Understanding Fraudulent Misrepresentation

Summary

The chat covers various aspects of contract law, focusing on fraudulent misrepresentation, undue influence, and duress. It explains the elements required to prove a valid claim for fraud, including a false statement, materiality, intent to defraud, justifiable reliance, and damages. It discusses scenarios where these elements are not present, leading to no fraud. The chat also explores the concept of undue influence, where a person in a position of trust breaches their fiduciary duty. It further delves into the concept of duress, where a person is coerced into a contract under threats. The chat also explains the difference between liquidated and unliquidated debts, and the concept of consideration in contract law. It also discusses the remedies available in case of fraud, including contract rescission/restitution and monetary damages.

Full Conversation

Barry, the buyer, and Sam, the seller, enter into a binding, written contract for the sale of a building in Queens for $* million. For the past ten years, the building has been used to host weddings and other large parties. Prior to signing the contract, Sam tells Barry that the heating, plumbing and and sound systems were just replaced in * for $*,*. Barry does not really care because he tells Sam that he plans on tearing down the entire building and putting up new condo townhouses for sale. The closing takes place on December *, *. After the closing, Barry decides to retire. He would like to return the property to Sam and get his $* million dollars back. After taking possession of the building, Barry learns that Sam's statements about the new heating, plumbing, and sound systems were completely false. Barry also learns that Sam knew that his statements were false when he made them. Which of the following element of fraud are not present here? • The false statement was not material. • There is no false statement. • There was no reliance on the false statement. • There is no proof of scienter. • The false statement did not concern a matter of fact.
In this case, the element of fraud not present is "There was no reliance on the false statement". Barry had plans to demolish the building regardless of Sam's statement about the systems.
Larry has served as Clio's lawyer and close advisor for the last 40 years. Clio is now 97 years old. Larry and Clio agree that Larry will buy a piece of undeveloped property that Clio owns in Brooklyn for $*,*. The property sale contract is in a writing signed by both parties. Clio thought that the property was worth about $*,*. Larry knew that the property was worth $*-* million. The closing is scheduled for December *, *. On November *, *, Clio's son informs Larry that Clio will not be closing on the property, and that "the deal is off!" Which of the following statements is most accurate? This is a case of undue influence. This is a case involving a unilateral mistake. This is a case of duress. This is a case of fraud
This scenario most likely involves a case of undue influence. As Larry is Clio's trusted advisor and lawyer, he has a fiduciary duty to act in Clio's best interests, which he may have breached by not informing her of the property's true value.
Barry, the buyer, and Sam, the seller, enter into a binding, written contract for the sale of a house in Queens for $* million. There is no down payment. The closing is scheduled for December *, *. On November *, *, Sam officially notifies Barry that he will not be closing on the house and that he plans on selling the house to Tandy instead for $*.* million. Barry sues Sam for breach of contract and wins the case. At the trial, Barry was able to prove that it would cost him $*.* million to buy a similar house in Queens. What is the most likely remedy that the court will order? The court will not order any remedy in this case. • The court will order Sam to complete the transaction and to deliver the house's title to Barry. • The court will order Sam to pay Barry $* million in damages. • The court will order Sam to pay Barry $*,* in damages. • The court will order Sam to pay Barry $*,* in damages.
The court will most likely order Sam to pay Barry $*,* in damages. This amount represents the difference between the cost of a similar house in Queens and the original contract price.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry contacted Selena and asked him whether the covers would fit the new iPhone *. The research that Henry did online conveyed the impression that the covers would fit the iPhone *, but he wanted confirmation. Selena honestly answered that, to the best of her knowledge, she had no idea whether the covers would indeed fit the iPhone *. Henry then sent a written, signed acceptance email for *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *. Which of the following statements is most accurate? • This is a case of mutual or bilateral mistake. • This is a case of fraud. • This is a case of unilateral mistake. • This is a case of duress. • This is a case of undue influence.
