[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.00,0:00:02.16,Default,,0000,0000,0000,,>> We now shift our attention from
Dialogue: 0,0:00:02.16,0:00:07.18,Default,,0000,0000,0000,,affirmative misrepresentations of fact\Nto concealment and non-disclosure,
Dialogue: 0,0:00:07.18,0:00:12.28,Default,,0000,0000,0000,,other instances in which courts\Nregulate improper bargaining tactics.
Dialogue: 0,0:00:12.28,0:00:16.60,Default,,0000,0000,0000,,Section 160 of the restatement\Ndeals with concealment,
Dialogue: 0,0:00:16.60,0:00:19.53,Default,,0000,0000,0000,,instances in which one party takes
Dialogue: 0,0:00:19.53,0:00:24.42,Default,,0000,0000,0000,,an action that is likely to keep the\Nother party from learning some fact.
Dialogue: 0,0:00:24.42,0:00:28.85,Default,,0000,0000,0000,,That section states that concealment\Nis dealt with as equivalent of
Dialogue: 0,0:00:28.85,0:00:33.80,Default,,0000,0000,0000,,the wrongdoers affirmatively stating\Nthat the concealed fact does not exist.
Dialogue: 0,0:00:33.80,0:00:39.46,Default,,0000,0000,0000,,In other words, concealment is dealt\Nwith as a type of misrepresentation.
Dialogue: 0,0:00:39.46,0:00:42.14,Default,,0000,0000,0000,,For example, if a home seller
Dialogue: 0,0:00:42.14,0:00:44.87,Default,,0000,0000,0000,,moves a heavy piece of\Nfurniture over a portion of
Dialogue: 0,0:00:44.87,0:00:48.29,Default,,0000,0000,0000,,the living room floor that was\Ndamaged by termites to keep
Dialogue: 0,0:00:48.29,0:00:52.14,Default,,0000,0000,0000,,prospective buyers from learning\Nabout prior termite infestation,
Dialogue: 0,0:00:52.14,0:00:56.39,Default,,0000,0000,0000,,the law will treat that action as\Nif the homeowner affirmatively
Dialogue: 0,0:00:56.39,0:01:01.91,Default,,0000,0000,0000,,stated that the house never had\Ntermites, an obvious misrepresentation.
Dialogue: 0,0:01:01.91,0:01:06.94,Default,,0000,0000,0000,,Non-disclosure is dealt with in\NSection 161 of the restatement.
Dialogue: 0,0:01:06.94,0:01:11.63,Default,,0000,0000,0000,,Sometimes, rather than affirmatively\Nmisrepresenting facts,
Dialogue: 0,0:01:11.63,0:01:14.84,Default,,0000,0000,0000,,a party remains silent under\Ncircumstances that lead
Dialogue: 0,0:01:14.84,0:01:19.90,Default,,0000,0000,0000,,the other party to wrongly assume that\Ncertain facts exist or do not exist.
Dialogue: 0,0:01:19.90,0:01:22.76,Default,,0000,0000,0000,,This is an instance of non-disclosure.
Dialogue: 0,0:01:22.76,0:01:26.64,Default,,0000,0000,0000,,Non-disclosure presents a particular\Nchallenge to contract law
Dialogue: 0,0:01:26.64,0:01:31.54,Default,,0000,0000,0000,,because of the age-old doctrine\Nof caveat emptor, buyer beware.
Dialogue: 0,0:01:31.54,0:01:34.61,Default,,0000,0000,0000,,Each party is assumed\Nto be looking out for
Dialogue: 0,0:01:34.61,0:01:37.68,Default,,0000,0000,0000,,his or her own interests\Nat the bargaining table.
Dialogue: 0,0:01:37.68,0:01:40.66,Default,,0000,0000,0000,,If a party fails to\Ninquire about an issue,
Dialogue: 0,0:01:40.66,0:01:44.60,Default,,0000,0000,0000,,that's his problem, so long\Nas he is not been lied to.
Dialogue: 0,0:01:44.60,0:01:47.12,Default,,0000,0000,0000,,In other words, so long\Nas the other party does
Dialogue: 0,0:01:47.12,0:01:50.14,Default,,0000,0000,0000,,not affirmatively misrepresent some fact,
Dialogue: 0,0:01:50.14,0:01:52.79,Default,,0000,0000,0000,,why should the law impose an obligation on
Dialogue: 0,0:01:52.79,0:01:54.92,Default,,0000,0000,0000,,the silent party to affirmatively
Dialogue: 0,0:01:54.92,0:01:57.59,Default,,0000,0000,0000,,disclose the weakness in\Nhis bargaining position?
