American Contract Law for a Global Age, 2017a

As you read this unit, you may find it helpful to review the Restatement
provisions on fraud and misrepresentation (§§ 159-164), duress and undue influence
(§§ 174-177) and mistake (§§ 151-154).
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Cases and Materials
ALABI v. DHL AIRWAYS, INC.
Superior Court of Delaware, New Castle
583 A.2d 1358 (Del. Super. 1990)
HERLIHY, J.
[DHL was an express package delivery service. In Philadelphia, Mabayomije
Alabi—who had regularly used DHL’s services for more than two years—allegedly
put $15,000 in cash in a DHL envelope to be sent to London. DHL required customers
to generally describe the contents of envelopes in a box on the shipping contract.
Because DHL’s terms and conditions prohibited accepting or shipping cash, Alabi
wrote “documents relating to school bills” in the box, and sealed the package before
handing it over to DHL, which was otherwise unaware of its contents. Alabi was
required to certify that “the article in the shipment is properly described and is not
an item “which DHL has declared to be unacceptable” for shipment. Alabi inquired if
the package could be insured for $15,000; DHL said that its maximum insurance
value was $10,000. Alabi paid $76 for shipment and for the $10,000 in insurance.
When the envelope arrived in London, it disappeared from the DHL storage area.
Police were called in, but the package and its contents were never found. Alabi
claimed that DHL was negligent, and demanded the $15,000, plus punitive damages.]
DHL seeks summary judgment claiming plaintiff’s contracts with it are
voidable due to his alleged misrepresentation of the contents of the envelope. A
contract may be voidable on the basis of misrepresentation, be it a fraudulent or an
innocent misrepresentation. Norton v. Poplos, 443 A.2d 1 (Del. Super. 1982);
Restatement (Second) of Contracts § 164. As such, misrepresentation can be asserted
as an affirmative defense to an action on the contract.
The Restatement (Second) of Contracts provides probably the clearest
discussion of the elements that need be shown to prevail when asserting
misrepresentation as a defense. In order for a contract to be voidable, a party must
show all four of the following elements: (1) that there was a misrepresentation; (2)
that the misrepresentation was either fraudulent or material; (3) that the
misrepresentation induced the recipient to enter into the contract; and (4) that the
recipient’s reliance on the misrepresentation was reasonable. Rest. 2d § 164.
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UNIT 15: ASSENT-BASED DEFENSES 285