Exam 11: Conduct Invalidating Assent

Which of the following can meet the scienter requirement to establish fraud in the inducement?

At the marriage of her daughter, Lorna is given papers to sign, which the catering company says are the invoices for the food, service, and decorations. Underneath the invoices are a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers; her signature is transferred to the sales contract. This is a void contract because it was entered by fraud in the execution.

Attorney Geraldine advises her client, Rick, to enter a contract, which ultimately would have benefited Geraldine but not Rick. The test of whether the contract, if entered, is voidable based on undue influence is whether Geraldine's advice would have dominated the thinking of an ordinary, reasonable person rather than whether it dominated Rick's mind or emotions.

In the Lesher v. Strid case, the court held that:

An act that is not wrongful or unfair may constitute duress.

Ty threatened to have Lisa's father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward Lisa's father rather than Lisa herself.

A famous decision involving mistake in the meaning of contractual terms is Raffles v. Wichelhaus , a case involving two ships with the same name which were confused by the two parties. Neither party was at fault, and the court held that no contract existed.

Define and discuss the concept of materiality in relation to misrepresentation

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, although it is a good imitation, which fooled even the dealer. In this case:

Generally, whether or not the parties deal at arm's length does not affect whether silence alone amounts to fraud.

A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for breach of contract. The court found:

What elements need to be proved to establish each type of fraud?

The test for duress is objective and the act constituting duress must be a tort or a crime in order to be wrongful.

Nonfraudulent representation is made without scienter.

If the act or threat would affect a person of average strength and intelligence, then and only then will the act constitute duress.

Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after Jill has bought the car, she finds out that Linda isn't interested in buying it. Jill:

Which of the following is correct with regard to duress?

Harry was told that he had to pay $50 for filing his claim in small claims court. He did. If the fee is really $40, he cannot recover the $10 because it is a unilateral mistake of fact.

a. Name two types of nonfradulent misrepresentation and define each one. b. What remedies may be available for nonfraudulent misrepresentation?

Economic coercion that compels a person to enter into a contract renders that contract void.