Chapter 13 PDF

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reality of consent...

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1/27/22, 5:55 PM

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Chapter 13- Reality of consent Wednesday, April 8, 2020 3:36 PM

Voidable: contracts induced by misrepresentation, fraud, mistake, duress, or undue influence Rescind: person whose consent was not real has the power to cancel a contract; person who rescinds a contract is entitled return of anything he gave the other party and return anything he received from other party • Has to be done in a reasonable amount of time

• to rescind a contract based on fraud or any of the other doctrines, a person must act promptly and unequivocally ○ must object promptly upon learning the facts that give a person the right to rescind and must express intent to cancel contract • ratification ends the right to rescind • avoid any conduct that would send a "mixed message," such as continuing to accept benefits from the other party or behaving in any other way that is inconsistent with her expressed intent to rescind

• an assertion that is not in accord with the truth • when a person enters a contract because of his justifiable reliance on a representation about some important fact, the contract is voidable • can be either "innocent" (not intentionally deceptive) or "fraudulent" (made w/ knowledge of falsity and intent to deceive) • contract may be voidable even if person making misrepresentation believes in good faith that what he says is true • whether innocent or deceiving, it gives complaining party right to rescind a contract • The fact that is in question must be material (important) 1. Untrue assertion of fact was made 2. Fact asserted was material or assertion was fraudulent 3. Complaining party entered the contract because of reliance on assertion 4. Reliance of complaining party was reasonable a. establishing fraud necessitates proof that untrue assertion was made with scienter b. if plaintiff is seeking to recover damages for deceit, they would have to establish economic injury because of his reliance on the fraudulent assertion c. if only seeking rescission, injury not required • to have misrepresentation or fraud, one of the parties must have made an untrue assertion of fact or engaged in some conduct that is the equivalent of untrue assertion of fact ○ fact asserted must be past or existing fact ○ Can be concealment • fact that is likely to play a significant role in inducing a reasonable person to enter the contract or if the person asserting the fact knows that the other person is likely to rely on the fact • if misrepresentation was innocent, person seeking to rescind contract must establish fact asserted was material • person pursues some course of action because of his faith in an assertion made to him • if complaining party knew assertion was false or was not aware assertion has been made, there has been no reliance • person does not act justifiably if he relies on an assertion that is obviously false or not to be taken seriously • problem is determining extent to which relying party is responsible for investigating accuracy of statement on which he relies https://onedrive.live.com/redir?resid=8AD1D66E9379CE6E%21106&page=Edit&wd=target%28Blaw 280.one%7C2b636bd0-0e46-3046-af2f-92b86d8f… 1/5

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• person who didn't attempt to discover readily discoverable facts was not justified in relying on other party's statements about them • concealment of fact through active conduct intended to prevent other party from discovering fact is considered to be equivalent of assertion • concealment involves active hiding of fact while nondisclosure is the failure to volunteer information

• type of misrepresentation that is committed knowingly, with intent to deceive • legal term for this type of falsity, which distinguishes fraud from innocent misrepresentation is scienter • No requirement that the statement is material just fraudulent • contract remedy for fraudulent misrepresentation is rescission • person who commits fraud may be liable for damages for tort of deceit • in some states, party must choose between either suing for damages for deceit or rescinding contract • Sue for rescission • scienter

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belief about a fact that is not in accord with the truth must relate to facts as they exist at the time contract is created not misrepresentation as erroneous belief is not result of other party's untrue statements mistake about principle of law will not justify rescission Section 157 of Restatement focuses on degree of party's negligence in making a mistake mutual mistake take form of erroneous expression of an agreement, caused by clerical error in typing a contract • *remedy is reformation (modification) of writing rather than avoidance

when both parties are mistaken, resulting contract can be avoided if: 1. Mistake relates to a basic assumption on which contract was made a. assumptions about identity, existence, quality, or quantity of subject matter 2. Mistake has a material effect on agreed-upon exchange 3. Party affected by mistake doesn't bear risk of mistake exists when only one of the parties makes a mistake about a basic assumption on which he made the contract; person trying to avoid on ground must show either: 1. Nonmistaken party caused or had reason to know of mistake 2. It would be unconscionable to enforce contract

• wrongful coercion that induces a person to enter or modify a contract • one kind is physical compulsion to enter contract • Threat of any kind of physical or economic harm 1. Contract was induced by an improper threat 2. Victim had no reasonable alternative but to enter contract • describe situations in which one person induces formation or modification of a contract by threatening another person's economic interests

• unfair persuasion that involves wrongful pressure exerted on a person during bargaining process • involve relationship between parties and one is of trust and confidence or one in which person exercising persuasion dominates person being persuaded

• Robert and louise sparks sold a house in decatur georgia to stephen a wheat and teresa m mccrerey wheat https://onedrive.live.com/redir?resid=8AD1D66E9379CE6E%21106&page=Edit&wd=target%28Blaw 280.one%7C2b636bd0-0e46-3046-af2f-92b86d8f… 2/5

