Duress and Undue Influence

1
Duress and Undue Influence
LESSON 8-1

• Define genuine agreement and rescission
• Identify when duress occurs
• Describe how someone may exercise undue influence

2
GENUINE AGREEMENT

• Genuine agreement is an agreement to enter into a
  contract that is evidenced by words or conduct
  between the parties.

3
RESCISSION

• Rescission is backing out of the transaction by
  asking for the return of what you gave in the
  transaction, and offering to give back what you
  received.

4
DURESS

• Duress occurs when one party uses an improper
  threat or act to obtain an expression of agreement

• Threats of illegal conduct
• Threats to report crimes
• Threats to sue
• Economic threats

5
WHAT IS UNDUE INFLUENCE?

• Undue influence occurs when one party to the
  contract is in a position of trust and wrongfully
  dominates the other party.
• There are two key elements in undue influence
• The relationship
• Unfair persuasion

6
Mistake, Misrepresentation, and Fraud
LESSON 8-2

• Describe the kinds of mistakes that can make a
  contract void or voidable
• Determine when misrepresentation has occurred
• Identify when fraud has occurred
• Discuss the remedies for mistake,
  misrepresentation, and fraud

7
WHAT IS A UNILATERAL MISTAKE?

• A unilateral mistake occurs when one party holds
  an incorrect belief about the facts related to a
  contract.

• Recognized unilateral mistake
• Induced unilateral mistake

8
WHAT ARE MUTUAL MISTAKES?

• When there is a mutual mistake both parties have
  an incorrect belief about an important fact.

• Mistake about the subject matter
• Mistake of law

9
WHAT IS MISREPRESENTATION?

• For a statement to be treated as
  misrepresentation, three elements are required

• Untrue statement of fact
• Active concealment
• Silence
• Materiality
• Reasonable reliance

10
INNOCENT MISREPRESENTATION

• Innocent misrepresentation occurs when a party to
  a contract does not know that a statement he or
  she made is untrue.

11
FRAUDULENT MISREPRESENTATION

• Fraudulent misrepresentation occurs when a party
  to a contract knows that a statement he or she
  made is untrue.

12
FRAUD AND REMEDIES FOR FRAUD

• Misrepresentation must be intentional or reckless
• The misrepresentation or concealment must injure
• Remedies for fraud
• Rescission
• Damages
• Punitive damages