Transactions With Persons Other Than Clients
Misrepresentation
[1] A lawyer is required to be truthful when dealing with others on a client’s behalf, but generally has no affirmative duty to inform an opposing party of relevant facts. A misrepresentation can occur if the lawyer incorporates or affirms a statement of another person that the lawyer knows is false. Misrepresentations can also occur by partially true but misleading statements or omissions that are the equivalent of affirmative false statements. For dishonest conduct that does not amount to a false statement or for misrepresentations by a lawyer other than in the course of representing a client, see Rule 8.4.
Statements of Fact
[2] This Rule refers to statements of fact. Whether a particular statement should be regarded as one of fact can depend on the circumstances. Under generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or value placed on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim are ordinarily in this category, and so is the existence of an undisclosed principal except where nondisclosure of the principal would constitute fraud. Lawyers should be mindful of their obligations under applicable law to avoid criminal and tortious misrepresentation.
Crime or Fraud by Client
[3] Under Rule 1.2(d), a lawyer is prohibited from counseling or assisting a client in conduct that the lawyer knows is criminal or fraudulent. Paragraph (b) states a specific application of the principle set forth in Rule 1.2(d) and addresses the situation where a client’s crime or fraud takes the form of a lie or misrepresentation. Ordinarily, a lawyer can avoid assisting a client’s crime or fraud by withdrawing from the representation. Sometimes it may be necessary for the lawyer to give notice of the fact of withdrawal and to disaffirm an opinion, document, affirmation or the like. In extreme cases, substantive law may require a lawyer to disclose information relating to the representation to avoid being deemed to have assisted the client’s crime or fraud. If the lawyer can avoid assisting a client’s crime or fraud only by disclosing this information, then under paragraph (b) the lawyer is required to do so, unless the disclosure is prohibited by Rule 1.6.
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LEGAL ASSENT
- A promise to buy or sell that courts will require parties to obey
-without legal assent contract could be voidable, in which case it can be rescinded, or
canceled, permitting the person who canceled the contract to require the return of
everything she gave the other party. She must herself return whatever she has received
-Mistake: When people agree to buy or sell, they do so with a particular understanding
about the nature of the good or service they are about to exchange. However, one or
both parties may think they consented to exchange a particular thing only to find out
later that no meeting of the minds had occurred.
-Mistake of fact: erroneous belief about the facts of the contract at the time the contract
is concluded
-Unilateral: error by one party about material fact
-mutual: error shared by both parties to the agreement
-For a mutual mistake to interfere with legal consent there must be, A basic assumption
about the subject matter of the contract,A material effect on the agreement.
An adverse effect on a party who did not agree to bear the risk of mistake at the time of
the agreement.
-Misrepresentation: is an untruthful assertion by one of the parties about that material
fact; it prevents the parties from having the mental agreement necessary for a legal
contract.
-The courts insist on a meeting of the minds for a valid contract. Thus, they might
rescind a contract even though the person making the false assertion was entirely
innocent of any intentional deception.
-if the marketing materials created by a company are seen as being inaccurate or
appear to misrepresent what a product truly is or what benefits the product offers,
consumers may attempt to take legal action.
- Innocent Misrepresentation: false statement about a material fact that the person
making it believed to be true, misled can rescind but not sue for damages
- negligent Misrepresentation: negligent, untruthful assertion of material fact by
contracting party, aggrieved party can rescind contract and sue for damages
Fraudulent/ Intentional misrepresentation: intentional, untruthful assertion of material
fact by contracting party, aggrieved party can rescind contract and sue for damage
Requirements for fraudulent misrepresentation: A false statement about a past or
existing fact that is material to the contract,Intent to deceive, which can be inferred from
the particular circumstances.Then add a third necessary element:
Justifiable reliance on the false statement by the innocent party to the agreement: