Capacity and Genuine Assent PDF

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Hackney...

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Business Law

Capacity and Genuine Assent – Module 11 

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Capacity – Traditional Rule o A person lacks capacity if his mental processes are so deficient that he lacks understanding of 1. Nature of the transaction 2. Purpose of the transaction 3. Effect of the transaction Incapacity May Be (not on exam as list) 1. Factual – Mental impairment, drug or alcohol impairment 2. Status – Minority, persons under the age of 18 3. Legal – Adjudicated incompetent, as when a guardian has bee appointed Minority Equity Rule o Minors must pay reasonable value for necessaries supplied to them Intoxication o A person may lack capacity because of intoxication, but the incapacity will be temporary and only last during the period of intoxication Mistake (ON EXAM) o A mutual mistake of material fact is a basis for rescission (both parties are confused about the nature of the transaction) o The cow example: Rose 2nd Aberlone  Sherwood v. Walker (1887) o Mutual mistake of law o Unilateral mistake of fact o Unilateral mistake of law Fraud – Tradition Definition o Fraud is the intentional misstatements, or misstatement made with reckless disregard of its truth or falsity, of a past or present material fact, made with the intent to induce reliance, that is justifiably relied upon to the relying party’s detriment o Subjective intent Undue Influence o Undue influence requires the presence of a fiduciary relationship Duress o Requires coercion or threats of violence...