Chapter 11
Conduct Invalidating Assent
DURESS
-Definition: Wrongful or Unlawful act or threat that overcomes the free will of a party
-Physical Compulsion: coercion involving physical force renders the agreement void
-Improper Threats: improper threats or acts including economic and social coercion, render the
contract voidable
oSubjective to person
oActs must be contrary to public policy or morally reprehensive
Undue Influence
-Definition: taking unfair advantage o a person by reason of a dominant position based on a
confidential relationship (parent-child)
-Ultimate Question: whether dominant party induced transaction by dominating the mind or
emotions of a submissive party
-Important Factors:
oWhether Dominant Party made full disclosure of all relevant info known to him
oWhether consideration was adequate
oWhether dependant party received competent and independent advice before completing
the transaction
-Effect: Renders contract voidable
Fraud
-In the Inducement: intentional misrepresentation of material fact by one party to the other, who
consents to enter into a contract in justifiable reliance upon the misrepresentation
oFalse Representation: positive statement or conduct that misleads
oFact: an event that occurred or thing that exists
oMaterially: of substantial importance
oKnowledge of Falsity and Intention to Deceive: called scienter and includes
Actual Knowledge
Lack of belief in statement’s truthfulness
Reckless indifference to its truthfulness
oJustifiable Reliance: a defrauded party is reasonably influenced by misrepresentation
Non-Fraudulent Misrepresentation
-Negligent Misrepresentation: misrepresentation made without due care in ascertaining its
truthfulness; renders agreement voidable
-Innocent Misrepresentation: misrepresentation made without knowledge of its falsity but with
due care; renders contract voidable
Mistake
-Definition: an understanding that is not in accord with existing fact
-Mutual Mistake: both parties have a common but erroneous belief forming the basis of the
contract voidable by either party
-Unilateral Mistake: relief will be granted where the non-mistaken party knows, or reasonably
should know, that such a mistake has been made or where the mistake was caused by the fault of
the non-mistaken party
-Mistake in Meaning of Terms: the situation in which the parties misunderstand the meaning of
one another’s manifestations of mutual assent. If neither party is to blame or both are to blame,
there is no contract at all; that is, the agreement is void
