Duress and Undue Influence

Duress

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

Threats of

• illegal conduct
• to report crimes
• to sue
• economic threats

Undue Influence

• occurs when one party to the contract is in a position of trust and wrongfully dominates the other party

Elements of Undue Influence

• relationship and wrongful or unfair persuasion

The Relationship

• A relationship of trust, confidence, or authority must exist between the parties of the contract

Unfair Persuasion

• Ex. An elderly person, who is dependent on one child for daily care, may sell her home to that child for half its value

Mistake, Misrepresentation, and Fraud

Unilateral Mistake

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

Recognized Unilateral Mistake

• One party involved in the contract is aware of the mistake and a court may grant recission to the injured party

Induced Unilateral Mistake

• One party involved in the contract encourages and induces the other to make a mistake, and the contract is voidable

Mutual Mistake

• Both parties make a mistake
• bilateral mistake

Innocent Misrepresentation

• party to a contract does not know that a statement he or she made is untrue

Fraudulent Misrepresentation

• party to a contract knows that a statement he or she made is untrue

Misrepresentation

• the untrue statement is one of fact
• the statement is material to the transaction
• the victim reasonably relied on the statement

Fraud

• based on misrepresentations
• all the elements of misrepresentation must be proven, or it is not fraud

Fraud

• misrepresentation must be intentional or reckless
• the misrepresentation or concealment must injure

Remedies for Fraud

• Rescission
• damages
• punitive damages