This situation seems to represent a case of mutual or bilateral mistake, as both parties had an incorrect belief about the fundamental facts of the contract - the compatibility of the covers with iPhone *.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry contacted Selena and asked her whether the covers would fit the new iPhone *. Selena answered that she was absolutely certain that the covers would indeed fit the iPhone *. Henry then sent a written, signed acceptance email for *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *. One of Selena's employees privately tells Henry that Selena knew that the phone covers don't fit the iPhone *, but that Selena said, "It's up to the buyers to figure that out. I just say what I need to close the deal." Which of the following statements is most accurate? • This is a case of fraud. • This is a case of undue influence. This is a case of duress. • This is a case of mutual or bilateral mistake. • This is a case of unilateral mistake.
This situation may represent a case of fraud, assuming all elements can be proven. Selena made a false statement knowing it was untrue, Henry relied on it, and it appears he suffered damages as a result.
On June *, *, Murray offered to sell a home theater system to Janice for $*,*, which would be installed in Janice's basement. During the negotiations, Murray told Janice that her family would have "a real movie theater experience" in the home theater, and that "Janice would be the envy of everyone in her neighborhood." Janice had recently gone through an ugly breakup with her significant other, so she was stressed out and she really wanted to buy something that would make her and her kids feel better. Janice bought the system for $*,*. After six months with the home theater, Janice realizes that the home theater experience is nothing like a real movie theater because the home theater equipment is completely different from a real movie theater. Furthermore, Janice is still not the envy of everyone in her neighborhood. In fact, many of the people in Janice's neighborhood think that she is a buffoon, and Janice does not feel better. Which of the following statements is most accurate? • Janice can rescind the contract because Janice was under duress when she bought the home theater system. • Janice cannot rescind the contract because Murray's comments were mere sales "puffery:" • Janice can rescind the contract because Murray made a material misrepresentation of fact about the home theater system. • Janice can rescind the contract because Janice and Murray were both mistaken, under the law, about the home theater system. • Janice cannot rescind the contract because only Janice was mistaken, as a matter of law, about the home theater system.
The most accurate statement is likely: "Janice cannot rescind the contract because Murray's comments were mere sales puffery." These are subjective statements about the quality of the product, not objective facts.
On June *, *, Selena and Henry entered into a signed contract for *,* iPhone covers. After Henry receives the covers from Selena, he learns that Selena committed fraud to get Henry to enter into the contract. Assume that Henry can establish a valid claim for fraud in court. What remedies might Henry pursue? • Henry may seek no remedies from the court. • Henry may seek contract rescission/ restitution and monetary damages, and he can actually obtain both remedies from the court. • Henry may seek monetary damages but not contract rescission / restitution. Henry may seek only contract rescission / restitution but not monetary damages. Henry may seek contract rescission/ restitution and monetary damages, though he can only actually obtain one remedy or the other from the court.
Henry may seek both contract rescission/restitution and monetary damages, although it usually depends on the specific laws in his location. It's often rare to obtain both remedies; typically, one opts for restitution if the monetary damages are insufficient to cover the loss.
On June *, *, Selena and Henry entered into a signed contract for *,* iPhone covers. Immediately after Henry receives the covers from Selena, he learns that Selena committed fraud to get Henry to enter into the contract. Henry tries to sell the covers online to consumers for three months, but he has little success. Assume that Henry can establish a valid claim for fraud in court. What remedies might Henry pursue? Henry may seek only contract rescission / restitution but not monetary damages. • Henry may seek no remedies from the court. • Henry may seek monetary damages but not contract rescission / restitution. • Henry may seek contract rescission/ restitution and monetary damages, though he can only actually obtain one remedy or the other from the court. • Henry may seek contract rescission/ restitution and monetary damages, and he can actually obtain both remedies from the court.
