UNFAIR PERSUASION. Example: unfair terms of the contract Example: an elderly person, who is dependent on one child for daily care, may sell her home to that child for half its value. This is a strong evidence of lack of free will. To avoid unfair persuasion, the stronger party should act with scrupulous honesty, fully disclose all important facts, and insist that the weaker party obtain a lawyer before entering into a contract. Persuasion or nagging do not necessarily mean undue influence exists. unilateral mistakeoccurs when one party holds an incorrect belief about the facts related to a contract. Example: a mistake from failure to read a contract before signing it Example: a misunderstanding from a rushed or careless reading of contract Example: signing a contract written in language you don’t understand will bind you even if you are mistaken about some of the contract’s content.
UNFAIR PERSUASION. If dominant party to contract receives unfair terms, then undue influence may exist (and the dominated party may rescind) Mistake – when one or both parties are mistaken about facts of K:
1. Unilateral Mistakes – when one party holds an incorrect belief about the facts related to a K - Innocent unilateral mistake (if someone fails to read K carefully before signing … K is still valid) - Recognized unilateral mistake (major mistake that other party is aware of … K is voidable) - Induced unilateral mistake (one party encouraged other to make the mistake … K is voidable)
2. Mutual (Bilateral) Mistakes – when both parties have incorrect beliefs about an important fact; important facts that influence parties’ decision making about a K are called material facts - Mistake about subject matter. (mutual mistakes of fact …K is void) - Mistake of law (mutual mistake about applicable laws … K is still valid) Misrepresentation – statements that turn out to be untrue may be either innocent or fraudulent misrepresentation … both of these defenses make the K voidable. 3 elements of misrep:
1. Untrue Statement of Fact (in misrep, the statement must be one of fact … a past or existing fact … otherwise it is just an opinion; opinions of experts are considered to be statements of fact) - Active Concealment: same as a false statement of fact. - Silence: in many situations the seller may remain silent about defects, except: (i) if you make a statement about a material fact that omits important info; (ii) if a true statement is made untrue by subsequent events; or (iii) if one party knows other has made a basic mistaken assumption.