Dialogue: 0,0:01:57.59,0:02:00.38,Default,,0000,0000,0000,,It is against the general idea of
Dialogue: 0,0:02:00.38,0:02:04.37,Default,,0000,0000,0000,,caveat emptor that the restatement\Nattempts to draw clear boundaries
Dialogue: 0,0:02:04.37,0:02:07.49,Default,,0000,0000,0000,,around those instances\Nin which one party is
Dialogue: 0,0:02:07.49,0:02:11.36,Default,,0000,0000,0000,,required to speak up and\Naffirmatively disclose facts.
Dialogue: 0,0:02:11.36,0:02:14.84,Default,,0000,0000,0000,,The instances generally\Ninvolve cases that directly
Dialogue: 0,0:02:14.84,0:02:19.01,Default,,0000,0000,0000,,implicate the honesty and fairness\Nof the bargaining process.
Dialogue: 0,0:02:19.01,0:02:22.27,Default,,0000,0000,0000,,Let's explore Section 161.
Dialogue: 0,0:02:22.27,0:02:25.64,Default,,0000,0000,0000,,The first thing to notice\Nis that if a party has
Dialogue: 0,0:02:25.64,0:02:29.56,Default,,0000,0000,0000,,an obligation to disclose\Na fact and fails to do so,
Dialogue: 0,0:02:29.56,0:02:32.93,Default,,0000,0000,0000,,the restatement treats\Nthat party as having made
Dialogue: 0,0:02:32.93,0:02:36.56,Default,,0000,0000,0000,,an affirmative assertion that\Nthe fact does not exist.
Dialogue: 0,0:02:36.56,0:02:43.49,Default,,0000,0000,0000,,In effect, a misrepresentation under the\Ndefinition set forth in Section 159.
Dialogue: 0,0:02:43.49,0:02:46.82,Default,,0000,0000,0000,,The first instance in which\Na party is required to
Dialogue: 0,0:02:46.82,0:02:50.27,Default,,0000,0000,0000,,disclose a fact is when\Nthat party has previously
Dialogue: 0,0:02:50.27,0:02:53.45,Default,,0000,0000,0000,,made some assertion and\Nknows that failure to speak
Dialogue: 0,0:02:53.45,0:02:57.54,Default,,0000,0000,0000,,up will render his prior\Nassertion a misrepresentation.
Dialogue: 0,0:02:57.54,0:02:59.09,Default,,0000,0000,0000,,Let's take an example,
Dialogue: 0,0:02:59.09,0:03:02.24,Default,,0000,0000,0000,,one similar to Hill v.\NJones in our casebook.
Dialogue: 0,0:03:02.24,0:03:05.03,Default,,0000,0000,0000,,Let's assume the following exchange takes
Dialogue: 0,0:03:05.03,0:03:08.11,Default,,0000,0000,0000,,place between a homeowner\Nand a potential buyer.
Dialogue: 0,0:03:08.11,0:03:12.48,Default,,0000,0000,0000,,Further assume that several\Nyears prior to this exchange,
Dialogue: 0,0:03:12.48,0:03:16.04,Default,,0000,0000,0000,,the homeowner discovered the\Nearly stages of termite damage,
Dialogue: 0,0:03:16.04,0:03:17.98,Default,,0000,0000,0000,,but it was treated aggressively.
Dialogue: 0,0:03:17.98,0:03:21.53,Default,,0000,0000,0000,,Obviously, the potential buyer\Nunderstood the homeowner is
Dialogue: 0,0:03:21.53,0:03:25.22,Default,,0000,0000,0000,,saying that the house had never\Nbeen infested with termites.
Dialogue: 0,0:03:25.22,0:03:29.24,Default,,0000,0000,0000,,Under such circumstances,\NSection 161 imposes
Dialogue: 0,0:03:29.24,0:03:31.37,Default,,0000,0000,0000,,an obligation for the homeowner to speak
Dialogue: 0,0:03:31.37,0:03:33.94,Default,,0000,0000,0000,,up to correct the buyer's misperception.
Dialogue: 0,0:03:33.94,0:03:38.39,Default,,0000,0000,0000,,For the moment, we're going to\Nskip over subsection b and look to
Dialogue: 0,0:03:38.39,0:03:42.77,Default,,0000,0000,0000,,subsection c and d. Subsection c deals
Dialogue: 0,0:03:42.77,0:03:46.52,Default,,0000,0000,0000,,with instances in which it\Nbecomes clear to one party that
Dialogue: 0,0:03:46.52,0:03:48.30,Default,,0000,0000,0000,,the other party has mistaken
Dialogue: 0,0:03:48.30,0:03:51.82,Default,,0000,0000,0000,,understanding of certain provisions\Nof the proposed contract.
