blawGENUINENESS OF ASSENT
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A party who demonstrates that he or she did not genuinely assent to the terms of a contract may avoid the contract. Genuine assent may be lacking due to mistake, fraudulent misrepresentation, undue influence, or duress.  As was true with contracts entered into by persons lacking contractual capacity, contracts lacking genuine assent are voidable, not void.

Ch. 14: Contracts: Genuineness of Assent - No. 1 West’s Business Law (8th ed.)

MISTAKE
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Mistake: The parties entered into a contract with different understandings of one or more material fact(s) relating to the subject matter of the contract.  Unilateral Mistake: A mistake made by one of the contracting parties. Generally, a unilateral mistake will not excuse performance of the contract unless: (1) the other party to the contract knew or should have known of the mistake; or (2) the mistake is one of mathematics only.  Mutual Mistake of Fact: A mistake on the part of both contracting parties as to some material fact. In this case, either party may rescind. Mutual Mistake of Value: If, however, the mutual mistake concerns the future market value or some quality of the object of the contract, the contract can normally be enforced by either party.

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Ch. 14: Contracts: Genuineness of Assent - No. 2 West’s Business Law (8th ed.)

FRAUDULENT MISREPRESENTATION
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When an innocent party consents to a contract with fraudulent terms, he or she may usually avoid the contract, because he or she did not genuinely assent to the fraudulent terms.  Elements of Fraudulent Misrepresentation: (1) A misrepresentation of material fact was made, (2) with the intent to deceive, (3) on which the innocent party justifiably relied (4) resulting in injury to the innocent party.  Most courts do not require proof of an injury to the innocent party if the only remedy sought by the innocent party is rescission of the contract – that is, returning the parties to their pre-contractual positions. However, in order to recover damages, it is universally held that the innocent party must prove injury as a result of the misrepresentation.

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Ch. 14: Contracts: Genuineness of Assent - No. 3 West’s Business Law (8th ed.)

TYPES OF MISREPRESENTATIONS
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Predictions and Expressions of Opinion: Generally, these will not give rise to an actionable misrepresentation, unless the person making the statement has a particular expertise and knows or has reason to know that the listener intends to rely on the statement. Misrepresentation by Conduct: The conduct of a party – particularly a party’s concealment of some material fact from the other party – will support a claim of misrepresentation. Misrepresentation of Law: Generally, this will not support a misrepresentation claim, unless the speaker is a member of a profession that is commonly known to require greater knowledge of the law than possessed by the average citizen. Misrepresentation by Silence: Generally, neither party to a contract has a duty to come forward and volunteer facts unless the other party asks. However, the common law recognizes exceptions where a duty to speak exists, for example, where there exists a serious defect or serious risk of injury. In addition, some statutes create duties to speak not otherwise present under common law.

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Ch. 14: Contracts: Genuineness of Assent - No. 4 West’s Business Law (8th ed.)

INTENT AND RELIANCE
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Scienter: A defendant acts with the intent to deceive if he: (1) knows a statement to be false, (2) makes a statement he reasonably believes to false, (3) makes a statement recklessly, without regard to its truthfulness or falsity, or (4) implies that a statement is made on the basis of information that he does not possess or on some other basis on which it is not, in fact, based.

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Reliance: The plaintiff must have acted based on (although not necessarily solely based on) the defendant’s misrepresentation. Moreover, in some jurisdictions, the plaintiff’s reliance on the misrepresentation must be reasonable.

Ch. 14: Contracts: Genuineness of Assent - No. 5 West’s Business Law (8th ed.)

OTHER MISREPRESENTATIONS
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Innocent Misrepresentation: A statement made by a person, believing it to be true, that actually misrepresents some material fact.  An innocent misrepresentation results, in essence, in a mutual mistake of fact. Therefore, the only remedy to an injured party is generally rescission of the contract.

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Negligent Misrepresentation: An untrue statement made by a person believing it to be true who failed to exercise reasonable care in determining its truthfulness and/or failed to use the skill and competence required by her business or profession.

Ch. 14: Contracts: Genuineness of Assent - No. 6 West’s Business Law (8th ed.)

UNDUE INFLUENCE AND DURESS
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Undue Influence arises from relationships in which one party can influence another party to the point of overcoming the influenced party’s free will.  The essential feature of undue influence is that the party being influenced does not, in reality, enter into the contract of his or her own free will.

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Duress: Forcing a party to enter into a contract because of the fear created by threats. While a party forced to enter into a contract under duress may choose to perform the contract, duress is grounds for cancellation, or rescission.

Ch. 14: Contracts: Genuineness of Assent - No. 7 West’s Business Law (8th ed.)

ADHESION CONTRACTS
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Adhesion Contract: A contract written exclusively by one party (the “dominant” party, usually the seller or creditor) and presented to the other party (the “adhering” party, usually the buyer or borrower) on a “take-it-or-leave-it” basis, such that the adhering party has no opportunity to negotiate the terms of the contract.  To avoid enforcement of a contract based on adhesion, the adhering party must show that: (1) the parties had substantially unequal bargaining positions and (2) enforcement against the adhering party would be manifestly unfair or oppressive.

Ch. 14: Contracts: Genuineness of Assent - No. 8 West’s Business Law (8th ed.)