Exam 13: Reality of Consent

A party to a contract who seeks to rescind the contract because of that party's reliance on the unintentional but materially false statements of the other party will assert:

The legal term for innocent misrepresentation is "scienter."

A person who rescinds a contract must:

A party to a contract who seeks to rescind the contract because of that party's reliance on the unintentional but materially false statements of the other party will assert:

A person who rescinds a contract is entitled to the return of:

A fact is considered to be material in a misrepresentation case when:

Reliance means that an individual acts because of an assertion of another party.

________ means knowledge on the part of the person making the representations,at the time when they are made,that they are false.

Geometry Co.manufactures microchips for electrical products.Jojoba monopolizes the supply of gallium arsenide,which is used heavily in the manufacturing of microchips.Because of this monopoly and the demand for microchips,Geometry enters into a long-standing agreement with Jojoba for 20 years.For the first couple of years,due to the huge demand for the microchips,Geometry insisted on timely delivery of the raw material.However,once the demand slumped,Geometry asserted economic duress to avoid the contract.Will Geometry be successful?

One of the differences between fraud and misrepresentation is that:

For a unilateral mistake to make a contract voidable,either (1)the nonmistaken party must have caused or had reason to know of the mistake or (2)enforcement of the contract must be unconscionable.

A contract may be voidable even if the person making the misrepresentation believes in good faith that what he/she says is true.

According to contract law,a(n)________ is a belief about a fact that is not in accordance with the truth.

Misrepresentations can either be innocent or fraudulent.

Suppose that Reed is buying a crane from Movers Inc.Reed needs a crane that will handle loads of up to 10,000 pounds.Movers' salesman tells Reed that the crane "will handle a 10,000-pound load." Relying on this statement,Reed buys the crane.Later,he discovers that the crane will only handle a 5,000-pound load.Reed wants to rescind on the basis of either fraud or misrepresentation.Movers,however,alleges that the salesman did not make a statement of past or existing fact.Is Movers correct?

Nick,a real estate agent,decided to purchase a house for $300,000 after hiring architects,decorators,and electricians to examine it.However,Nick did not get the property appraised.After executing the sale contract with the homeowner,Kurt,Nick discovered that the house was actually worth only $150,000.Will Nick be entitled to rescind his contract with Kurt? Explain.

When one of the parties offers a disproportionately small amount of money in settlement of a debt and refuses to pay more,it is a form of economic duress.

The threat to institute a criminal prosecution against another party to force that party into a contract is almost always duress.

Morton Reeves,a building subcontractor,submitted a bid for construction of a portion of a high-rise office building.The bid contained material errors in computation.Lago Corp. ,the general contractor,accepted the bid with the knowledge of Reeves' errors.Reeves:

Concealment involves the active hiding of a fact,whereas nondisclosure is the failure to volunteer information.