Reality of Consent:Capacity PDF

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Summary

Notes from the lecture on Reality of Consent and Capacity to Consent.
Prof Jennifer Gershberg ...

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Reality of Consent - If an agreement is made because of duress, misrepresentation, fraud, a mistake, etc., consent isn’t actually real - Courts want people to engage in agreements that represent reality - Contracts become voidable -

The injured party can rescind the contract bc their consent wasn’t real o Must rescind promptly once you’ve learned of the voidable offense o If you don’t rescind, you have ratified the contract, losing the right to later rescind it o Ratifying – agreeing to be bound by a contract you had the right to rescind  Binds you to the contract  Takes away the right to walk away later  (Must be prompt/unequivocal or clear if you are going to rescind)

Misrepresentation - Either innocent or fraudulent - Ex. Innocent: selling a power drill that you firmly believe works perfectly, it doesn’t work o Remedy = rescind the contract (give money back, give drill back) - Ex. Fraudulent: purposely lied to get you to agree to sign the contract o Remedy = rescission + punitive damages (for fraud) o Omissions included - Elements are the same for innocent/fraudulent (need all 4) 1. An untrue factual assertion or omission is made 2. The fact was material or fraudulent (in cases of fraud, doesn’t have to be material) 3. The complaining party entered the contract bc of his reliance on the untrue assertion 4. Reliance was reasonable (easy hurdle; more pressure on person who misrepresented to be honest) Mistake - Mutual mistake – both parties are mistaken about some central fact Requirements: 1. The mistake relates to a basic assumption on which the contract is based Ex. Contract about 2 different ships w the same name; or you couldn’t sell the number of napkins you promised someone you’d sell to them 2. Mistake has a material effect on the exchange  Show that one party would be really hurt by enforcing the agreement, & that the other would be unfairly enriched

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 Ex. Paying $1,000 for no napkins  3. Party that’s hurt by the mistake doesn’t assume the risk of the mistake  Ex. Girl gets in accident, signs release to not pursue further settlements due to any other injuries related to the accident, but later gets more injuries related to the accident  Mistake she claimed – they both thought the injury was less than it was  She couldn’t later say she made a mistake bc she bore the risk Unilateral mistake – only one party is mistaken o Same reqs as mutual, plus: 1. The non-mistaken party either caused or had reason to know of the mistake OR 2. It would be unconscionable to enforce the agreement  Oppressively unfair Want to protect people from things they’re not bargaining for Usually about existence of subject-matter of contract, identity, etc. something fundamental Must be about facts as they exist at the time the contract was entered (predictions don’t count as mistakes) Common: clerical errors – both recognize it, just change the errors and be done

Duress - Wrongful coercion that induces someone to enter a contract - Must be some sort of threat 1. Contract was induced by an improper threat 2. Victim had no reasonable alternative but to enter contract - Standard is now more subjective that considers what the victim actually felt, but depends on state/court Undue Influence - No threat: unfair persuasion 1. There is a relationship of trust or dominance 2. Unfair methods of persuasion were used o Is the person being rushed to sign? o Do they have adequate time to consult another opinion / think about it? Time to respond thoughtfully? - Ex. Agree to keep taking care of Mom if she signs over all her money to you within the next 20 minutes Duress + undue influence + no consideration – case where wife gives husband 30 seconds to sign an agreement

Capacity – ability to understand what you’re doing; to acquire a legal obligation or a right. Need maturity / state of mind to be bound by a contract 1. Minors o Minors are allowed to be in contracts o Have the right at any time before they’re 18 to disaffirm (walk away from) a contract o To discourage adults from entering contracts with kids o If a child disaffirms, both sides must return anything they’ve given the other side o If a kid ratifies the contract at 18, they cannot later disaffirm o If a child lies about his age, courts are divided over whether to let the child disaffirm o Exceptions:  Employment contracts not voidable for lack of capacity  Contracts with parents 2. Mental Incapacity - Many people w mental illnesses are capable of being held to contracts - Cognitive test: Does this person have the cognitive ability to understand the nature/effect of this agreement? o Case-by-case; no hard/fast rule other than that it is a cognitive test o If no, the person who lacks capacity can walk away (the remedy is that you can walk away) - Exc: if a court already decides that someone is incapacitated due to severe mental impairment, any future contracts that person tries to enter are void, not voidable 3. Intoxication - Only grounds for incapacity if it’s so extreme that you’re rendered totally out of your mind & unable to appreciate what you’re doing/agreeing to - Basic drunkenness not enough: must be really impaired and literally incapacitated. Must have no idea what you are agreeing to - As soon as you come to, you must disaffirm promptly Void vs. Voidable: Voidable is enforceable, but someone can walk away if they choose to. Void is never enforceable...