Chapter 7
Genuineness of
Assent
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Section 1
Duress and Undue
Influence
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GOALS
• Recognize when GENUINE
ASSENT is NOT present.
• Identify 2 key elements in undue
influence
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Cameron owned a promising race-horse that
Dave had offered to buy for undisclosed
parties. When Cameron refused to sell, Dave
lowered his voice and slowly said. “Listen, the
people I represent don’t take no for an
answer. If you don’t sell, they’ll hurt you.
They’ll hurt your family, Like a good friend,
I’m telling you to sell. You’re getting a fair
price, just sign the contract.” Cameron, who
had secretly recorded the conversation, sold.
Then he called the police.
Can he now rescind and get his horse back?
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Whether oral or written, an
agreement will be treated as
valid (legally binding and
enforceable) as long as it
meets all the proper legal
requirements!
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Genuine Assent
(True and Complete Agreement)
• Lacking in court due to:
– Duress
– Undue influence
– Mistake
Section 2
– Misrepresentation
– Fraud
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Rescission
Offer is terminated due to lack of
Genuine Assent and the injured
party is able to get back whatever
they have already put into it.
Must happen right after you find out
about the lack of genuine assent.
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Ratification
Conduct suggesting you intend to be
bound by the contract.
(ex: making a payment.)
If you rescind, it MUST be done
before ratification.
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Duress
(Unfair Pressure)
• One party uses threats as a way
to make you agree to the
agreement.
• If proved, duress will cause a
contract to be voidable.
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Types of Duress
• Threats of illegal conduct – “I will kill you if
you don’t sign this contract”
• Threats to report crimes – “I will tell the
police you robbed the bank if you don’t sign
this contract”
• Threats to sue – When a threat to sue is
really made for a purpose unrelated to the
suit, this may be duress. *Divorce
• Economic Threats – If you don’t pay $25 for
this part, then I won’t sell it to you, therefore
you won’t be able to make your product.
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Albert had cancer and was being treated by Dr.
Burke. He had carefully followed the doctor’s advice,
and the treatment had been successful. One day,
during a periodic checkup, Dr. Burk said to Albert,
“To prevent the cancer from recurring, you need to
reduce the stress in your life. Long drives in the
country are great for that. Come to think of it, I’m
selling my convertible right now. You should buy it.”
Without investigating, Albert followed the doctors
directions and contracted to buy the car. Later he
found the price he’d agreed to pay was nearly
double the market value.
Could Albert avoid the contract due to undue
influence?
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Undue Influence
One party in the contract is in a
position of trust and wrongfully
dominates the other party.
Two key elements in undue
influence:
1. Relationship
2. Unfair Persuasion
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1. Relationship: Family, church,
and/or doctors can cause undue
influence.
2. Unfair persuasion: Usually found
in the terms of the contract.
Best Advice-ALWAYS READ
EVERYTHING BEFORE SIGNING!
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Section 2
Mistake, Misrepresentation,
and Fraud
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GOALS
• Recognize the types of mistakes that can
make a contract voidable.
• 3 criteria for a statement to
“misrepresentation”
• Define FRAUD and describe the remedies
for it.
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Bill saved more than $25,000 to buy the new
car of his dreams. At the dealership, the sales
staff convinced him to purchase added options
until his $25,000 was totally exhausted. When
he went to register the vehicle, he found that
the state expected him to pay an 8% sales tax
on the purchase price. Bill thought the $2,000
in sales tax had been already included in the
$25,000 paid at the dealership.
Is the contract voidable by Bill because of his
mistake?
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Contractual Mistakes
1. Unilateral Mistake – Only one party
made the boo-boo about the facts
related to the contract. *Not reading
before signing. Contract is still valid
2. Bilateral (mutual) Mistake – Both
parties made the boo-boo related to
the contract.
– Material facts are mistaken. *Purchase $
– Contract is voided
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Material Facts
Important facts that influence the
party's decision about a
contract.
Examples:
–Purchase price
–Amount of goods
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Great-Life offered a dietary supplement
for sale. The package contained a
statement that clinical studies at
Harvard University had shown the drug
reduced the risk of cancer by more
than 30% if taken regularly. This
statement was FALSE.
Can customers get their money back if
they learn of the deception?
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MISREPRESENTATION
2 types:
 Innocent – Accidental mistake
 Fraudulent – Intentional mistake
In both cases, statements are treated as
misrepresentation by the law only if:
1. Untrue statement is one of fact or there
is active concealment, and
2. Statement is material to the transaction
or is fraudulent, and
3. Victim reasonably relied on the
statement.
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Untrue Statement of Fact
In misrepresentation, the statement
must be one of fact (past or
existing), NOT opinion.
*An expert’s opinion is considered a
fact.
• Active concealment – cover up
• Silence – aware, but didn’t say it
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Breaking the Silence
1. Statement about a material fact omits
important information. (Not telling the
whole story)
2. A true statement is made false by
subsequent events. *The roof don’t
leak
3. One party knows the other party is
mistaken, but does NOT inform the
other party.
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MATERIALITY
There are 3 ways an untrue statement can be
determined to be material:
1. Statement would cause a reasonable person
to contract. *forged basketball player card
2. If the defendant knew the plaintiff would rely
on the statement.*It’s important to the offeree,
but not to you.
3. Defendant knew the statement was false.
As long as the offeree relies on the info, it is
material.
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Fraud
Based on misrepresentation.
Fraud = misrepresentation + intent + injury
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Jeff sold a used car to Carla for $1,600.
Jeff told her that the car had been driven
only 50,000 miles, had never been in an
accident, and had the original paint. In
fact, Jeff had stolen the car, set back the
odometer from 90,000 miles, and
repainted the exterior in the original
color. Jeff stood between Carla and rear
of the car so she couldn’t see the badly
repaired bumper. Later Carla learned
the truth.
What remedies are available to Carla?
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Remedies (solutions) for Fraud
• Rescission – contract is voided
and anything you received
must be returned.
• Damages
• Punitive Damages
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