Mutual Assent

You agreed. But did you REALLY agree?

• The Used Car

  • Seller says: “Never been in an accident”

  • Seller knows it was nearly totaled last year

    • Fraud

• The Boss

  • “Sign this agreement or I’ll make sure you never work in this injury again”

    • Duress

• The Collectible

  • Buyer and seller both believe a signed Taylor Swift poster is authentic

  • It isn’t

    • Mutual Mistake

• The Terms and Conditions

  • I have read and agree to all 47 pages

    • Unconscionability

• Did the parties genuinely assent to this deal?

Mutual Assent

• The parties have the same understanding of the terms and conditions of the contract

• But apparent agreement can be undermined by:

  • Fraud;

  • Misrepresentation;

  • Mistake;

  • Duress;

  • Undue influence; or

  • Unconscionability

• Saying “yes” isn’t always the end of the analysis

Where are we?

• The contract formation checklist:

  • Offer

  • Acceptance

  • Consideration

  • Mutual Assent (We are here)

• Capacity

• Legality

• Proper form, when required

• Today’s focus: What could make an apparent agreement legally defective?

Fraud

• Fraud = Intentional Deception

• Ask

  • Was there a misstatement of fact?

  • Was the fact material?

  • Did the speaker know it was false?

  • Was there an intent to deceive?

  • Did the other party rely on it?

  • Did the reliance cause damage?

• Don’t stop at: “But they lied!”

Build the Fraud Case

• Seller: “This car has never been in an accident.”

• Reality: Seller knows it was previously totalled

Fact, Opinion or Puffery

• Which could support fraud?

  • A. “This is the best car you’ll ever own

    • Puffery

  • B. “This car has 42,000 original miles”

    • Fact

  • C. “You’re going to LOVE this car”

    • Opinion/Puffery

  • D. “The engine was replaced last month”

    • Fact

  • E. “This car is basically indestructible”

    • Puffery

Materiality

• Does the fact actually matter?

  • A material fact is important enough to affect the decision to enter the contract

• Example:

  • “The house has never flooded” (material)

  • vs.

  • “This is the cutest house in the neighborhood”

• Or

  • “The roof was replaced last year” (material)

  • vs.

  • “You’re going to love living here”

• Lawyer question: Would this information matter to the deal?

Reliance Matters

• Seller falsely says: “The laptop has never been repaired”

• Buyer responds: “I don’t care. I’m stripping it for parts anyways”

• Buyer purchases it

• Fraud?

  • What element might be missing?

  • Reliance

• A lie alone doesn’t complete the analysis

Misrepresentation

• A false statement of material fact made without an intent to deceive

• Same bad information but a different state of mind

Fraud or Misrepresentation? Facebook Marketplace Edition

• Seller: “2025 MacBook Pro - 1 TB Storage”

• Scenario A:

  • Seller knows it has only 512 GB

  • Fraud

• Scenario B:

  • Seller honestly believes it has 1 TB

  • Misrepresentation

• What changed?

  • The seller’s knowledge and intent

What about silence?

• Do you have to tell the other party everything?

• Generally: Silence alone does not necessarily equal fraud

  • But circumstances may create a Duty to Disclose

• One important situation involves a fiduciary relationship:

  • A relationship involving special trust, confidence, or responsibility

  • Examples may include:

    • Attorney → Client

    • Trustee → Beneficiary

    • Agent → Principal

• Sometimes saying nothing says plenty

Rescission

• Think: CMD + Z for Contracts

• Rescission seeks to:

  • Undo the contract

  • And, as much as possible,

  • Return the parties to their pre-contract positions

• “Let’s pretend this deal never happened”

Mistake

• An erroneous belief concerning a fact relevant to the agreement

• Two possibilities:

  • Mutual Mistake—Both parties are wrong

  • Unilateral Mistake—One party is wrong

• Same word. Very different analysis

Mutual Mistake

• Everybody got it wrong

• Seller offers a guitar allegedly signed by Taylor Swift

  • Seller: “It’s authentic”

  • Buyer: “I agree”

• Price: $5,000

• Later…the signature is fake

• Neither party knew

• What exactly did the parties think they were bargaining for?