Henry may seek both contract rescission/restitution and monetary damages. However, obtaining both remedies from the court depends on the specific laws in his location. Typically, one pursues restitution if monetary damages don't cover the loss.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. The research that Henry did online conveyed the impression that the covers would fit the iPhone *. Selena knew that the covers would not fit the iPhone *. Henry sent a written, signed acceptance email for *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *. Which of the following statements is most accurate? • This is a case of fraud. • This is a case of mutual or bilateral mistake. • This is a case of unilateral mistake. • This is a case of undue influence. • This is a case of duress.
This situation appears to be a case of fraud. Selena intentionally misrepresented a material fact (the compatibility of the covers with iPhone *) upon which Henry relied and consequently suffered damages.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry contacted Selena and asked her whether the covers would fit the new iPhone *. The research that Henry did online conveyed the impression that the covers would fit the iPhone *, but Henry wanted confirmation. Selena answered that, to the best of her knowledge, the covers would indeed fit the iPhone *. Henry then sent a written, signed acceptance email for * points Y Saved *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *.
This situation could be a case of misrepresentation if Selena knowingly provided incorrect information about the cover fit. Could you clarify whether Selena was aware that the covers wouldn't fit the iPhone * when she confirmed to Henry?
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry contacted Selena and asked her whether the covers would fit the new iPhone *. The research that Henry did online conveyed the impression that the covers would fit the iPhone *, but Henry wanted confirmation. Selena answered that, to the best of her knowledge, the covers would indeed fit the iPhone *. Henry then sent a written, signed acceptance email for *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *. Which of the following statements is most accurate? • This is a case of fraud. • This is a case of duress. • This is a unilateral mistake. • This is a mutual (bilateral mistake). • This is a case of undue influence.
This situation seems to be an instance of a mutual (bilateral) mistake. Both parties believed the covers would fit the iPhone *, but they were mistaken. As this is a fundamental aspect of the contract, it could potentially be voided.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry contacted Selena and asked her whether the covers would fit the new iPhone *. The research that Henry did online conveyed the impression that the covers would fit the iPhone *, but Henry wanted confirmation. Selena answered that, to the best of her knowledge, the covers would indeed fit the iPhone *. Henry then sent a written, signed acceptance email for *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *. Which of the following statements is most accurate? • Neither party can rescind or disaffirm the contract. Only the buyer can rescind or disaffirm the contract. • Only the seller can rescind or disaffirm the contract. The agreement between the seller and the buyer is void.
The most accurate statement appears to be: "Only the buyer can rescind or disaffirm the contract." Henry, the buyer, relied on Selena's assurance about the compatibility of the covers, which turned out to be incorrect.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry contacted Selena and asked her whether the covers would fit the new iPhone *. Selena answered that she was absolutely certain that the covers would indeed fit the iPhone *. Henry then sent a written, signed acceptance email for *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *. One of Selena's employees privately tells Henry that Selena knew that the phone covers don't fit the iPhone *, but that Selena said, "It's up to the buyers to figure that out. I just say what I need to close the deal." Which of the following statements is most accurate? • Neither party can rescind or disaffirm the contract. • Only the buyer can rescind or disaffirm the contract. Either party can rescind or disaffirm the contract. • Only the seller can rescind or disaffirm the contract.
The most accurate statement would be: "Only the buyer can rescind or disaffirm the contract." Henry, the buyer, was misled by Selena's fraudulent statement about the product. This might entitle him to rescind the contract.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. The research that Henry did online conveyed the impression that the covers would fit the iPhone *. Selena knew that the covers would not fit the iPhone *. Henry sent a written, signed acceptance email for *,* covers. After Henry receives the covers from Selena, he realizes that the covers cannot fit on the iPhone *. Which of the following statements is most accurate? • Only the buyer can rescind or disaffirm the contract. • Only the seller can rescind or disaffirm the contract. • The agreement between the seller and the buyer is void. • Neither party can rescind or disaffirm the contract.
