GENUINE AGREEMENTBusiness Law

The Opening Scene

Alena Hana Viktor Jake Mr. Benes

Fraud and Misrepresentation Fraud: A deliberate deception

intended to secure an unfair or unlawful gain

Rescind: Cancel or sue for money damages

Elements of Fraud

1. False representation of fact 2. Knowledge of the falsity by the

party making the false representation

3. Intent to deceive by the party making the false representation

4. Reasonable reliance by the innocent party

5. Actual loss suffered by the innocent party

False Representation of Fact Material Fact: A fact that is

important; it matters to one of the parties Does allow salespeople to use a certain

amount of “sales talk”, called “sales puffing” or “sales puffery”

Concealment: Not revealing important information

Representation Known to Be False Must be aware that the

representation is false Buying a used car that has been in an

accident, but salesperson tells you that it hasn’t

False Representation Intended to Be Relied Upon

Must show that the false representation was made with the intent that it be relied upon 1964 Mustang, really a 65 but not selling

the car

False Representation Actually Relied Upon

Must be reasonably relied upon by the other party when the agreement is made Page 131 Example 3

Resulting Loss

Must suffer a monetary loss If you do a favor for someone in

exchange for an item, say mow lawn for a CD. You find out that the CD does not work, scratched, you can’t make a claim for fraud

Innocent Misrepresentation Misrepresentation: Untrue statement

of facts The law gives you the right to rescind

the contract

IF you buy a bike that is broken but the owner does not know this, you can cancel the deal and get money back but cannot be entitled to damages because owner did not know.

Mistake, Duress, and Undue Influence

Unilateral Mistake: An error on the part of one of the parties to the contract

Example 5 page 133

Mistake as to the Nature of the Agreement: Agree to mow someone's lawn and the

contract says every week, but you were orally told once a week, must mow every week.

Mistake as to the Identity of a Party: Two people with the same name and the

offer is sent to the wrong person

Bilateral Mistake: Both parties to a contract are mistaken

about an important fact Mistake as to the Possibility of

Performance: When both parties believe the

agreement can be performed, when in fact, they cannot. In this type of situation, either party may get out of the contract Example 7 page 136

Mistake as to the Subject Matter: Mistaken about the identity of the

subject matter Example 8 page 136

Duress

Duress: Overcoming a person’s will by use of force or by threat of force or bodily harm

Economic Duress: Threats to a person’s business or income that cause them to enter a contract without real consent

Physical Duress: Physical violence is used

Emotional Duress: Threats

Undue Influence Undue Influence: Occurs when a

person uses unfair and improper persuasive pressure to force another person to enter into an agreement Dependency Relationship: Dependent on the

other party because of ill health, old age, or mental

Unfair or Improper Pressure: Excessive pressure to force the dependent into a contract

Beneficial Contract: Benefits the independent party at the expense of the dependent party