Mistake or Bad Prediction

• These are NOT the same

• Existing Fact: “We both believe this diamond is genuine”

  • Potential mistake

• Future Prediction: “We both believe this collectible will be worth $50,000 someday”

  • Bad prediction $\ne$ necessarily mistake

• Contract law generally doesn’t guarantee that your deal will age well

Unilateral Mistake

• One party got it wrong

• A contractor prepares a bid:

  • Materials: $40,000

  • Labor: $30,000

  • Profit: $10,000

• Intended Bid: $80,000

• But accidentally submits: $8,000

• Owner: "“ACCEPTED!”

• Is the contractor stuck with it?

• Key Questions:

  • How serious was the mistake

  • Did the other party know or have reason to know?

  • What would enforcement mean?

Duress

• When “Yes” isn’t voluntary

• Duress involves improper threats or coercion that deprive a party or meaningful free choice

• Compare:

  • “This offer expires at 5:00”

  • “Sign this or I’ll hurt you” (Duress)

• Pressure $\ne$ automatically duress

Hard Bargaining or Duress

• You be the Lawyer:

  • 1. “My offer expires at 5”

    • Hard bargaining

  • 2. “Take $3,000 or I’m selling it to someone else”

    • Hard bargaining

  • 3. “Sign this or I’ll destroy your reputation”

    • Duress

  • 4. “Sign this or your family will regret it”

    • Duress

  • 5. “I know you’re desperate for the money. This is my final offer”

    • Either way

Undue Influence

• Not every threat looks like a threat

• Undue Influence: involves improper persuasion, often where one party is particularly susceptible to another’s influence

• Think: Trust, power, vulnerability, improper persuasion

• Potential contexts:

  • Caregiver/dependent person

  • Adviser/client

  • Family member/vulnerable relative

• Duress:

  • “Do this or else”

• Undue influence:

  • “Trust me. You know I know what’s best for you

Duress or Undue Influence

• Scenario A

  • “Transfer the property or else”

  • Duress

• Scenario B

  • An elderly person depends completely on a relative for daily care. The relative repeatedly pressures the person to transfer property to them

  • Undue Influence

• Both affect free choice

• The mechanism is different

Unconscionability

• The “Come on, seriously?” Doctrine

• A contract or provision may be challenged when the contracting process or terms are extremely unfair or oppressive

• But…Bad deal $\ne$ unconscionable deal

• Courts generally do not rescue parties simply because:

  • They paid too much

  • They changed their mind

  • They didn’t negotiate well

  • They later regretted the deal

• Something more is required

Two kinds of Unconscionability

• Easy memory trick:

  • Procedural = PROCESS

  • Substantive =SUBSTANCE

The 3:00 a.m Apartment

• A student desperately needs housing before classes begin.

• The landlord presents a lengthy, non-negotiable lease.

• Buried on page 19: “Landlord shall never be liable for any injury occurring on the premises for any reason whatsoever.”

• Landlord says: “Sign it now or I'm giving the apartment to the next person.”

• What do you see?

  • Procedural unconscionability?

  • Substantive unconscionability?

  • Both? Neither?

Contract you don’t Negotiate

• Boilerplate: Standardized language used repeatedly in contracts

• Adhesion Contract

• A standardized contract generally drafted by the party with greater bargaining power and offered on a take-it-or-leave-it basis

• You encounter them constantly:

  • Apps;

  • Leases;

  • Gym memberships;

  • Software;

  • Tickets;

  • Financing

• Important: Standardized $\ne$ automatically enforceable

Overreaching

• Taking unfair advantage of another party though excessive or improper conduct

• Look at the whole transaction:

  • Bargaining power

  • Knowledge

  • Vulnerability

  • Hidden or confusing terms

  • Opportunity to understand the agreement

  • Meaningful alternatives

• Ask again: How did we get to “yes”?

Installment Contracts

• Buy now. Pay Later. Read carefully

• An installment contract provides for payment or performance in multiple installments over time

• Common examples:

  • Auto financing;

  • Phone financing;

  • Furniture;

  • Buy-now-pay-later purchases

• Installment contracts are not inherently problematic

• But examine:

  • Fees, interest, default provisions, remedies, disclosures

• Especially when considering claims of overreaching or unconscionability

Mutual Assent Roadmap

• Intentional deception

  • FRAUD

• Innocent false statement?

  • MISREPRESENTATION

• Wrong about an existing fact?

  • MISTAKE

  • Both → Mutual

  • One → Unilateral

• Improper threat?

  • DURESS

• Improper persuasion involving trust/power?

  • UNDUE INFLUENCE

• Seriously unfair deal?

  • UNCONSIONABILITY

  • Process → Procedural

  • Terms → Substantive