Author Question: Fraudulent Misrepresentation. William and Lilly Adams obtained a divorce in 1985 and began the ... (Read 56 times)

Caiter2013 · **on:** Jun 24, 2018

Fraudulent Misrepresentation. William and Lilly Adams obtained a divorce in 1985 and began the process of dividing their property. They inventoried their worldly possessions and decided that certain property would go to Mrs. Adams and the remainder, including the debts on the community property, would remain with Mr. Adams. Mrs. Adams later testified in legal proceedings that Mr. Adams had consistently told her that she must take the property as offered and agree not to seek alimony, that Mr. Adams had threatened to declare bankruptcy and force her to accept the responsibility for her share of the community debts if she did not agree, and that Mr. Adams frequently cursed her but did not in any way threaten physical harm. Mrs. Adams also testified that she had examined the subsequent formal community property settlement and that she basically understood it. At that time, she had casually spoken to two different attorneys about the settlement contract, but because both attorneys said that they would need time to investigate before giving advice, she went ahead and signed it. She now claims that she had signed the agreement under duress and because of fraudulent misrepresentation. Discuss whether Mrs. Adams can rescind the settlement contract on these grounds.

Question 2

The duties of a principal to an agent do not include:
a. cooperating with the agent
b. paying agent for services rendered
c. reimbursing the agent for any reasonable expense
d. indemnifying the agent for legal liability incurred in completing the purpose of the agency e. all of the other choices are required

cloudre37 · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

Fraudulent misrepresentation
Mrs. Adams cannot rescind her contract based on fraud. Fraud is the intentional mis-representation or suppression of the truth made to obtain an unjust advantage for one party. A claim of fraud also requires that the innocent party justifiably rely on these misrepresentations. Fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill. Mrs. Adams claimed that she reasonably relied upon Mr. Adams' statements, but these representations could easily have been investigated. Mrs. Adams failed to hire an attorney to investigate or contest the settlement arrangement that her husband put forward. Also, the assets of the community property far exceeded the debts; so, Mr. Adams' threat of bankruptcy was not a serious consideration at the time the contract was made. Thus, she unreasonably relied upon Mr. Adams' representations and cannot rescind the settlement agreement because of fraud.
Nor can Mrs. Adams rescind her contract based on duress. Duress requires a reasonable fear of unjust and considerable injury to a party's person, property, or reputation. Although disposition and personal circumstance of a party must be taken into account in determining reasonableness of fear, emotional strain would not be relevant. Mrs. Adams claimed that the threat of bankruptcy and being faced with a huge debt constituted duress. A threat of doing a lawful act or a threat of exercising a legal right, however, does not constitute duress. Mr. Adams did not threaten Mrs. Adams with personal harm and had a legal right to have Mrs. Adams take on part of the community debt. He could also legally exercise his right to put the property into bankruptcy. Thus, Mrs. Adams cannot rescind her contract on the basis of duress.

Answer to Question 2

e