Fraud Invalidates a Contract

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  • Topic: Damages, Equity, Judicial remedies
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  • Published : December 2, 2012
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Week Four Assignment
By: Kelly Sciberras
November 25, 2012
DeVry University
Business Law – BUSN420

Week Four Assignment

As our textbook explains fraud invalidates a contract. “The presence of fraud affects the authenticity of the innocent party’s consent to a contract. When an innocent party is fraudulently induced to enter into a contract, the contract usually can be avoided because she or he has not voluntarily consented to the terms. Normally, the innocent party can either cancel the contract and be restored to her or his original position or enforce the contract and seek damages for harms resulting from the fraud (Miller 281).” Generally, fraudulent misrepresentation refers only to misrepresentation that is consciously false and is intended to mislead another. Typically, fraud involves three elements; a misrepresentation of a material fact must occur, secondly there must be intent to deceive, and lastly the innocent party must justifiably rely on the misrepresentation. To collect damages, a party must have been harmed as a result of the misrepresentation. Fraudulent misrepresentation can also occur in the online environment. Undue Influence and Duress

Undue influence arises from relationships in which one party can greatly influence another party, thus overcoming that party’s free will. A contract entered into under excessive or undue influence lacks voluntary consent and is therefore voidable. The essential feature of undue influence is that the party being taken advantage of does not, in reality, exercise free will in entering into a contract. It is not enough that a person is elderly or suffers from some mental or physical impairment. There must be clear and convincing evidence that the person did not act out of her or his free will Miller explains. Forcing a party to enter into a contract because of the fear created by threats is referred to as duress. In addition, blackmail or extortion to induce consent to a contract constitutes duress....
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