Jane Francois married Victor H. Francois. At the time of the marriage, Victor was a fifty-year-old bachelor living with his elderly mother, and Jane was a thirty-year-old, twice-divorced mother of two. Victor had a relatively secure financial portfolio; Jane, on the other hand, brought no money or property to the marriage.

The marriage deteriorated quickly over the next couple of years, with disputes centered on financial matters. During this period, Jane systematically gained a joint interest in, and took control of, most of Victor’s assets. Three years after they married, Jane contracted Harold Monoson, an attorney, to draw up divorce papers. Victor was unaware of Jane’s decision until he was taken to Monoson’s office, where Monoson presented for Victor’s signature a “Property Settlement and Separation Agreement.” Monoson told Victor that he would need an attorney, but Jane vetoed Victor’s choice. Monoson then asked another lawyer, Gregory Ball, to come into the office. Ball read the agreement and strenuously advised Victor not to sign it because it would commit him to financial suicide. The agreement transferred most of Victor’s remaining assets to Jane. Victor, however, signed it because Jane and Monoson persuaded him that it was the only way that his marriage could be saved. In October of the following year, Jane informed Victor that she had sold most of his former property and that she was leaving him permanently. Can Victor have the agreement set aside as a result of undue influence? Explain.

• Discuss Chapter problem dealing with the Jane and Victor Francois scenario.Can Victor’s financial portfolio be saved?
• What are arguments and Concepts that can be used by Victor?
• What are counter arguments that can be used by Jane?
• Who do you think Wins and Why?

Chapter Summary

Duress

Definition wrongful act or threat that overcomes the free will of a party

Physical Compulsion coercion involving physical force renders the agreement void

Improper Threats improper threats or acts, including economic and social coercion, render the contract voidable

Undue Influence

Definition taking unfair advantage of a person by reason of a dominant position based on a confidential relationship

Effect renders the contract voidable

Fraud

Fraud in the Execution a misrepresentation that deceives the other party as to the nature of a document evidencing the contract; renders the agreement void

Fraud in the Inducement renders the agreement voidable if the following elements are present:

False Representation positive statement or conduct that misleads

Fact an event that occurred or a thing that actually exists

Materiality misrepresentation that would be likely to induce a reasonable person to manifest her assent

Knowledge of Falsity and Intention to Deceive (called scienter) and includes

actual knowledge,

lack of belief in the statement’s truthfulness, or

reckless indifference to the statement’s truthfulness

Justifiable Reliance a defrauded party is reasonably influenced by the misrepresentation

Nonfraudulent Misrepresentation

Negligent Misrepresentation misrepresentation made without knowledge of its falsity and without due care in ascertaining its truthfulness; renders the contract voidable

Innocent Misrepresentation misrepresentation made without knowledge of its falsity but with due care; renders the contract voidable

Mistake

Definition an understanding that is not in accord with existing fact

Mutual Mistake both parties have a common but erroneous belief forming the basis of the contract; renders the contract voidable by either party

Unilateral Mistake courts are unlikely to grant relief unless the error is known or should be known by the nonmistaken party

Assumption of Risk of Mistake a party may assume the risk of a mistake

Effect of Fault upon Mistake not a bar to avoidance unless the fault amounts to a failure to act in good faith