The most accurate statement is likely: "Only the buyer can rescind or disaffirm the contract." Given the circumstances, Henry, the buyer, may have the right to rescind the contract due to Selena's fraudulent misrepresentation.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry sent a written, signed acceptance email for *,* covers, for a total contract price of $*,*. They agree, in writing, that delivery and payment will be made on September *, *. Selena's business is doing terribly and she really needs the money from the sale to Henry. On August *, *, Henry informs Selena that he wants to order another *,* covers but only for $*,*. Henry tells Selena that if she does not agree to the terms of the second deal, he will pull out and cancel the first deal without making payment. Selena reluctantly agrees and Selena signs a second written contract with Henry for *,* covers at $*,*. Which of the following statements is most accurate? • Selena can rescind the second contract due to fraud. • Selena can rescind the second contract due to mutual mistake. • Selena can rescind the second contract due to duress. • Selena cannot rescind the second contract. • Selena can rescind the second contract due to undue influence.
The most accurate statement is: "Selena can rescind the second contract due to duress." Henry coerced Selena into accepting less favorable terms by threatening to cancel the first deal, which constitutes duress.
On June *, *, Selena emailed a written, signed offer for iPhone covers to Henry, who sells smartphone covers to the public. Henry sent a written, signed acceptance email for *,* covers, for a total contract price of $*,*. They agree, in writing, that delivery and payment will be made on September *, *. On August *, *, Henry informs Selena that he wants to order another *,* covers but only for $*,*. Henry tells Selena that if she does not agree to the terms of the second deal, his henchmen will plant a bomb in her factory. Henry also tells Selena that he will blow up her car with her in it if she goes to the police. Selena reluctantly agrees and she signs a second written contract with Henry for *,* covers at $*,*. Which of the following statements is most accurate? • Selena can rescind the second contract due to undue influence. •Selena can rescind the second contract due to fraud. • Selena cannot rescind the second contract. • Selena can rescind the second contract due to mutual mistake. • Selena can rescind the second contract due to duress.
The most accurate statement is: "Selena can rescind the second contract due to duress." Henry's threats of physical harm and destruction of property are clear instances of duress.
Ralph rents a house in Staten Island from Linda for $*,* per month. The lease agreement is in a writing signed by both parties. The lease term is January *, * to January *, *. Unfortunately for Linda, Ralph did not pay his rent for January, February, March, or April of *. Ralph has no legal excuse for non-payment. Linda seeks $*,* in unpaid rent from Ralph. Which of the following statements is most accurate? • The debt is liquidated. • The debt is unliquidated. • The lease agreement is not supported by valid consideration. • The lease agreement is voidable.
The most accurate statement is: "The debt is liquidated." This means that the amount of the debt is fixed and certain, in this case being the unpaid rent of $*,*.
Ralph rents a house in Staten Island from Linda for $*,* per month. The lease agreement is in a writing signed by both parties. The lease term is January *, * to January *, *. Unfortunately for Linda, Ralph did not pay his rent for January, February, March, or April of *. Ralph has no legal excuse for non-payment. Linda seeks $*,* in unpaid rent from Ralph. Ralph and Linda verbally agree that Linda will accept $*,* in full payment of the unpaid rent, if Ralph agrees to pay his rent on time for the remainder of the lease. Which of the following statements is most accurate? • The settlement agreement is void. • The settlement agreement is supported by valid consideration. • The settlement agreement is not supported by valid consideration. • The settlement agreement lacks mutual assent.
The most accurate statement is: "The settlement agreement is supported by valid consideration." Ralph's promise to pay his rent on time for the remainder of the lease constitutes new consideration supporting this agreement.
Ralph rents a house in Staten Island from Linda for $*,* per month. The lease agreement is in a writing signed by both parties. The lease term is January *, * to January *, *. Unfortunately for Linda, Ralph did not pay his rent for January, February, March, or April of *. Ralph honestly believes that he does not need to pay any rent for those four months because the house had no heat or hot water during that time. Linda disagrees. Linda believes that Ralph is entitled to a rent reduction, but that he still should pay most of his rent. Ralph and Linda verbally agree that Linda will accept $*,* in full payment of the unpaid rent. Which of the following statements is most accurate? • The debt is partially liquidated and partially unliquidated. • The debt is unliquidated. • The debt is unlawful. • The debt is liquidated.
