INTRODUCTION TO MATERIALS
Promise or set of promises for the breach of which the law gives a
remedy, or performance of which the law in some way recognizes as a
duty.
An agreement is a manifestation of mutual assent on the part of
Restatement §§ 3.
Agreement Defined;
two or more persons. A bargain is an agreement to exchange promises
Bargain Defined:
or to exchange a promise for a performance or to exchange
performances. (Bargain of parties)
Unless the context otherwise requires, the Article applies to
UCC §§ 2-102.
Scope; Certain Security transactions in goods; it does not apply to any transaction which
and Other Transactions although in the form of an unconditional contract to sell or present
Excluded from This
sale is intended to operate only as a security transaction nor does this
Article:
Article impair or repeal any statute regulating sales to consumers,
farmers, or other specified classes of buyers.
(1) “Goods” means all things (including specially manufactured
UCC §§ 2-105.
Transferability;
goods) which are movable at the time of identification*
“Goods”; “Future”
(2) Goods must be both existing and identified before any interest in
Goods:
them can pass. Goods which are not both existing and identified are
“future” goods. A purported present sale of future goods or of any
interest therein operates as a contract to sell.
(3) There may be a sale of a part interest in existing identified goods.
(1) A promise is a manifestation of intention to act or refrain from
Restatement §§ 2.
Promise; Promisor;
acting in a specified way, so made as to justify a promisee in
Promisee;
understanding that a commitment has been made.
Beneficiary:
(2) The person manifesting the intention is the promisor.
(3) The person to whom the manifestation is addressed is the
promisee. (4) Where performance will benefit a person other than the
promisee, that person is the beneficiary.
A promise may be stated in words either oral or written, or may be
Restatement §§ 4.
How a Promise May inferred wholly or partly from conduct.
Be Made:
(1) A term of a promise or agreement is that portion of the intention or
Restatement §§ 5.
Terms of Promise,
assent manifested which relates to a particular matter.
Agreement, or
(2) A term of a contract is that portion of the legal relations resulting
Contract:
from the promise or a set of promises which relates to a particular
matter, whether or not the parties manifest an intention to create
those relations.
UCC §§ 1-201(b)(3). As distinguished from “contract”, means the bargain of the parties in
“Agreement”:
fact as found in their language or inferred from other circumstances,
including course of performance, course of dealing, or usage of trade
as provided in §1-303
UCC §1-201(b)(12). As distinguished from “agreement”, means the total legal obligation
“Contract”:
that results from the parties’ agreement as determined by the Uniform
Commercial Code as supplemented by any other applicable laws.
Restatement §§ 1.
Contract Defined:
UCC §§ 2-104.
“Merchant”;
“Between
Merchants”:
(1) “Merchant” means a person that deals in goods of the kind or
otherwise by his occupation holds himself out as having knowledge or
skill peculiar to the practices or goods involved in the transaction or to
whom such knowledge or skill may be attributed by his employment
of an agent or broker or other intermediary who by his occupation
holds himself out as having such knowledge or skill.
(3) “Between Merchants” means in any transaction with respect to
which both parties are chargeable with the knowledge or skill of
merchants.
CONSIDERATION AND ALTERNATIVE BASES FOR
LIABILITY
Restatement §17.
Requirement of a
Bargain:
Restatement § 71.
Requirement of
Exchange; Types of
Exchange:
Restatement § 86.
Promise for Benefit
Received:
Restitution
Restatement § 77.
Illusory and
Alternative Promises
and Exclusive
Dealings:
(1) Except as stated, the formation of a contract requires a bargain
in which there is a manifestation of mutual assent to the exchange
and a consideration.
(2) Whether or not there is a bargain a contract may be formed under
special rules applicable to formal contracts or under the rules stated in
§82-94 (Contracts Without Consideration)
(1) To constitute consideration, a performance or a return promise
must be bargained for.
(2) A performance or return promise is bargained for if it is sought by
the promisor in exchange for his promise and is given by the promisee
in exchange for that promise.
