Contract Vitiating Factors: Fraud, Undue Influence, Duress, and Mistake

Contract Law: Vitiating Factors

I. Fraud and Misrepresentation

Fraud and misrepresentation are theories used to set aside a contract when one party's assent was not truly given due to being misled. A contract is formed by mutual assent plus consideration. To get out of a contract, a valid legal theory is required.

A. Elements of Misrepresentation (Generally)

• False Representation: A statement that is not true.

• Fact vs. Opinion: Must generally be a statement of fact, not an opinion. An opinion given by an expert, however, might be treated as a fact in certain circumstances.

• Materiality: The misrepresentation must be relevant to the decision-making process.

• Intent: The party making the misrepresentation had knowledge of its falsity or acted recklessly.

• Justified Reliance: The other party must have been justified in relying on the misrepresentation.

B. Case Scenarios for Fraud and Misrepresentation

1. Property Value Misrepresentation

• Facts: Seller stated belief that a property was worth $300,000, but sold it for $225,000. Buyer wants to set aside the deal.

• Question: Is this fraud/misrepresentation?

• Analysis:

  • False Representation: The statement "I believe it's worth double" is an opinion, not a fact. It's subjective.

  • Expert Opinion: The seller is not an expert, so their opinion is unlikely to be treated as a fact.

  • Justified Reliance: A buyer is generally not justified in relying solely on a seller's opinion of value, especially when the selling price is lower than the stated 'belief.' There's a