The most accurate statement is: "The debt is partially liquidated and partially unliquidated." The $*,* that Linda and Ralph agreed upon is the liquidated portion, while the disagreement over the remaining $*,* makes that portion unliquidated.
Ralph rents a house in Staten Island from Linda for $*,* per month. The lease agreement is in a writing signed by both parties. The lease term is January *, * to January *, *. Unfortunately for Linda, Ralph did not pay his rent for January, February, March, or April of *. Ralph honestly believes that he does not need to pay any rent for those four months because the house had unreliable heat and hot water during that time. Linda disagrees based on her lawyer's advice. Linda believes that Ralph is entitled to a rent reduction, but that he still should pay most of his rent. Ralph and Linda verbally agree that Linda will accept $*,* in full payment of the unpaid rent. Which of the following statements is most accurate? • The settlement agreement lacks consideration and is legally unenforceable. • The settlement agreement is supported by consideration and is legally enforceable. • The settlement agreement is enforceable because the lease was signed by both parties. • The settlement agreement is unenforceable because it was a verbal agreement.
The most accurate statement is: "The settlement agreement is supported by consideration and is legally enforceable." Both Ralph and Linda made new promises (Ralph to pay $*,* and Linda to accept it as full payment) which constitutes valid consideration for the agreement.
Ralph rents a house in Staten Island from Linda for $*,* per month. The lease agreement is in a writing signed by both parties. The lease term is January *, * to January *, *. Unfortunately for Linda, Ralph did not pay his rent for January, February, March, or April of *. Ralph has no legal excuse for non-payment. Linda seeks $*,* in unpaid rent from Ralph. Ralph and Linda verbally agree that Linda will accept $*,* in full payment of the unpaid rent, if Ralph agrees to pay his rent on time for the remainder of the lease. Which of the following statements is most accurate? • Linda cannot sue for the remaining back rent owed. • Linda still can sue for the remaining back rent owed.
The most accurate statement is: "Linda cannot sue for the remaining back rent owed." This is because they have established a new agreement where Linda accepts a lesser amount ($*,*) as full payment of the unpaid rent.
Ralph rents a house in Staten Island from Linda for $*,* per month. Ralph pays for his own electricity usage, though Linda provides gas. The gas bill is usually about $*-* per month. The lease agreement is in a writing signed by both parties. The lease term is January *, * to January *, *. Unfortunately for Linda, Ralph did not pay his rent for January, February, March, or April of *. Ralph has no legal excuse for non-payment. Linda seeks $*,* in unpaid rent from Ralph. Ralph and Linda verbally agree that Linda will accept $*,* in full payment of the unpaid rent, if Ralph agrees to pay the house's gas bill (about $*-* per month) for the remainder of the lease. Which of the following statements is most accurate? • Linda still can sue for the remaining back rent owed. • Linda cannot sue for the remaining back rent owed.
The most accurate statement is: "Linda cannot sue for the remaining back rent owed." Based on their agreement, Ralph's new obligation to pay the gas bill serves as consideration for Linda accepting a lesser amount as full payment of the back rent.
Ralph rents a house in Staten Island from Linda for $*,* per month. Ralph pays for his own electricity usage, though Linda provides gas. The gas bill is usually about $*-* per month. The lease agreement is in a writing signed by both parties. The lease term is January *, * to January *, *. Unfortunately for Linda, Ralph did not pay his rent for January, February, March, or April of *. Ralph has no legal excuse for non-payment. Linda seeks $*,* in unpaid rent from Ralph. Ralph and Linda agree in a new signed writing that Linda will accept $*,* in full payment of the unpaid rent. Which of the following statements is most accurate? • Linda still can sue for the remaining back rent owed. • Linda cannot sue for the remaining back rent owed.
The most accurate statement is: "Linda cannot sue for the remaining back rent owed." They have made a new agreement in writing where Linda accepts a lesser amount ($*,*) as full payment for the unpaid rent.