Английский язык для юристов. Предпринимательское право

– undue influence – злоупотребление влиянием; недолжное влияние

Each party to a contract is protected from the chicanery of the other or from certain mistakes that may have crept into their agreement and destroyed mutual assent. If mutual assent has been destroyed, the contract is said to be a defective agreement, and that party is no longer bound to the terms of the agreement. A defective agreement can arise as a result of fraud, misrepresentation, mutual mistake, duress, or undue influence.

A wrongful statement, action, or concealment pertinent to the subject matter of a contract knowingly made to damage the other party defines fraud. If proved, fraud destroys any contract and makes the wrongdoer liable (i.e., legally responsible) to the injured party for all losses that result.

To destroy mutual assent on a claim of active or passive fraud, the complaining, or innocent, party must prove the existence of five elements:

1. The complaining party has to show that the other party made a false representation about some material fact (i.e., an important fact, a fact of substance) involved in the contract. A material fact is very crucial to the terms of the contract.

2. It must be demonstrated that the other party made the representation knowing of its falsity.

3. It must be revealed that the false representation was intended to be relied upon by the innocent party.

4. The complaining party must demonstrate that there was a reasonable reliance on the false representation.

5. It must be shown that the innocent party actually suffered some loss by relying on the false representation after entering the contract.

When one party to a contract makes a false statement intended to deceive the other party and thus leads that party into a deceptively based agreement, active fraud occurs.

To be fraudulent, statements must involve facts.

In contrast, passive fraud, which is generally called concealment or nondisclosure, occurs when one party does not offer certain facts that he or she is under an obligation to reveal. If this passive conduct is intended to deceive and does, in fact, deceive the other party, fraud results.

A fiduciary relationship is a relationship based upon trust. Such a relationship exists between attorneys and clients, guardians and wards, trustees and beneficiaries, and directors and a corporation. If one party is in a fiduciary relationship with another party, then an obligation arises to reveal what otherwise might be withheld when the two parties enter an agreement.

A false statement made innocently with no intent to deceive is called misrepresentation. Innocent misrepresentation makes an existing agreement voidable, and the complaining party may demand rescission. Rescission means that both parties are returned to their original positions before the contract was entered into. Unlike cases based on fraud, which allow rescission and damages, cases based on innocent misrepresentation allow only rescission and not money damages.

When there has been no real meeting of the minds because of a mistake, mutual assent was never achieved and the agreement may be rescinded. As in misrepresentation, mistake permits rescission.

Some mutual mistakes are universally accepted as grounds for rescission. Others can give rise to lawsuits but not in all courts or in all jurisdictions. Among them are:

1. Mistakes as to Description. When both parties are mistaken in the identification and description of subject matter, a mutual mistake exists, and rescission will be granted.

2. Mistakes as to Existence. Proof that the subject matter had been destroyed before agreement was made also gives grounds for rescission. The agreement would be voidable if it were proved that just before acceptance the subject matter had been destroyed.

3. Mistakes as to Value. When two parties agree on the value of the subject matter and later find that they were both mistaken, a mutual mistake of opinion, not of fact, has occurred. Mutual mistakes of opinion are not grounds for rescinding a contract.

4. Mistakes Through Failure to Read a Document. Failure to read a document or the negligent reading of a document does not excuse performance on the ground of a mistaken understanding of the document's contents.

5. Mistakes of Law. Misunderstandings of existing laws do not give grounds for rescission; in other words, ignorance of the law is no excuse. Rescission may be allowed, however, when mistakes have related to the law of another jurisdiction.

Duress and undue influence rob a person of the ability to make an independent, well-reasoned decision to enter a contractual relationship freely. Duress may be viewed as an action by one party that forces another party to do what need not otherwise be done. Duress forces a person into a contract through the use of physical, emotional, or economic threats. In contrast, undue influence involves only the use of excessive pressure, and also requires the existence of a confidential relationship. Undue influence should not be confused with persuasion or a subtle form of inducement.

Either violence or the threat of violence against an individual or that person's family, household, or property is physical duress. Emotional duress arises from acts or threats that would create emotional distress in the one on whom they are inflicted.

A threat of a business nature that forces another party without real consent to enter a commercial agreement is called economic duress, or business compulsion. The court will rule the contract voidable on grounds of economic duress if the plaintiff can prove the existence of three elements:

1. The complaining party must first show that the other party was responsible for placing the complainant in a precarious economic situation and that the other party acted wrongfully in doing so.

2. The complainant must also show that there was no alternative other than to submit to the wrongful contractual demands of the party.

3. The innocent party must also show that he or she acted reasonably in entering the contract.

Exercise 1. Comprehension questions:

1. In what cases the wrongful statement is not a fraud?

2. What is the main difference between active fraud and passive fraud?

3. What is fiduciary relationship?

4. What does rescission mean?

5. What are the kinds of mutual mistakes?

6. What is the difference between duress and undue influence?

7. What do duress and undue influence have in common?

8. What does undue influence require?

9. Are persuasion and subtle inducement considered to be undue influence?

Exercise 2. Find in the text English equivalents to the following:

Понуждение; укрывательство; принуждение; фидуциарные отношения; мошенничество; существенный факт; введение в заблуждение; искажение фактов; обоюдное согласие, совпадение намерений сторон; злоупотребление влиянием; недолжное влияние.

Exercise 3. Consult recommended dictionaries and give words or phrases to the following definitions:

Обоюдное согласие сторон; расторжение договора по обоюдному согласию; изменение отдельных пунктов договора; лицо, уполномоченное собственником; предусмотрены любые формы взаимозачетов; вправе изменить размер платы; критерии ничтожности и оспоримости сделок; заинтересованное лицо; отсутствие согласия; нарушение прав и законных интересов; отсутствие вещных прав; неуполномоченное лицо; конклюдентные действия; распространяется на отношения; оспариваемый договор.

Exercise 4. Be ready to talk on one of the following topics:

1. List the elements that must be proved to establish fraud.

2. Identify situations that can give rise to claims of passive fraud.