BASIC RULES CONTRACTS

FRAUDULENT MISREPRESENTATION:
The elements of frauulent m!sre"resentat!on are as follo#s:
$% a false mater!al statement of fa&t
'% mae #!th !ntent to e&e!(e )s&!enter*
+% rel!an&e ,- the !nno&ent "art-
.% the !nno&ent "art- !s /ust!f!e !n rel-!n0 on the false mater!al statement
1% ama0es )not !n all s!tuat!ons*
Please note that frauulent m!sre"resentat!on !s a tort2 that !t !s !t !s a &!(!l #ron0% It !s
not a 3 an has noth!n0 to o #!th 3 la# other than to ser(e to "erm!t a "art- to a(o! a
3 on the 0rouns that there #as frauulent m!sre"resentat!on%
I al#a-s test on th!s &on&e"t% 4ou &an rea more a,out !t !n &ha"ter 12 #h!&h #e #on5t
&o(er unt!l near the en of the semester%
6ere are the m!sta7es stuents ma7e #!th th!s rule:
$% -ou fa!l to state the &om"lete rule
'% -ou feel s-m"ath- for the !nno&ent "art- an !0nore the fa&ts !n orer to arr!(e at
a &on&lus!on -ou l!7e
+% -ou ne0le&t the se&on half of the rule2 that !s2 the m!nute -ou see that someone
has l!e2 -ou for0et to &ons!er #hether the !nno&ent "art- rel!e on the l!e an
then -ou for0et to &ons!er !f the- #ere /ust!f!e !n rel-!n0 on the l!e%
6ere !s an e8am"le:
Su""ose that Mr% M&Don!e e&!es to ha(e a "art- at h!s house an !n(!te the ent!re
BLA9 on:l!ne &lass2 that !s us2 all of us% 6e f!ns out that I lo(e &heese an th!n7s !t
#oul ,e n!&e to ha(e a reall- 0reat sele&t!on of &heese at the "art-% 6e 0oes to the lo&al
#!ne an &heese store an as7s a,out an- unusual &heeses the- m!0ht ha(e% The &ler7
tells h!m that !f he 0oes to the en &a" on the th!r a!sle an o"ens the !s"la- &ase there2
he #!ll ,e a,le to sele&t a "!e&e of (er- unusual &heese% It !s &heese that !s flo#n !n fresh
e(er- s!n0le a- from the MOON%
6e ,u-s the &heese% Then he f!ns out that !t !s /ust "la!n2 e(er- a- ;ueso ,lan&o flo#n
!n fresh e(er- a- from Colom,!a%
No#2 let5s ta7e !t element ,- element:
9as there a false mater!al statement of fa&t mae<
4es2 ,- the &ler7% 6e sa! the &heese #as from the moon%
D! the &ler7 sa- !t #as &heese from the moon 7no#!n0 that !t #as not2 that !s2 !nten!n0
to e&e!(e Mr% M&Don!e<
I th!n7 #e &an all a0ree that -es2 he sa! th!s !n orer to !nu&e Mr% M&Don!e to ,u- the
&heese%
D! Mr M&Don!e rel- on the false statements<
I th!n7 #e &an all a0ree that -es2 he rel!e ,e&ause he ,ou0ht the &heese%
9as he /ust!f!e !n ,el!e(!n0 the &ler7 that the &heese #as from the moon<
No2 I on5t th!n7 he #as an I feel &erta!n -ou a0ree%
So2 remem,er2 that -ou must "ro(!e the ent!re rule an anal-s!s on -our "a"ers an
e8ams !f -ou ha(e a ;uest!on on frauulent m!sre"resentat!on%
STATUTE OF FRAUDS:
Th!s !s another rule that stuents &ons!stentl- 0et #ron0% So2 I am 0o!n0 to tell -ou #here
-ou 0o #ron0%
$% -ou ne0le&t to state the COMPLETE RULE
'% -ou o not o a &om"lete anal-s!s
The rule !s more &om"le8% It has man- "arts%
The statute of fraus #as ena&te to "re(ent frau on the &ourt% It oes not &on&ern
frau% In other #ors2 !t has noth!n0 to o #!th frau2 !ts "ur"ose !s to PRE=ENT frau%
So ,e &areful% 9hat #as e&!e #as that ,e&ause some "eo"le &oul &heat others ,-
ma7!n0 &la!ms that #ere untrue an then "a-!n0 #!tnesses to l!e a,out the &la!m2 &erta!n
&ontra&ts #oul not ,e ENFORCED unless the- #ere E=IDENCED ,- a #r!t!n0 s!0ne
,- the "art- to ,e &har0e #!th enfor&ement of the 3%
If -ou enter !nto a 3 that falls 9IT6IN the SOF an !t !s not e(!en&e ,- a #r!t!n02 !t
oes not ma7e the 3 (o!2 !t means the 3 !s UNENFORCEABLE% The 3 ma- ,e (al!
