Business Law Today PDF

Roger LeRoy Miller BUSINESS LAW Today STANDARD EDITION TEXT & SUMMARIZED CASES, 12e Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2...

Roger LeRoy Miller BUSINESS LAW Today STANDARD EDITION TEXT & SUMMARIZED CASES, 12e Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole publicly accessible website, in whole or in part. Defenses to Contract Enforceability Chapter 13 Chapter Outline 13-1 Mistakes 13-2 Fraudulent Misrepresentation 13-3 Undue Influence and Duress 13-4 The Writing Requirement 13-5 The Parol Evidence Rule Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Learning Objectives 1. What is the difference between a unilateral and a bilateral mistake? 2. What are the elements of fraudulent misrepresentation? 3. What is the essential feature of undue influence? 4. What types of contracts must be in writing to be enforceable? 5. What is parol evidence? When is it admissible to clarify the terms of a written contract? Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-1 Mistakes If one party does not voluntarily consent to the terms of a contract, then the law will not normally enforce the contract. Voluntary consent (assent) may be lacking because of mistake, fraudulent misrepresentation, undue influence, or duress. Only a mistake of fact (and not a mistake of value or quality) makes a contract voidable. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-1a Unilateral Mistakes A mistake that occurs when one party to a contract is mistaken as to a material fact. The contract normally is enforceable against the mistaken party. Exceptions: 1. The other party knew or should have known that a mistake of fact was made. 2. The error was due to a substantial mathematical mistake and was made inadvertently and without gross (extreme) negligence. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-1b Bilateral (Mutual) Mistakes (slide 1 of 2) A mistake that occurs when both parties are mistaken about same material fact. Either Party Can Rescind the Contract Normally, the contract is voidable by the adversely affected party and can be rescinded. Case Example 13.2 Coleman Holdings Limited Partnership v. Eklund (2015) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 13-1 Mistakes of Fact Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-1b Bilateral (Mutual) Mistakes (slide 2 of 2) When the Parties Reasonably Interpret a Term Differently If the contract parties attach materially different meanings to the term, the mutual misunderstanding may allow the contract to be rescinded or reformed. Case Example 13.3 Richard v. Anadarko Petroleum Corp. (2017) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-1c Mistakes of Value If a mistake concerns the future market value or quality of the object of the contract, the mistake is one of value, and the contract normally is enforceable. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-2 Fraudulent Misrepresentation Typically, fraud involves: 1. A misrepresentation of a material fact must occur. 2. There must be an intent to deceive. 3. The innocent party must justifiably rely on the misrepresentation. 4. To collect damages, a party must have been harmed as a result of the misrepresentation. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-2a Misrepresentation Has Occurred (slide 1 of 3) The first element of proving fraud is to show that misrepresentation of a material fact has occurred. Misrepresentation by Conduct Occurs when a party takes specific action to conceal a fact that is material to the contract. Spotlight Case Example 13.5 Selleck v. Cuenca (2009) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-2a Misrepresentation Has Occurred (slide 2 of 3) Statements of Opinion Statements of opinion and representations of future facts (predictions) are generally not subject to claims of fraud. Sellers are allowed to use puffery to sell their goods without being liable for fraud. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-2a Misrepresentation Has Occurred (slide 3 of 3) Misrepresentation of Law Misrepresentation of law ordinarily does not entitle a party to be relieved of a contract. Exception: When the misrepresenting party is in a profession known to require greater knowledge of the law than the average citizen possesses. Misrepresentation by Silence Ordinarily, neither party to a contract has a duty to come forward and disclose facts, and a contract normally will not be set aside because such information has not been volunteered. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-2b Intent to Deceive The second element of fraud is scienter, or knowledge on the part of the misrepresenting party that facts have been misrepresented. Innocent Misrepresentation Occurs when a person makes a false statement of fact that he or she believes is true. Negligent Misrepresentation Occurs when a person makes a false statement of fact through carelessness, or because he or she did not use the skill and competence required by her or his business or profession. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-2c Justifiable Reliance on the Misrepresentation The third element of fraud is reasonably justifiable reliance on the misrepresentation of fact. The deceived party must have a justifiable reason for relying on the misrepresentation. The misrepresentation must also be an important factor—but not necessarily the sole factor—in inducing the deceived party to enter into the contract. Case Example 13.11 Cronkelton v. Guaranteed Construction Services (2013) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-2d Injury to the Innocent Party Most courts do not require a showing of harm in an action to rescind a contract. In contrast, to recover damages caused by fraud, proof of harm is universally required. The measure of damages is ordinarily equal to the property’s value had it been delivered as represented, less the actual price paid for the property. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-3 Undue Influence and Duress (slide 1 of 2) A contract lacks voluntary consent and is unenforceable if undue influence or duress is present. 13-3a Undue Influence Occurs when one party can greatly influence another party, thus overcoming that party’s free will. One Party Dominates the Other There must be clear and convincing evidence that the person did not act out of her or his free will. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-3 Undue Influence and Duress (slide 2 of 2) A Presumption of Undue Influence in Certain Situations When the dominant party in a fiduciary relationship benefits from the relationship, the court will often presume that the contract was made under undue influence. 13-3b Duress Use of threats to force a party to enter into a contract constitutes duress. Duress is both a defense to the enforcement of a contract and a ground for rescission of a contract. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-4 The Writing Requirement (slide 1 of 2) To be enforceable, all states require certain types of contracts to be in writing or evidenced by a written memorandum or an electronic record. The party or parties against whom enforcement is sought must have signed the contract, unless certain exceptions apply. These state statutes are referred to collectively as the Statute of Frauds. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-4a Contracts Involving Interests in Land A contract calling for the sale of land is not enforceable unless it is in writing or evidenced by a written memorandum. Land is real property and includes all physical objects that are permanently attached to the soil, such as buildings, fences, trees, and the soil itself. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-4b The One-Year Rule (slide 1 of 2) Contracts that cannot, by their own terms, be performed within one year from the day after the contract is formed must be in writing to be enforceable. Time Period Starts the Day after the Contract Is Formed Must Be Objectively Impossible to Perform within One Year When performance of a contract is objectively impossible during the one-year period, the contract must be in writing to be enforceable. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-4b The One-Year Rule (slide 2 of 2) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-4c Collateral Promises (slide 1 of 2) Collateral promise: A secondary promise to a primary transaction, such as a promise made by one person to pay the debts of another if the latter fails to perform. A collateral promise normally must be in writing to be enforceable. Primary versus Secondary Obligations Primary obligation: A promise to pay another person’s debt (or other obligation) that is not conditioned on the person’s failure to pay (or perform. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-4c Collateral Promises (slide 2 of 2) Primary versus Secondary Obligations Secondary Obligation: A promise to pay another’s debt only if that party fails to pay. An Exception—The “Main Purpose” Rule An oral promise to answer for the debt of another is covered by the Statute of Frauds unless the guarantor’s purpose in accepting secondary liability is to secure a personal benefit. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-4 The Writing Requirement (slide 2 of 2) 13-4d Promises Made in Consideration of Marriage A unilateral promise to make a monetary payment or to give property in consideration of marriage as well as prenuptial agreements must be in writing. 13-4e Contracts for the Sale of Goods The UCC’s Statute of Fraud provisions require written evidence or an electronic record of a contract for the sale of goods of $500 or more. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-4f Exceptions to the Statute of Frauds (slide 1 of 3) Partial Performance When a contract has been partially performed and the parties cannot be returned to their positions prior to the contract’s formation, a court may grant specific performance. Case Example 13.21 NYKColl A.B. v. Pacific Fruit, Inc. (2013) Admissions If a party against whom enforcement of an oral contract is sought “admits” under oath that a contract for sale was made, the contract will be enforceable. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-4f Exceptions to the Statute of Frauds (slide 2 of 3) Promissory Estoppel Section 139 of the Restatement (Second) of Contracts provides that an oral promise can be enforceable, notwithstanding the Statute of Frauds, if the promisee has justifiably relied on the promise to his or her detriment. Special Exceptions under the UCC Oral contracts for customized goods may be enforced in certain circumstances. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-4f Exceptions to the Statute of Frauds (slide 3 of 3) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13-4g Sufficiency of the Writing or Electronic Record What Constitutes a Writing? Any confirmation, invoice, sales slip, check, fax, or e-mail—or such items in combination. One document may incorporate another document by expressly referring to it. Several documents may form a single contract if they are physically attached or placed in the same envelope. What Must Be Contained in the Writing? The essential contract terms and some indication that the parties voluntarily agreed to the terms. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-5 The Parol Evidence Rule Under the parol evidence rule, if a court finds that a written contract represents the complete and final statement of the parties’ agreement, then it will not allow either party to present parol evidence (testimony or other evidence of communications between the parties that is not contained in the contract itself). Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-5a Exceptions to the Parol Evidence Rule 1. Contracts subsequently modified 2. Voidable or void contracts 3. Contracts containing ambiguous terms 4. Incomplete contracts 5. Prior dealing, course of performance, or usage of trade 6. Contracts subject to an orally agreed-on condition precedent 7. Contracts with an obvious or gross clerical (or typographic) error Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  13-5b Integrated Contracts An integrated contract is a written contract that constitutes the final expression of the parties’ agreement. Evidence extraneous to the contract that contradicts or alters the meaning of the contract in any way is inadmissible. If a contract contains all of the terms of the parties’ agreement, then it is completely integrated. If it contains only some of the terms and not others, it is partially integrated. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 13-4 The Parol Evidence Rule Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.