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• The contract that was date august 14, 2009 had a property disclosure statement dated march 5, 2009 • The sparks gave the property to the wheats and closed the transaction on september 14, 2009 • At closing the sparks also signed an owners affadavit • When he got the house mr wheat deeded his interest in the property to his wife and the wheat trust which they just created • In the disclosure the sparks said that there were no encroachments, leases, unrecorded easements, or boundary line disputes for the property • In an addendum attached to the disclosure the sparks said that the exterior sewer line was replaced with pvc in 2005 and all the water lines including the service line were replaced with copper plumbing in 2006 • 18 months after they got the property, the wheats began having a problem with the sewer lateral servicing the property • While they were trying to fix it they found out that the sewer lateral ended 133 feet beyond their property and some of it was in their neighbors yard and the rest of it was in a wooded area owned by the city • The wheats contacted the sparkses real estate agent about the sewer issue • The real estate agent replied with emails from the sparks basically admitting that they knew about the neighbor issue • The wheats reached an easment agreement with the grandsens and the city to resolve the encroachments between the property and the public sewer connection • In a different section of the disclosure the sparks said there was water leakage water accumulation and dampness in the basement • Evidence showed that the sparks were aware of a couple of leaks while the house was still on the market and louise would use fans to dry up the leaks before showing th house • Their agent told them to update the disclosure and talk about the leaks but they did not • On april 2, 2009 ms sparks sent an email to the agent about the leaks that she had noticed and said she had someone coming who was going to fix them • In a deposition ms sparks said that she doesn’t think they fixed the right leaks • The wheats visited the open house in april 2009 and decided to buy and once they did they began to notice the leaks • The wheats, the wheat trust, and stephen a wheat as a trustee filed a lawsuit against the sparkses • The plaintiffs asserted fraud claim based on false representations about the sewer lateral and misleading failures to disclose the important particulars regarding the lateral • They also did a fraud claim based on misleading non-disclosure or active concealment of the water intrusions in the basement • They wanted compensatory and punitive damages • After discovery the sparks filed a motion for summary judgement and the trial court granted it • The wheats appealed • The grant of summary judgement for the sparks was reversed in favor of the wheats and the case was remanded • Did the sparks commit a fraud by saying there was nothing wrong with the house in the disclosure when there actually was something wrong?

• In 2002 bob and sally sumerel steven and ann berzin dane and kerry dicke and bart kaufman won a product liability suit against goodyear • Goodyear designed and manufactured a defective hose in the plaintiffs heating systems • The jury awarded the plaintiffs about $1.3 mil against goodyear and this included repair and replacement costs, diminuition in value damages and other costs and losses • The jury also found that goodyear was responsible for 36% of other costs and losses for the berzins and the dickes and 48% for the sumerels and kaufman • The district court awarded prejudgement interests for the repair costs but not for the other costs and losses • Both sides appealed • The appelate court found that they were entitled to interest on the other costs and losses and remanded the case back to district court so they could calculate and award the interest • After the case was remanded the attorneys for both sides began to discuss the calculations for the pre judgement interest • They agreed on the dates but could not agree on the calculations • One of the goodyears attorneys michael brooks said to one of the plaintiffs lee gray attorneys that the amount he had was about 2.7 mil and it was higher than theirs by six figures • Brooks said the discrepancy could have been caused by the failure to factor in the pre judgement interest for kaufman and grey said that could possibly be it https://onedrive.live.com/redir?resid=8AD1D66E9379CE6E%21106&page=Edit&wd=target%28Blaw 280.one%7C2b636bd0-0e46-3046-af2f-92b86d8f… 3/5

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• Brooks then sent an email on behalf of good year for their charts of calculation and the total amounts due to each plaintiff • After looking at goodyears charts the plaintiffs attorneys noticed that 100% of the costs and losses was going to go to goodyear instead of the 36 and 48% mentioned previously • The error resulted in an overstatement of damages due by more that $550k • They didn't tell the goodyears attorneys or brooks about this error that they noticed • Instead the plaintiffs lead attorney voiicemailed and faxed goodyears lead attorney both who werent part of the offer made by brooks • A satisfaction of judgement form as created but brooks discovered his error before anyone signed • Brooks sent corre • The plaintiffs demanded goodyear pay the higher amount and goodyear refused so they filed a motion to enforce the purported settlement agreement • The district court granted the motion and goodyear appealed • Rule unilateral mistake • Are documents with errors in them able to be considered as a settlement agreement • Decision was reversed in favor of goodyear

• In march 2011 patricia hicks was a passenger in a motor vehicle that was rear ended by debra sparks • Hicks went to the hospital and followed up with her physician a couple of days later with complaints of headaches and neck pain • She visited about 15 times and received treatment and physical therapy for her symptoms • In april 2011 hicks sent a claim about her injuries to sparks insurance company progressive northern insurance company • An adjuster, sharon oconnel is the one who was handeling her claim • She told oconnell that she stopped physical therapy and that se still had some pain but she was ready to talk about a settlement • Oconnell offered hicks $2k but she did not accept • Hicks spoke with oconnell again in may 2011 and mentioned she was still having headaches • Hicks demanded a settlement of 7k and oconnell offered 2500 • Hicks said she wanted more time to think about the counter offer she was presented with • Hicks contacted odonnell again asking for 5k and mentioned how her lawyers told her to wait a year before settling to make sure the injuries are gone • Oconnel countered with 3k • In October 2011 hicks stated again that she wanted 5k • Oconnell countered with 4k and hicks accepted • A year after the accident hicks began having numbness and pain in her hands and arms • She got an MRI that revealed she had a herniated disk and she ended up getting surgery for it • In 2013 hicks filed a suit in the Delaware superior court saying that sparks negligence caused the initial accident and the following injuries • The court granted a motion for summary judgement for sparks due to the check hicks got which was the release • Hicks appealed to Delaware supreme court • Rule mutual mistake • Issue was there a mutual mistake between the two parties

I feel that it is ethical for a customer to insist on the mistaken price because it's the company's job to make sure that everything on the website is correct and how are the customers supposed to know that the price was wrong

I think as a business, whether you're new or not, you shouldn't put such responsibility on the customer saying that if you don't pay then we'll go broke. They should have some sort of extra funds off to the side to help keep them afloat.

no because he already owns it and the retailer should've been more clear and put $1,200 rather than 1200 which is kind of vague. The comma makes a big difference. yes, they had a duty to disclose the murder/suicide because In my opinion that is a material fact

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