(3) The performance may consist of
(a) an act other than a promise; or
(b) a forbearance; or
(c) the creation, modification, or destruction of a legal relation.
(4) The performance or return promise may be given to the promisor
or to some other person. It may be given by the promisee or by some
other person.
(1) A promise made in recognition of a benefit previously received by
the promisor from the promisee is binding to the extent necessary to
prevent injustice. (2) A promise is not binding under Subsection (1)
(a) if the promisee conferred the benefit as a gift or for other reasons
the promisor has not been unjustly enriched; or (b) to the extent that
its value is disproportionate to the benefit.
A promise or apparent promise is not consideration if by its terms the
promisor or purported promisor reserves a choice of alternative
performances unless:
(a) Each of the alternative performances would have been
consideration if it alone had been bargained for; or
Restatement § 90.
Promise Reasonably
Inducing Action or
Forbearance*
Promissory Estoppel
(b) One of the alternative performances would have been
consideration and there is or appears to the parties to be a
substantial possibility that before the promisor exercises his
choice events may eliminate the alternatives which would not
have been consideration.
(1) A promise which the promisor should reasonably expect to
induce action or forbearance on the part of the promisee or a 3rd
person and which does induce such action or forbearance IS binding
IF injustice can be avoided only by enforcement of the promise.
(2) A charitable subscription or a marriage settlement is binding under
Section (1) without proof that the promise induced action or
forbearance.
CONTRACT FORMATION AND MUTUAL ASSENT
THEORY OF MUTUAL ASSENT:
Restatement §§ 18.
Manifestation of
Mutual Assent:
Restatement §§ 21.
Intention to be
Legally Bound:
Restatement §§ 22.
Mode of Assent:
Offer and
Acceptance:
Manifestation of mutual assent to an exchange requires that each party
either make a promise or begin or render a performance. (What is in
your head v. what outsiders can see)
No intention to be legally bound is required*
Restatement §§ 24.
Offer:
An offer is the manifestation of willingness to enter into a bargain,
so made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.
Not an offer if you have reason to know the person making it doesn’t
intend to conclude a bargain w/o further manifestation of assent.
(b) Advertisements are offers to make an offer.
(c) Generally, price quotes are not offers.
(1) An offer may invite or require acceptance to be made by an
affirmative answer in words, or by performing or refraining from
performing a specified act, or may empower the offeree to make a
selection of terms in his acceptance.
(1) The manifestation of mutual assent comes after the offer and
acceptance*
(2) A manifestation of mutual assent may be made even though
neither offer not acceptance can be identified and even though the
moment of formation cannot be determined.
OFFER:
Restatement §§ 26.
Preliminary
Negotiations:
Restatement §§ 30.
Form of Acceptance
Invited:
Restatement §§ 32.
Invitation of Promise
or Performance:
(2) Unless otherwise indicated, an offer invites acceptance in any
reasonable manner / medium in the circumstances.
In case of doubt an offer is interpreted as inviting the offeree to
accept either by promising to perform what the offer requests or by
rendering the performance, as the offeree chooses.
ACCEPTANCE:
Restatement §§ 50.
Acceptance Defined;
Acceptance by
Performance;
Acceptance by
Promise:
Restatement §§ 56.
Acceptance by
Promise; Necessity of
Notification to Offeror:
Restatement §§ 54.
Acceptance by
Performance; Necessity
of Notification to
Offeror:
Restatement §§ 45.
Option Contract
Created by Part
Performance or
Tender:
Restatement §§ 62.
Effect of Performance
by Offeree Where Offer
Invites Either
Performance or
Promise:
Restatement §§ 51.
Effect of Part
Performance Without
Knowledge of Offer
Restatement §§ 35.
The Offeree’s Power of
Acceptance:
Restatement §§ 53.
Acceptance by
Performance;
Manifestation of
(1) Acceptance of offer - manifestation of assent to the terms thereof
made by the offeree in a manner invited or required by the offer.
(2) Acceptance by performance - requires that at least part of what
the offer requests be performed or tendered and includes acceptance
by a performance which operates as a return promise.
