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Genuine assent may be lacking due to mistake, deception, or pressure. A. Mistake s 1. Unilateral mistake -- A mistake made by one of the contracting parties. Generally, a unilateral mistake will not excuse performance of the contract unless a. the other party to the contract knew or should have known of the mistake 2. Mutual mistake a. Mistake of fact – a mutual mistake of a material will allow the parties to rescind a contract. If the mistake is related to “what you are contracting for” then the contract can be rescinded. Example: Nick enters into a contract to sell David a diamond engagement ring that belonged to his grandmother. David believes that he is purchasing a diamond engagement ring. After the contract has been executed, David has the ring appraised and finds that the stone is not a diamond, but a cubic zirconia. David can rescind the c ontract because the mistake is related to a material fact of the contract. b. Mistake of value – If the mistake is related to what the item is worth, the contract is still enforceable. Example: Mary finds a painting while she is at a yard sale. The seller is asking $250 for the painting. The painting is old but both Kaitlyn and the seller think that $250 is a fair price for the painting. After purchasing the painting, Kaitlyn finds out that the painting is really worth $50,000. The seller tries to rescin d the contract. Can they? No, both believed that the painting was nothing more than an old painting. Both believed that $250 was a fair price. The fact that there was a mistake in value does not mean the seller can rescind the contract. c. Mistake in transcription or printing of contract -- Often negotiations take place prior to a final contract being formed. For example, my neighbor agreed to sell her 2018 Mercedes to Jessica. They agreed to a price of $48,000. However, when the contract was typed, the price was listed as $84,000. Both parties should have found the error before they finalized the contract. If they did not, Jessica can petition the court to have the contract “reformed” to reflect the correct price. However, she will need to establ ish proof that the price should have been $48,000. B. Deception – When one of the parties has been misled by a fraudulent statement, there is no genuine assent, and the contract is voidable by the innocent party. 1. Fraud -- the following must be present in order for fraud to exist a. The party must make a false statement or have r eckless disregard for the truth. b. The party must intend for the listener to rely on the statement, c. The listener does rely on the statement, and d. The listener is harmed by relying on the statement. e. Example: Jane went to purchase a used car. She asked the salesperson if the mileage on the odometer was accurate. The salesperson was not sure but replied yes. Jane was pleased to have found a reliable car and purchased it that day. Later, Jane learned that the odometer had been turned back. She sued to the car dealer for fraud. Will the court rule in her favor? i. The salesperson stated the mileage was accurate even though he wasn’t sure – This is reckless disregard for the truth ii. The salesperson intended for Jane to rely on his answer iii. Jane did rely on his answer iv. Jane was harmed by relying on the answer because the c ar was worth less than what she paid Answer: The car dealer committed fraud A. Active Concealment a. If a party physically conceals a known defect, this also constitutes fraud. b. Example: A homeowner is aware that the electrical wiring in a home does not meet building codes. The only area of the home where the wiring is visible is in the unfinished basement where the wiring runs across the ceiling. Instead of hiring an electrician to fix the issue, the homeowner installs a ceiling in the basement to hide the old wiring. By taking action to conceal the issue, the homeowner is guilty of fraud. 2. Nondisclosure or silence as misrepresentation a. Ordinarily, a party has no duty to volunteer information if they are not asked. b. Exceptions i. Unknown defect or condition – If the seller is aware of a serious defect or problem, they have a duty to disclose that information if it is unlikely that the o ther person would discover the defect on their own. Example: Brian is selling his home. Brian is aware that termites have damaged the wood framing of the home, but the damage is not visible. This is a series defect that Brian must disclose to buyers, a s it is unlikely that the buyer would discover the issue on their own. ii. Agents – An agent has the same duty to disclose a known problem or defect as their client. For example, if Brian hired a real estate agent to sell his home and the agent knew of t he termite damage, the agent is under the same duty to disclose the defect. C. Pressure -- If one of the parties is pressured into an agreement, they lack genuine assent. This may be due to undue influence, or duress. 1. Undue Influence a. Influence that is asserted upon another person by someone who dominates that person. b. In order to find that there is undue influence, the party must show that one party is in a position of weakness which makes puts them in a position to be affected by the influence of the other party. You must also prove that a confidential relationship ex ists between the parties. For example, Older parent and child; patient and nurse 2. Duress -- conduct that deprives the victim of free will because they are threatened with physical harm, or financial loss. a. Physical duress – the threat of physical harm to a person. For example: If you do not sign the contract, I will break your legs. b. Economic duress – the threat of financial loss. For example: You can take a $25,000 cut in pay, or I’ll fire you.