Book Opener

Resulting LossYou may choose to enter into a contract as the result of false statementsmade by the other party. Unless you suffer loss as a result, however,you cannot win a lawsuit for fraud. For instance, if you paid afriend $75 for a CD player that was said to be “in perfect working order”and then discovered the track selection feature did not work, you havelost $75 and may make a claim for fraud. If, however, you agreed toaccept the CD player in exchange for a favor, such as helping your friendperform a community project, you suffered no monetary loss. In such asituation, you would not be legally entitled to make a claim for fraud.Innocent MisrepresentationSometimes a person will make an innocent statement that turns outto be false. However, that person honestly believed the statement wastrue at the time it was made. Such an act is a misrepresentation , oran untrue statement of facts, and the law gives you the right to rescindthe contract. You may not win damages if the false representation isinnocently made.Example 4. Fred bought a mountain bike from Matt, an acquaintanceat school. Matt said he believed the bike did not need anyrepairs. After a weekend ride at a local reservoir, Fred discoveredthe back wheel was severely misaligned. Fred could cancel thedeal and ask for his money back. He is not entitled to damagesbecause Mike genuinely believed the bike was in good shape.Reviewing What You Learned1. What are the elements of fraud?2. What is the difference between fraud andconcealment?3. What is the difference between fraud andinnocent misrepresentation?4. What is the difference between the remedyavailable for fraud and the remedy availablefor misrepresentation?Critical Thinking ActivityFraud Why do courts permit fraud to disruptgenuine agreement in a contractual setting?Legal Skills in ActionToo Good to Be True? You recently receiveda phone call from a travel agency offering avacation package to Europe for less than$200. To take advantage of the offer, youwere told to send $200 in cash within 24hours or to supply a credit card number onthe spot. Working in a small group with yourclassmates, discuss whether this sounds likea case of potential fraud. Begin by listing theelements of fraud.132 Unit 2: Entering Into Contracts