(3) Acceptance by a promise - requires that the offeree complete
every act essential to the making of the promise.
Except as stated in §69 or where the offer manifests a contrary
intention, if accepting by promise the offeree must notify the offeror.
Notice is what transforms act of signing into agreement*
No notice is needed if a way to accept is specified. ONLY needs
notice if you think the offeror will not know of your acceptance by
performance* (Carlill v. Carbolic Smoke Ball Co.)
(Hypo of A making B an offer if B walks across the bridge, B says
nothing, walks half way, A shouts “revoked!”) Once performance
has begun, it is no longer revocable, but an option contractmeaning the offeree has the power to accept.
(1) If the offeree is given the choice of acceptance by performance or
by promise, IF accepting by performance, THEN once you have
begun performance, you have “accepted”.
(2) Such an acceptance operates as a promise to render complete
performance*
Offeree cannot assent to an offer if they do not have knowledge of
the offer. (If you complete any part of performance with knowledge of
the offer, if can create a valid contract) (Glover v. Jewish War Vets)
(1) An offer gives the offeree power to complete the manifestation of
mutual assent by acceptance of the offer.
(2) A contract cannot be created by acceptance after the power of
acceptance has been terminated in one of the ways listed in §36.
(1) An offer can be accepted by the rendering of a performance only if
the offer invites such an acceptance.
Intention Not to
Accept:
Restatement §§ 69.
What constitutes
receipt of revocation,
rejection, or
acceptance*
(2) Except as stated in §69, the rendering of a performance does not
constitute an acceptance if within a reasonable time the offeree
exercises reasonable diligence to notify the offeror of non-acceptance.
(3) Where an offer of a promise invites acceptance by performance
and does not invite a promissory acceptance, the rendering of the
invited performance does not constitute an acceptance if before the
offeror performs his promise the offeree manifests an intention not to
accept.
(1) Where silence can be acceptance:
(a) Where an offeree takes the benefit of offered services with
reasonable opportunity to reject them and reason to know that they
were offered with the expectation of compensation.
(b) Where the offeror has stated or given the offeree reason to
understand that assent may be manifested by silence or inaction, and
the offeree in remaining silent and inactive intends to accept the offer.
(c) Where bc of previous dealings or otherwise, it is reasonable that
the offeree should notify the offeror if he does not intend to accept.
(2) An offeree who acts inconsistent with the offeror’s ownership of
offered property is bound in accordance with the offered terms unless
they are manifestly unreasonable. But if the act is wrongful as against
the offeror it is an acceptance only if ratified by him.
TERMINATION OF OFFERS:
(1) An offeree’s power of acceptance is terminated by his rejection of
the offer, unless the offeror has manifested a contrary intention.
(2) A manifestation of intention not to accept an offer is a rejection
unless the offeree manifests an intention to take it under further
advisement.
(1) A counter-offer is an offer made by an offeree to his offeror
Restatement §§ 39.
Counter-Offers:
relating to the same matter as the original offer and proposing a
substituted bargain differing from that proposed by the original offer.
(2) An offeree’s power of acceptance is terminated by his making of a
counter-offer, unless the offeror has manifested a contrary intention or
unless the counter-offer manifests a contrary intention of the offeree.
An offeree’s power of acceptance is terminated when the
Restatement §§ 48.
Death or Incapacity
offeree or offeror dies or is deprived of legal capacity to enter into the
of Offeror or Offeree: proposed contract.
You have received the offer, acceptance or counter offer once its has
Restatement §§ 68.
What Constitutes
come into your possession. (Meaning your mailbox, your email inbox,
Receipt of Revocation,
even if you have no opened it yet.) THE MAILBOX RULE
Restatement §§ 38.
Rejection:
Rejection, or
Acceptance:
Restatement §§ 63.
Time When
**Only about acceptances**. A default rule that an acceptance made
in a manner and medium invited by the offer, is complete, once out of
Acceptance Takes
Effect: Mailbox Rule
Restatement §§ 40.
