

fraud exists when the false statement was made knowingly, without belief in its truth, or recklessly. ex: ponzi scheme

negligent misrepresentation

a party provides innacurate information carelessly

4 corners of the contract

1. are the terms plain upon reading it?

2. how would a reasonable person interpret the terms of the contract

contractual interpretation principles

1. look at the meaning of the words in the contract itself (the 4 corners rule)

2. interpret remaining ambiguities against the drafter of the contract (contra preferentum)

purposive interpretations

textual intepretation just looks at words. purposive interpretaitons look at what the parties are trying to achieve and give it meaning

interpret ambiguities against the drafter (contra preferentum)

any ambiguities that cannot be resolved by contractual interpretation is resolved against the drafter

exlusion clauses

attempt to significantly limit or eliminate laibility

exclusion clauses - modern test

1. did the other person truly agree to the exclusion clause?

2. does the exlusion clause apply to the situation when interpreting the contract?

3. is the transaction unconsionable?

4. is there public policy reason to avoid applying the exlusion cause?