Dialogue: 0,0:03:51.82,0:03:53.24,Default,,0000,0000,0000,,The thinking is that,
Dialogue: 0,0:03:53.24,0:03:55.88,Default,,0000,0000,0000,,if one party is aware\Nthat the other party is
Dialogue: 0,0:03:55.88,0:03:58.94,Default,,0000,0000,0000,,confused as to the proposed\Nterms of a contract,
Dialogue: 0,0:03:58.94,0:04:04.07,Default,,0000,0000,0000,,it is incumbent upon that party to\Ncorrect a misunderstanding and not allow
Dialogue: 0,0:04:04.07,0:04:06.74,Default,,0000,0000,0000,,the other party to enter\Ninto the contract under
Dialogue: 0,0:04:06.74,0:04:11.06,Default,,0000,0000,0000,,some misperception as to what\Nthe proposed agreement requires.
Dialogue: 0,0:04:11.06,0:04:17.99,Default,,0000,0000,0000,,Note that subsections a and c are\Ninstances in which one party is,
Dialogue: 0,0:04:17.99,0:04:22.28,Default,,0000,0000,0000,,to some extent, responsible for the\Nother party's misunderstanding.
Dialogue: 0,0:04:22.28,0:04:25.04,Default,,0000,0000,0000,,In the case of subsection a,
Dialogue: 0,0:04:25.04,0:04:27.95,Default,,0000,0000,0000,,some prior assertion of one party has
Dialogue: 0,0:04:27.95,0:04:31.37,Default,,0000,0000,0000,,in some way led to the other\Nparty's misunderstanding.
Dialogue: 0,0:04:31.37,0:04:34.33,Default,,0000,0000,0000,,In the case of subsection c,
Dialogue: 0,0:04:34.33,0:04:36.83,Default,,0000,0000,0000,,the party upon which an obligation to
Dialogue: 0,0:04:36.83,0:04:40.42,Default,,0000,0000,0000,,disclose is being imposed is responsible,
Dialogue: 0,0:04:40.42,0:04:42.02,Default,,0000,0000,0000,,at least in part, for
Dialogue: 0,0:04:42.02,0:04:46.68,Default,,0000,0000,0000,,the proposed contractual language that\Nhas led to the other party's confusion.
Dialogue: 0,0:04:46.68,0:04:50.50,Default,,0000,0000,0000,,Subsection d deals with\Ninstances in which one party,
Dialogue: 0,0:04:50.50,0:04:54.58,Default,,0000,0000,0000,,by reason of being in a relation of\Ntrust and confidence to the other,
Dialogue: 0,0:04:54.58,0:04:58.49,Default,,0000,0000,0000,,has special heightened\Nobligations to that other party.
Dialogue: 0,0:04:58.49,0:05:02.07,Default,,0000,0000,0000,,Such relations arise an\Ninstances, for example,
Dialogue: 0,0:05:02.07,0:05:04.80,Default,,0000,0000,0000,,when one party is acting as a trustee,
Dialogue: 0,0:05:04.80,0:05:08.64,Default,,0000,0000,0000,,an agent, or a guardian on\Nbehalf of the other party.
Dialogue: 0,0:05:08.64,0:05:11.99,Default,,0000,0000,0000,,But the section applies even\Nto relationships that do
Dialogue: 0,0:05:11.99,0:05:15.68,Default,,0000,0000,0000,,not involve a legally imposed\Nfiduciary obligation,
Dialogue: 0,0:05:15.68,0:05:18.70,Default,,0000,0000,0000,,including relationships\Nbetween family members
Dialogue: 0,0:05:18.70,0:05:21.07,Default,,0000,0000,0000,,or between a physician and a patient.
Dialogue: 0,0:05:21.07,0:05:22.98,Default,,0000,0000,0000,,In such instances,
Dialogue: 0,0:05:22.98,0:05:24.92,Default,,0000,0000,0000,,the failure of the individual with
Dialogue: 0,0:05:24.92,0:05:27.50,Default,,0000,0000,0000,,the heightened obligation\Nto disclose a fact
Dialogue: 0,0:05:27.50,0:05:29.90,Default,,0000,0000,0000,,relevant to the other's\Ninterests will be considered
Dialogue: 0,0:05:29.90,0:05:32.58,Default,,0000,0000,0000,,an assertion that the fact doesn't exist.
Dialogue: 0,0:05:32.58,0:05:35.22,Default,,0000,0000,0000,,In other words, a misrepresentation.
Dialogue: 0,0:05:35.22,0:05:38.13,Default,,0000,0000,0000,,Subsection b is somewhat different.
