Business Law Case - Steve and Tammy Case

Issues:

There are a few issues in this scenario. The first issue is whether or not Steve can sue Tammy (minor) for selling him the generator that broke after a week involving Fraud in the Inducement. Does this consist of fraud because she lied and stated it was the “best generator I’ve ever seen?” Does Tammy being a minor affect the terms of the contract? The second issue is whether or not Tammy’s counselor had a fiduciary relationship resulting in undue influence of her purchasing the gold that lost its value.

Law and Reasoning:

Tammy had a generator and knew that it had some problems. When buyer Steve asked if it was in good working order, she replied, “This is the best generator I’ve ever seen.” Based on the law bout fraudulent misrepresentation, it occurs when an assertion is made that is not in accord with the facts. The elements of fraud are 1) The wrongdoer made a false representation of material fact and 2) The wrongdoer intended to deceive the innocent party. Tammy committed the first and second elements of fraud because she made a false representation about the generator and intended to deceive Steve. The last two elements consist of 3) the innocent party justifiably relied on the misrepresentation and 4) the innocent party was injured. (Cheeseman, p.224). Steve relied on her misrepresentation and purchased the generator. Although Steve wasn’t necessarily injured, he lost his money and the generator broke. A type of fraud called Fraud in the Inducement occurs when one party knows what he or she is signing but has been fraudulently induced into entering the contract. (Cheeseman, p. 228).

When Tammy turns 18 she decides to use her leftover money from the generator to confide in a counselor. After her appointment, the counselor suggests she invests her money into gold and sets her up with a friend who sells it to her. The court may permit the decline of a contract based on the equitable doctrine of undue influence. The equitable doctrine pertaining the undue influence law claims its when one person takes advantage of another’s mental, emotional, or physical weakness and unduly persuades that person to enter into a party of contract. (Cheeseman, p. 228). The price of gold tumbles, and she wants her money back. The two elements to prove undue influence are 1) A fiduciary or confidential relationship must have existed between the parties and 2) The dominant party must have unduly used his or her influence to persuade the servient party to enter into a contract. (Cheeseman, p.228).

Conclusion from Reasoning:

The first issue concerns fraud in the inducement because the innocent party, Steve, knew what he was signing but was fraudulently induced to enter the contract. Steve wants to sue Tammy but he may not be able to for a few reasons. The first reason is that she is a minor at