,ut !t !s not enfor&ea,le% A (o! 3 !s no 3 at all%
No# let5s loo7 at th!s rule &arefull-% F!rst of all !t oes not sa- all 3s ha(e to ,e !n
#r!t!n0% It oes not sa- an- 3 has to ,e !n #r!t!n0 !n the sense of a full- #r!tten out 3%
9hat !t sa-s !s that !t must ,e e(!en&e ,- a #r!t!n0% Remem,er Lu&- (% >ehmer< 6e
s!m"l- too7 a s&ra" of "a"er an #rote o#n a fe# #ors an s!0ne !t% That !s #hat #e
mean ,- e(!en&e ,- a #r!t!n0% Of &ourse2 !f #e ha(e a full- #r!tten out 32 that !s all to
the 0oo ,ut #e on5t nee !t%
It also DOES NOT re;u!re T9O s!0natures% It onl- re;u!res one2 the one of the "art-
#ho !s &la!m!n0 there !s no 3 or !s tr-!n0 to 0et out of the 3% ?enerall- #hen "eo"le
enter !nto 3s the- on5t 7no# #ho !s 0o!n0 to tr- to 0et out or #ho !s 0o!n0 to ,a&7 out2
so !t !s a 0oo !ea to 0et ,oth or all "art!es to s!0n ,ut for statute of frau )SOF*
"ur"oses2 #e onl- nee one2 ,ut !t must ,e the r!0ht one%
The ne8t ;uest!on !s2 #hat t-"es of 3s fall 9IT6IN the SOF< There are t-"!&all- f!(e
!fferent t-"es:
$% 3s for an !nterest !n lan one that !n(ol(es transferr!n0 a&tual r!0hts !n the
lan to someone
'% 3s !n(ol(!n0 &ollateral "rom!ses &o:s!0n!n0 on a note
+% 3s #h!&h ,- the!r terms &annot ,e "erforme #!th!n one -ear from the ate of
format!on #at&h out: the 7e- #ors here are @,- !ts terms%A
.% 3s !n &ontem"lat!on of marr!a0e "re:nu"t!al
1% 3s for the sale or lease of ?OODS of B1CC or more #at&h outD Ma7e sure
the 3 !s for 0oos% In(ar!a,l-2 -ou remem,er the B1CC tr!00er ,ut on5t
,other to ma7e sure the 3 !s for 0oos% For &lass "ur"oses2 #e #!ll lea(e th!s
rule to &ha"ter $E an !s&uss !t then%
No#2 then2 f!rst off ,e sure -ou !ent!f- the t-"e of 3 ,efore -ou 0o !nto the rule so that
-ou use the &orre&t rule% For !nstan&e2 oes the 3 !n(ol(e 0oos< If so2 then loo7 for the
tr!00er amount% If !t oesn5t then the ollar amount of the 3 !s !rrele(ant to #hether the
statute a""l!es% It ma- ,e rele(ant for some other !ssue ,ut not the SOF%