Reality of Consent - Business Law
Chapter 13 Reality of Consent
Effects of Doctrines Discussed in This Chapter * Voidable: person whose consent was not real has the power to rescind (cancel) the contract * Necessity for Prompt and Unequivocal Rescission * Must act promptly and unequivocally to rescind a contract * Also avoid actions that suggest that she affirms or ratifies the contract * Send mixed messages, delaying the notification, etc.
Misrepresentation and Fraud * Relationship between Misrepresentation and Fraud * Misrepresentation: assertion that is not in accord with the truth * Can be “innocent” or “fraudulent” * Innocent: not intentionally deceptive * Fraudulent: made with knowledge of falsity and intent to deceive * Either one can give the complaining party right to rescind contract * Fraud: type of misrepresentation that is committed knowingly, with the intent to deceive * Scienter (legal term to distinguish from innocent) * Liable for damages; possibly including punitive damages for the tort of deceit * Election of Remedies * Can’t rescind contract and sue for damages (some states make you elect, or chose) * Requirements for Rescission on the Ground of Misrepresentation * Should be used only when a person has been misled about a fact important to the contract by someone he had the right to rely on * Required element: * Untrue assertion of fact was made * Fact asserted was material or the assertion was fraudulent * Complaining party entered the contract b/c of his reliance on the assertion * The reliance of the complaining party was reasonable * Untrue Assertion of Fact * Concealment of a fact * Nondisclosure * Failure to volunteer information * When the person has already offered some information but further information is needed to give the other party an accurate
Effects of Doctrines Discussed in This Chapter * Voidable: person whose consent was not real has the power to rescind (cancel) the contract * Necessity for Prompt and Unequivocal Rescission * Must act promptly and unequivocally to rescind a contract * Also avoid actions that suggest that she affirms or ratifies the contract * Send mixed messages, delaying the notification, etc.
Misrepresentation and Fraud * Relationship between Misrepresentation and Fraud * Misrepresentation: assertion that is not in accord with the truth * Can be “innocent” or “fraudulent” * Innocent: not intentionally deceptive * Fraudulent: made with knowledge of falsity and intent to deceive * Either one can give the complaining party right to rescind contract * Fraud: type of misrepresentation that is committed knowingly, with the intent to deceive * Scienter (legal term to distinguish from innocent) * Liable for damages; possibly including punitive damages for the tort of deceit * Election of Remedies * Can’t rescind contract and sue for damages (some states make you elect, or chose) * Requirements for Rescission on the Ground of Misrepresentation * Should be used only when a person has been misled about a fact important to the contract by someone he had the right to rely on * Required element: * Untrue assertion of fact was made * Fact asserted was material or the assertion was fraudulent * Complaining party entered the contract b/c of his reliance on the assertion * The reliance of the complaining party was reasonable * Untrue Assertion of Fact * Concealment of a fact * Nondisclosure * Failure to volunteer information * When the person has already offered some information but further information is needed to give the other party an accurate