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CHAPTER 8 TEST REVIEW
Genuine Assent
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6 PARTS OF A VALID CONTRACTOffer and AcceptanceGenuine AssentConsiderationCapacityLegalityWriting
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GENUINE ASSENTEntering a contract under your “Own Free Will”
NOT being forced (Duress)NOT being misled (Misrep or Fraud)
NOT holding an incorrect belief about what you are entering into (Mistake)
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GENUINE ASSENTAlso known as Genuine Agreement and Mutual Assent
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What if there is no Genuine Assent?Contract is VoidableOnly the injured party may end the contract agreement
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RatificationShowing Intent to be bound by a contract
Best way to ratify is a signature
Can ratify through an option (Payment)
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RescissionBacking out of a transaction by asking for a return of what you gave in exchange for what you received
Must occur “PRIOR” to Ratification
Only damage available in a case of Misrepresentation
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DuressUsing an improper threat or act to obtain an agreement
TYPES:Illegal conductThreaten to report a crimeThreaten to sueEconomic threats
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Undue InfluenceType of duress2 Elements to prove:Unfair PersuasionUsing a relationship with a person
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MISTAKESUnilateral- one side holds an incorrect belief about the Subject matter of the contract (Voidable)
Bilateral- (Also known as Mutual) When both sides hold incorrect beliefs about the subject matter of a contract (Void)
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2 Types of Unilateral MistakesRecognized Unilateral Mistake:
Mistake is major (Big) and 1 side knows, but allows the other side to think everything is as agreed (Can get recession)
Induced Unilateral Mistake: One side “encourages” or induces the other side to make a mistake, the contract is immediately “Voidable”
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Material FactsSomething important in a contract
Has to do with the main subject matter
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2 types of Mutual MistakesMistake of the Subject Matter- Both sides hold incorrect beliefs about what they are agreeing to in a contract (Void)
Mistake of the Law- Both sides agree to something that turns out to against the law (May be void and in some states, the agreement is still valid)
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MisrepresentationUntrue Statement of Fact “Told” to a person
Material (Important) to the person making the decision
Relied upon (The person misled relied upon it to make their decision to enter the contract)
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Fraud“First” must prove 3 elements of Misrep (Untrue statement, material and relied upon)
“Then” prove:Intent to deceiveInjury
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Active ConcealmentIntentionally trying to “hide” something from one side
Ex) Covering up a wall with a hole in it to make a person think it’s not damaged
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SilenceSeller may remain silent unless one of 3 things happens:
1. When a material fact omits information
2. When a true statement is made false3. When the seller knows the other
party has made a mistaken conclusion
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Remedies for Misrep and FraudMisrepresentation- ONLY rescission
Fraud- Rescission, compensatory damages and punitive damages