CHAPTER 11: CONDUCT
INVALIDATING ASSENT
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TOPICS COVERED CHAPTER 11:
CONDUCT INVALIDATING ASSENT
A. Duress.
B. Undue Influence.
C. Fraud.
D. Nonfraudulent Misrepresentation.
E. Mistake.
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DURESS
 Definition – wrongful or unlawful act
or threat that overcomes the free will
of a party.
 Physical Compulsion – coercion
involving physical force renders the
agreement void. 
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DURESS
 Improper Threats – improper threats
or acts, including economic and social
coercion, render the contract
voidable.
• The test is subjective: did the threat
actually induce assent on the part of
the victim? 
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UNDUE INFLUENCE
 Definition – taking unfair advantage
of a person by reason of a dominant
position based on a confidential
relationship.
 Effect – renders a contract voidable.

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UNDUE INFLUENCE
 Rea v. Paulson (1994).
 Berardi v. Meadowbrook Mall
Company (2002).
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FRAUD
 Fraud in the Execution – a
misrepresentation that deceives the
other party as to the nature of a
document evidencing the contract
renders the agreement void. 
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FRAUD
 Fraud in the Inducement – renders
the agreement voidable if the
following elements are present.
• False Representation – positive statement or
conduct that misleads.
• Fact – the event occurred or the thing exists.
MAROUN V. WYRELESS SYSTEMS, INC. (2005).
• Materiality – of substantial importance. 
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FRAUD
 Fraud in the Inducement – renders
the agreement voidable if the
following elements are present.
• Knowledge of Falsity & Intention to Deceive –
(scienter) includes (a)actual knowledge, (b)lack of belief in statement's truthfulness, or
(c)reckless indifference to its truthfulness.
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FRAUD
 Fraud in the Inducement – renders
the agreement voidable if the
following elements are present.
• Justifiable Reliance – a defrauded party
is reasonably influenced by the fraud.
• REED V. KING (1983).
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NONFRAUDULENT
MISREPRESENTATION
 Negligent Misrepresentation –
misrepresentation made without due
care in ascertaining its truthfulness;
renders agreement voidable.
 Innocent Misrepresentation –
misrepresentation made without
knowledge of its falsity but with due
care; renders contract voidable.
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MISTAKE
 The parties’ understanding not in
accord with existing fact(s).
 Mutual Mistake – both parties have a
common but erroneous belief forming
the basis of the contract; renders the
contract voidable by either party.
• Lesher v. Strid (2000).
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MISTAKE
 Unilateral Mistake – courts are
unlikely to grant relief unless the
error is known or should be known
by the nonmistaken party.
 Assumption of Risk – a party may
assume the risk of a mistake. 
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MISTAKE
 Effect of Fault upon Mistake – not a
bar to avoidance unless the fault
amounts to a failure to act in good
faith.
• Mistake in Meaning of Terms: no
contract if material mistake in terms
and neither party is to blame.
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CONDUCT INVALIDATING ASSENT
Conduct
Effect
Duress by physical force
Void
Duress by improper threats
Voidable
Undue influence
Fraud in the execution
Voidable
Void
Fraud in the inducement
Voidable
Nonfraudulent misrepresentation Voidable
Mutual mistake of fact
Voidable
© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.