– Duress – actual coercion or the improper threat of injury (not voluntary)
– Undue Influence – unfair persuasion from within a dominating or trusting special relationship. (not rational)
– Misstatements of Information – “Information I was basing my choices on were false” Equitable Estoppel. (doesn’t satisfy mutual enhancement and utility)
ELEMENTS OF DURESS
- IMPROPER THREAT
- leaves the victim NO REASONABLE ALTERNATIVE
Improper Threat – In “fair” bargains
- a CRIME or TORT is threatened
- CIMINAL PROSECUTION is threatened (unrelated crimes)
- use of a CIVIL LAWSUIT is threatened in bad faith
- purposely DELAYING an old contract. Breach of pre-existing legal duty
Improper Threat – In “unfair” bargains
A. Threat is “gratuitious”; only harming other person. Has no benefit to the party making the threat
a. Telling personal, true information to the public
B. Past unfair dealings make a threat more credible.
C. Use of power for illegitimate ends
Threat from a third party – victim CAN’T void if
A. Promisee is in GOOD FAITH
B. Promisee doesn’t have reason to KNOW ABOUT DURESS
C. Promisee has either GIVEN VALUE ALREADY
D. Promisee has taken MATERIAL DETRIMENTAL RELIANCE
ELEMENTS OF UNDUE INFLUENCE [contract is voidable]
1. UNFAIR PERSUASION of a person [fact dependant]
2. under influence of a PERSUADER (trusted or dominated by)
3. in a RELATIONSHIP with the persuader will not act in a manner inconsistent with the victim’s welfare
a. physicians – patient
c. parishioner – clergy
Unfair Persuasion –
A. unfairness in RESULTING BARGAIN
B. UNAVAILABILITY of independent advice
C. General SUSEPTIBILITY of the person
a. Underage
b. Uneducated (illiterate)
c. Elderly
d. Illegal immigrant
Exceptions – voidable by victim unless
A. Other party to the transaction is in GOOD FAITH
B. Has no reason to know of the UNDER INFLUENCE
C. Either GIVES VALUE or RELIES MATERIALLY on the transaction
Persuader could be in good faith, but if person is susceptible there could still be undue influence.
ELEMENTS OF MISREPRESENTATION [voidable]
1. MISREPRESENTATION; and
2. FRAUD or MATERIALITY of misrepresentation; and
3. JUSTIFIABLE RELIANCE on the misrepresentation (reasonable person test)
If all elements are satisfied, the recipient of the misrepresented info can void the contract.
Misrepresentation –
A. an assertion that is not in accord with the fact
B. an INNOCENT ERRONEOUS ASSERTION is still a misrepresentation; a reflection on either carelessness or ignorance.
C. an ACTIVE CONCEALMENT of the facts
D. remaining silent; FAILURE TO ALERT
E. OPINION
Kinds of misrepresentation –
A. OUTRIGHT ASSERTION
B. ACTIVE CONCEALMENT
C. NONDISCLOSURE
Hill v. Jones
ISSUE: Could silence qualify as an assertion?
HOLDING: Remanded. Sent back to trial court.
RULE: You don’t have to speak unless
Duty to Speak factors
1. If disclosure is required TO CORRECT a previous assertion
2. KNOWS that a party is mistaken about BASIC ASSUPTION
a. Termites are a material issue when buying the house
3. Knows that disclosure would correct a mistake of the other party as to the contents or effects of a writing that embodies the K
4. Where the other party is ENTITLED TO KNOW because of a RELATIONSHIP OF TRUST and confidence between them.
Justifiable Reliance on Opinions Misrepresentation Test – recipient of an opinion is NOT justified on relying on it unless the recipient:
A. Stands in a RELATIONSHIP OF TRUST or confidence with the speaker
B. Reasonably believes that speaker has special SKILLS, JUDGMENT or ABILITY
C. For some reason the recipient is PARTICULARLY SUSCEPTIBLE
Fraud Test –
A. maker knows or believes assertion is NOT IN ACCORD with the facts
B. maker DOES NOT HAVE CONFIDENCE that he/she states or implies truth of the assertion
C. maker knows she doesn’t have BASIS stated or implied for the assertion
a. “I read it in Scientific American”
Materiality Test
A. if it would be LIKELY TO INDUCE a reasonable response by a person in a negative way
Results of unconscionability
A. court can REFUSE TO ENFORCE the contract
B. court can STRIKE OUT an offending clause
C. may provide a remedy that gets rid of unconscionability in FINAL RESULT
