Do NowDo Now

Fred bought a mountain bike from Matt, an acquaintance at school. Matt said that he believed the bike did not need any repairs. After riding the bike, Fred discovered that the back wheel was misaligned.

Can Fred cancel the deal and get his money back?

Objective: SWBAT discern between fraud and innocent misrepresentation, and the effect it may have on contractual relations

• Yes, Fred could get his money back. This is not a case of fraud, so he cannot sue.

• This is a case of innocent misrepresentation.

Answer

Objective: SWBAT discern between fraud and innocent misrepresentation, and the effect it may have on contractual relations

Do NowDo Now

The town of Sharonville received four bids for construction of a new city hall. Angelini Construction won the contract because their bid was the lowest.

A few days later, Angelini’s general manager discovered that the bid should have been 2 million dollars, not 1.5 million.

Can Angelini rescind the contract based on there being no genuine agreement due to a bilateral mistake?

Objective: SWBAT identify the difference between a unilateral and bilateral mistake in a contract

No, Angelini cannot rescind (back out). Because the mistake was made by Angelini only, it was a unilateral mistake, which has no effect on a contract. They must do the job for the 1.5 million or they can be sued for breach of contract .

Answer

Objective: SWBAT identify the difference between a unilateral and bilateral mistake in a contract

Do NowDo NowWhat is sales puffery?

Is it illegal? Give an example of how a

consumer can be hurt by this.

Objective: SWBAT

AnswerAnswerSales puffery is when a sales person

“talks up” a product in order to sell it. This is also known as “seller’s opinion”. As long as what they are saying is not untrue, it is not illegal. This can still be misleading to the consumer if they go into a purchase uninformed.

Do NowDo NowYost purchased two horses from Millhouse: a two year old

named Pandy and a yearling named Andy. Millhouse gave the registration papers for Pandy and told Yost the papers for Andy would arrive later.

Yost later learned that Andy was not registered. Yost claimed that he would not have bought the horse if he knew this, and had to sell the horse at a loss.

Can Yost win a lawsuit against Millhouse for fraud?Yost v. Millhouse, 375 N.W. 2d 826 (Minnesota)

AnswerAnswerYost recovered money damages on

the grounds of misrepresentation of a material (important) fact. Millhouse falsely represented that the horse was registered when he knew it was not. The information was intended to relied on, and Yost suffered a loss because of it.

Do NowDo NowJeff Banner purchased a used car from Al Reed’s Quality

Used Autos. The salesperson assured Jeff that the car was in excellent shape, and had never been in an accident.

A week after purchasing the car, while going through the glove compartment, Jeff found receipts that proved repairs were made due to the car being in a major accident.

What are Jeff’s legal remedies?

AnswerAnswerJeff can bring suit for fraud, based on

the withholding of a material fact. This is known as concealment. Because Jeff relied on the false information, he would suffer a loss.