MBE Rules · Contracts
Misrepresentation
The rule
A contract is voidable if a party's assent was induced by a misrepresentation that was (1) fraudulent OR material, and (2) justifiably relied upon. Fraudulent: knowing or reckless. Material: would likely induce a reasonable person to assent.
In plain English
If someone lies or makes a big mistake about something important in a contract, and the other person believes it and agrees because of it, they can back out of the deal.
Worked example
The seller tells the buyer a car has never been in an accident, knowing it's false. The buyer purchases the car based on this statement. The buyer can void the contract because of the seller's misrepresentation.
Memory hook
Misrep: Fraud fools, material matters. Voidable if mislead by deceit or something a reasonable person would care about.
The trap
Students think: any lie voids a contract. Wrong, because it must be fraudulent or material. The actual test is if it would induce a reasonable person to assent.
How examiners test it
The MBE loves: seller makes false statement about product quality. Trap: students miss that if the buyer reasonably relies, it's voidable, even if the lie wasn't intentional.
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