Time When Rejection
or Counter-Offer
Terminates the
Power of Accept:
Mailbox Rule
Restatement §§ 36.
Methods of
Termination of the
Power of
Acceptance:
Restatement §§ 41.
Lapse of Time:
Restatement §§ 42.
Revocation by
Communication from
Offeror Received by
Offeree:
Restatement §§ 43.
Indirect
Communication of
Revocation:
Restatement §§ 46.
Revocation of
General Offer:
Restatement §§ 64.
Acceptance by
Telephone or
Teletype:
Restatement §§ 65.
Reasonableness of
Medium of
Acceptance:
the offeree’s possession, without regard to it reaching the offeror.
Does not apply to option contracts/ irrevocable offers.
Rejection or counter-offer by mail or telegram does not terminate
the power of acceptance until received by the offeror, but limits
the power so that a letter or telegram of acceptance started after the
sending of an otherwise effective rejection or counter-offer is only a
counter-offer unless the acceptance is received by the offeror before
he receives the rejection or counter-offer.
(1) An offeree’s power of acceptance may be terminated by
(a) rejection or counter-offer by the offeree; or
(b) lapse of time; or
(c) revocation by the offeror; or
(d) death or incapacity of the offeror or offeree.
(2) In addition, an offeree’s power of acceptance is terminated by the
non-occurrence of any condition of
acceptance under the terms of the offer.
(1) An offeree’s power of acceptance is terminated at the time
specified in the offer, or, if no time is specified, at the end of a
reasonable time.
(2) What is a reasonable time is a question of fact, depending on all
the circumstances existing when the offer and attempted acceptance
are made.
An offeree’s power of acceptance is
terminated when the offeree receives from the offeror a manifestation
of an intention not to enter into
the proposed contract.
An offeree’s power of acceptance is terminated when the offeror
takes definite action inconsistent with an intention to enter into the
proposed contract and the offeree
acquires reliable information to that effect.
Where an offer is made by advertisement in a newspaper or other
general notification to the public or to a number of persons whose
identity is unknown to the offeror, the offeree’s power of acceptance
is terminated when a notice of termination is given publicity by
advertisement or other general notification equal to that given to the
offer and no better means of notification is reasonably available.
Acceptance given by telephone or other medium of substantially
instantaneous two-way communication is governed by the principles
applicable to acceptances where the
parties are in the presence of each other.
Unless circumstances known to the offeree indicate otherwise, a
medium of acceptance is reasonable if it is the one used by the offeror
or one customary in similar transactions at the time and place the offer
is received.
Restatement §§ 66.
Acceptance Must be
Properly Dispatched:
Restatement §§ 67.
Effect of Receipt of
Acceptance
Improperly
Dispatched:
Restatement §§ 37.
Termination of
Power of Acceptance
Under Option
Contract:
Restatement §§ 87.
Option Contract:*
An acceptance sent by mail or otherwise form a distance is not
operative when dispatched, unless it is properly addressed and such
other precautions taken as are ordinarily observed to insure safe
transmission of similar messages.
Where an acceptance is seasonably dispatched
but the offeree uses a means of transmission not invited by the offer or
fails to exercise reasonable diligence to insure safe transmission, it is
treated as operative upon dispatch if received within the time in
which a properly dispatched acceptance would normally have arrived.
Notwithstanding §38-§49, the power of acceptance under an option
contract is not terminated by rejection or counter-offer, by revocation,
or by death or incapacity of the offeror, unless the requirements are
met for the discharge of a contractual duty.
(1) An offer is binding as an option contract if it
(a) has purported consideration
(b) is made irrevocable by statute.
(2) Promissory Estopple- binding as an option contract to the extent
necessary to avoid injustice.
UCC OFFER AND ACCEPTANCE:
UCC § 2-204.
Formation in
General:
UCC § 2-205.
Firm Offers:
*RS 45
UCC § 2-206.
Offer and Acceptance
in Formation of
Contract:
*recall RS 54
(1) Manner sufficient to show agreement
(2) Moment in making may be undetermined
(3) Open terms are allowed (still valid K)
*more flexible than common law standard
An offer by a merchant to buy or sell goods in a signed writing which
by its terms gives assurance that it will be held open is not
revocable, for lack of consideration, during the time stated or if no
time is stated for a reasonable time, but in no event may such period
of irrevocability EXCEED THREE MONTHS; such terms of
assurance on a form supplied by the offeree must be separately signed
by the offeror.
(1) Unless otherwise unambiguously indicated by the language or
circumstances (a) offers invite acceptance in any manner and by
any medium reasonable in the circumstances;
(b) an order or other offer to buy goods invites acceptance by
shipment of conforming or non-conforming goods, BUT shipment
of non-conforming goods does not constitute an acceptance if the
seller seasonably notifies the buyer that the shipment is only a
mere accommodation for the buyer.
(2) Where the beginning of a requested performance is a reasonable
mode of acceptance an offeror who is not notified of acceptance
within a reasonable time may treat the offer as having lapsed before
acceptance.
UCC § 2-207.
Additional Terms in
Acceptance or
Confirmation:
Battle of the Forms
(1) A definite and seasonable expression of acceptance (willingness
to continue) or a written confirmation which is sent within a
reasonable time operates as an acceptance even though it states
terms additional to or different from those offered or agreed upon,
UNLESS offeree clearly reveals they are unwilling to proceed. *
(2) The additional terms are to be construed as proposals (not in K
unless express). IF between merchant’s exception to be in K:
(Merchant has burden to decline terms.)
(a) offer expressly limits acceptance to offer terms
(b) they materially alter it; or
(c) notification of objection is given within a reasonable time after
notice of them is received.
(3) Parties do not have a contract, but act as if they do =formation
through action. Terms include what was agreed upon and UCC gap
fillers*
INCOMPLETE AND INDEFINITE CONTRACTS:
Restatement § 33.
Certainty:
(1) Terms [open terms] must be reasonably certain.
(2) The terms of a contract are reasonably certain if they provide a basis for
determining the existence of a breach and for giving an appropriate remedy.
UCC § 2-305.
Open Price Term
(3) If terms are open, it could be proof that there was no intention
to be bound.
(1) Open price terms are allowed IF they intend to be bound.
Price will be what is reasonable at the time of delivery.
Reasonable if: (a) nothing is said as to price; or (b) the price is left to
be agreed by the parties and they fail to agree; or (c) the price is to be
fixed by 3rd party/ market standard.
(2) A price to be fixed by the seller or by the buyer means a price to
be fixed in good faith.
(3) When there is a failure to agree by fault of one party, the other
may fix a reasonable price. (UCC is favorable to finding reasonable
price in similar transactions)
(4) If there is not intent to be bound unless price is agreed upon, and
no price is agreed upon, there is no contract*
CONTRACT DEFENSES
STATUTES OF FRAUDS:
Restatement § 8.
Ex. Of Traditional
Statute of Frauds.
Restatement § 110.
Classes of Contracts
Covered:
UCC § 2-201.
Formal
Requirements;
Statute of Frauds:
*modified
Restatement § 130.
Contract Not to be
Performed Within a
Year:
Restatement § 131.
General Requisites of
a Memorandum:
Restatement § 132.
Several Writings:
Restatement § 137.
Restatement § 139.
Enforcement by
An unenforceable contract is one for the breach of which neither the
remedy of damages no remedy of specific performance is available,
but which is recognized in some way as creating a duty of
performance, though there has been no ratification. (A contract subject
to the statute of frauds, that does not comply, is unenforceable)
(1) The following classes of contracts are subject to the SOF,
forbidding enforcement unless there is a written memorandum or an
applicable exception:
(a) Executorship- having control of an estate after a person dies
(b) Suretyship- answering for the duty of another
(c) Marriage* (not really anymore)
(d) Sale of land
(e) One-year provision: not to be performed within one year. (IF it
states “takes more than 1 yr”- its within 1 yr provision)
(1) Writing requirements (for sale of goods, for $500 or more):
Must be some writing. Not insufficient if wrong terms. Must contain
quantity. Writing must be signed. Evidences a contract.
