Business Law

Business

Quiz 14 :
Capacity and Legality

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Quiz 14 :
Capacity and Legality

Undue Influence: In the case of Juan v. Samuel, a trial court would most likely find in favor of Juan for Samuel's undue influence. Undue influence occurs when parties in a special relationship like Juan, who is totally dependent upon Samuel and deprived of his free will to sell the tract of land in question. This type of agreement is voidable at the option of Juan. Juan fears losing the support of Samuel, so he enters into an agreement that is obviously detrimental to Juan. In this situation, Samuel had a fiduciary duty to Juan that is breached when he demands a concession from Juan in order to continue the duty. Hence, Juan may set the contract aside at his option.

Rescission based on undue influence Yes, M can obtain rescission of the contract based on undue influence. Undue influence arises from relationships in which one party can greatly influence another party, thus overcoming that party's free will. As C had been a caregiver to M's mother, she can influence her to make M buy her house. Even if the sale to J had been completed before her death, J would have obtained rescission based on undue influence. As a contract entered into under excessive or undue influence lacks voluntary consent and is therefore voidable. Therefore, J can obtain rescission of the contract.

Fraudulent Misrepresentation: In the case of Tanner v. Grano, a trial court would most likely find in favor of Grano because the elements of fraud are not present in this case. The elements for fraud are: 1. A knowing intent to deceive. 2. Misrepresentation of material facts. 3. The reliance of an innocent party on the misrepresentation. 4. Damage or injury resulting from the reliance on the misrepresentation. Grano knowingly misrepresented the net profit made by the motel in the previous year. His statement regarding an income for the following year was a prediction and not a misrepresentation. In defense of this misrepresentation, Grano may present evidence showing that Tanner had the motel books before the sale and therefore had access to the truth provided by Grano. Tanner cannot show reliance on the misrepresentation. Grano did not have a fiduciary relationship with Tanner and was not obligated to disclose the fact of the bypass. That information was readily available at the local Planner's office and because Grano did not have a duty to disclose public information this fact is not an element of fraud. Tanner may not be able to recover his investment in the motel based on fraud because the hypothetical does not meet the standard of fraud.

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