(2) Merchant’s Exception: (to satisfy the writing requirement)
Writing in confirmation of contract. Must be sufficient against the
sender. Between merchants. Sent within a reasonable time. Receiver
has reason to know of its contents. No written objection within 10
days. (3) Exceptions: (cannot raise SOF as defense.)
(a) special manufacture; due to reliance on oral agreement and good
faith in beginning to make the product.
(b) admission; admitting there was a contract, negates the defense
(c) full performance by one side, that has been received by the other.
(fully paid for goods/ sent full order of goods)
(1) Where any promise in a contract cannot be fully performed
within a year from the time the contract is made, all promises in the
contract are within the Statute of Frauds until one party to the
contract completes his performance.
(2) Full performance by one side within one year, will not negate the
application of the statute to all terms if the other party cannot perform
within one year.
Requirements of the writing to be enforceable, if within the statute of
frauds: (a) identifies subject matter, (b) indicates a contract, (c)
essential terms*
The memorandum may consist of several writings if one of the
writings is signed*
Loss or Destruction of a Memorandum: does not deprive it of
effect under the Statute*
(1) Not PE but similar: Parties have oral contract, one party relies on it
and acts as if it exists- changing their behavior- and are worse off
Virtue of Action in
Reliance: (Not PE?)
Restatement § 7.
Voidable Contracts
when the other party says there is no contract. Must have reliance and
injury* (Not the K but change made in reliance of K).
(2) Whether injustice can be avoided only by enforcement of the
promise, the following circumstances are significant:
(a) the availability and adequacy of other remedies, particularly
cancellation and restitution;
(b) the definite and substantial character of the action or forbearance
in relation to the remedy sought.
(c) the extent to which the action or forbearance corroborates evidence
of the making and terms of the promise, or the making and terms are
otherwise established by clear and convincing evidence;
(d) the reasonableness of the action or forbearance;
(e) the extent to which the action or forbearance was foreseeable by
the promisor.
Power by one or more parties to render a contract void. *
INFANCY:
Restatement § 7.
Voidable Contracts
Restatement §§ 12.
Capacity to
Contract:
Restatement §§ 13.
Persons Affected by
Guardianship:
Restatement §§ 14.
Infants:
Power by one or more parties to render a contract void. *
(1) Must have legal capacity to be bound.
(2) A person has capacity unless he is:
(a) under guardianship; or
(b) an infant; or
(c) mentally ill or defective; or
(d) intoxicated.
A person has no capacity to incur contractual duties if his property is
under guardianship by reason of an adjudication of mental illness or
defect.
Until the day before your 18th birthday, all contracts entered into are
voidable.
INCAPACITY:
Restatement §§ 15.
Mental Illness or
Defect:
Restatement §§ 16.
Intoxicated Persons:
(1) Entitled to void a contract if:
(a) he is unable to understand (cognitive test)
(b) he is unable to act in a reasonable manner (affective test) in
relation to the transaction and the other party has reason to know of
his condition.
(2) Fairness Exception: Voidable unless the other party has no reason
to know of the defect and relies on the contract*
Intoxication can be a defense. Contract is voidable if the other person
has reason to know and due to that intoxication, you are:
(a) unable to understand
Restatement §§ 89.
Modification of
Executory Contract
(b) unable to act
Comment (c): MUST be disaffirmed promptly (once sober)
Pre-existing duty Rule: Modifications can be binding (if)
(a) if the modification is fair and equitable in view of circumstances
not anticipated by the parties when the contract was made, or
(b) to the extent provided by statute, or
(c) to the extent that justice requires enforcement in view of material
change of the position in reliance on the promise
DURESS:
Restatement §§ 89.
Modification of
Executory Contract
Restatement §§ 174.
Physical Duress
Restatement §§ 175.
When Duress by
Threat Makes a
Contract Voidable:
Restatement §§ 176.
Improper Threat
*a vague list
Restatement §§ 177.
When Undue
Influence Makes a
Contract Voidable:
Pre-existing duty Rule: Modifications can be binding (if)
(a) if the modification is fair and equitable in view of circumstances
not anticipated by the parties when the contract was made, or
(b) to the extent provided by statute, or
(c) to the extent that justice requires enforcement in view of material
change of the position in reliance on the promise
No manifestation of assent is given, if given while under physical
duress.* (void contract)
(1) If a party’s manifestation of assent is induced by an improper
threat by the other party that leaves the victim no reasonable
alternative, the contract is voidable by the victim.
(2) If a party’s manifestation of assent is induced by one who is not a
party to the transaction, the contract is voidable by the victim unless
the other party to the transaction in good faith and without reason to
know of the duress either gives value or relies materially on the
transaction.
(1) A threat is improper if
(a) what is threatened is a crime or a tort, or the threat itself would be
a crime or a tort if it resulted in obtaining property, (b) what is
threatened is a criminal prosecution, (c) what is threatened is the use
of civil process and the threat is made in bad faith, or (d) the threat is a
breach of the duty of good faith and fair dealing under a contract with
the recipient.
(2) A threat is improper if the resulting exchange is not on fair terms,
and (a) the threatened act would harm the recipient and would not
significantly benefit the party making the threat, (b) the effectiveness
of the threat in inducing the manifestation of assent is significantly
increased by prior unfair dealing by the party making the threat, or
(c) what is threatened is otherwise a use of power for illegitimate
ends.
(1) Undue influence is unfair persuasion
(2) If assent is induced by undue influence by the other party, the
contract is voidable by the victim.
(3) Third party influence will suffice in making it void unless the other
bound party had no reason to know about it and relied on K*
MISREPRESENTATION:
Restatement §§ 159.
Misrepresentation:
Restatement §§ 164.
When a
Misrepresentation
Makes a Contract
Voidable:
Restatement §§ 162.
When a
Misrepresentation is
Fraudulent or
Material:
Restatement §§ 160.
Concealment:
Restatement §§ 161.
Failure to Disclose
Restatement §§ 163.
When a
Misrepresentation
Prevents Formation
of a Contract:
An assertion that is not in accord with the facts.
(1) If manifestation of assent is induced by a fraudulent or material
misrepresentation upon which the recipient is justified in relying,
the contract is voidable by the recipient.
(2) If manifestation of assent is induced by either a fraudulent or a
material misrepresentation by one who is not a party to the transaction
upon which the recipient is justified in relying, the contract is voidable
by the recipient, unless the other party to the transaction in good faith
and without reason to know of the misrepresentation either gives value
or relies materially on the transaction.
(1) A misrepresentation is FRAUDULENT IF maker intends his
assertion to induce a party to manifest his assent and the maker
(a) knows or believes that the assertion is false, or
(b) does not have confidence that he states or implies in the truth, or
(c) knows he doesn’t have basis what he states or implies
(2) A misrepresentation is MATERIAL IF it would likely induce a
reasonable person to manifest his assent OR maker knows its likely
to induce the [particular] recipient to do so.
Action intended or known to be likely to prevent another from
learning a fact is equivalent to misrepresentation
When nondisclosure is misrepresentation:
(a) disclosure of the fact is necessary to prevent some previous
assertion from being a misrepresentation.
(b) disclosure would correct a mistake of other party as to a basic
assumption of that AND non-disclosure is a failure to act in good
faith or with fair dealing.
(c) where he knows that disclosure of the fact would correct a mistake
of the other party as to the contents or effect of a writing, evidencing
or embodying an agreement in whole or in part.
(d) where the other person is entitled to know the fact because of a
relation of trust and confidence between them.
If a misrepresentation of essential terms of the contract induces
“manifestation of assent” by one who has no reasonable opportunity to
know of the character or essential terms of the proposed contract, his
conduct is not effective as a manifestation of assent.