Dialogue: 0,0:05:38.13,0:05:40.73,Default,,0000,0000,0000,,It is implicated in instances in which
Dialogue: 0,0:05:40.73,0:05:43.70,Default,,0000,0000,0000,,the party required to\Ndisclose some fact may
Dialogue: 0,0:05:43.70,0:05:45.38,Default,,0000,0000,0000,,shoulder no responsibility for
Dialogue: 0,0:05:45.38,0:05:49.69,Default,,0000,0000,0000,,the other party's confusion,\Nmisunderstanding, or misperception.
Dialogue: 0,0:05:49.69,0:05:52.70,Default,,0000,0000,0000,,Nonetheless, the restatement\Nin effect asserts
Dialogue: 0,0:05:52.70,0:05:55.61,Default,,0000,0000,0000,,that considerations of\Nhonesty and fair dealing
Dialogue: 0,0:05:55.61,0:05:59.09,Default,,0000,0000,0000,,require that in circumstances\Nin which disclosure
Dialogue: 0,0:05:59.09,0:06:02.76,Default,,0000,0000,0000,,would correct a mistake that goes\Nto the core of the contracts,
Dialogue: 0,0:06:02.76,0:06:07.06,Default,,0000,0000,0000,,a basic assumption on which the\Nparty is making the contract,
Dialogue: 0,0:06:07.06,0:06:09.98,Default,,0000,0000,0000,,one party must disclose facts that
Dialogue: 0,0:06:09.98,0:06:12.84,Default,,0000,0000,0000,,would correct the mistake and\Nunderstanding of the other party.
Dialogue: 0,0:06:12.84,0:06:17.39,Default,,0000,0000,0000,,Two considerations relevant to whether\Nthe obligation of a good faith and
Dialogue: 0,0:06:17.39,0:06:22.38,Default,,0000,0000,0000,,a good fair dealing require\Ndisclosure are, first,
Dialogue: 0,0:06:22.38,0:06:27.47,Default,,0000,0000,0000,,did one party incur some cost to\Nacquire the contested information such
Dialogue: 0,0:06:27.47,0:06:28.49,Default,,0000,0000,0000,,that it can be viewed as
Dialogue: 0,0:06:28.49,0:06:32.100,Default,,0000,0000,0000,,the party's property that does not have\Nto be shared with the other party?
Dialogue: 0,0:06:32.100,0:06:37.49,Default,,0000,0000,0000,,An example is where a seller of\Ncommercial property pays a consultant to
Dialogue: 0,0:06:37.49,0:06:39.23,Default,,0000,0000,0000,,study the future earning potential of
Dialogue: 0,0:06:39.23,0:06:42.55,Default,,0000,0000,0000,,the property in light of\Nprojected market trends.
Dialogue: 0,0:06:42.55,0:06:45.29,Default,,0000,0000,0000,,Even if the seller has\Ndecided to sell based
Dialogue: 0,0:06:45.29,0:06:48.00,Default,,0000,0000,0000,,on a bleak future assessment\Nby the consultant,
Dialogue: 0,0:06:48.00,0:06:52.96,Default,,0000,0000,0000,,fairness does not require that the\Nmarket trend study be disclosed.
Dialogue: 0,0:06:52.96,0:06:58.18,Default,,0000,0000,0000,,A second situation in which one party\Ndoes not have to disclose facts,
Dialogue: 0,0:06:58.18,0:07:01.84,Default,,0000,0000,0000,,even when such facts are relevant\Nto the core of the transaction,
Dialogue: 0,0:07:01.84,0:07:04.22,Default,,0000,0000,0000,,is when the facts are readily available
Dialogue: 0,0:07:04.22,0:07:06.58,Default,,0000,0000,0000,,to the other party through\Na diligent search.
Dialogue: 0,0:07:06.58,0:07:11.96,Default,,0000,0000,0000,,A good example is the classic\N1817 case of Laidlaw v Organ.
Dialogue: 0,0:07:11.96,0:07:14.57,Default,,0000,0000,0000,,In that case, the parties entered into
Dialogue: 0,0:07:14.57,0:07:17.94,Default,,0000,0000,0000,,a contract involving the\Nsale of a load of tobacco.
Dialogue: 0,0:07:17.94,0:07:21.74,Default,,0000,0000,0000,,The contract was made in New\NOrleans at a time before
Dialogue: 0,0:07:21.74,0:07:26.24,Default,,0000,0000,0000,,news of Treaty of Ghent ending the war\Nwith Britain had reached that city.
Dialogue: 0,0:07:26.24,0:07:28.86,Default,,0000,0000,0000,,The buyer's agent was, however,
Dialogue: 0,0:07:28.86,0:07:30.49,Default,,0000,0000,0000,,aware of the end of the war,
Dialogue: 0,0:07:30.49,0:07:32.93,Default,,0000,0000,0000,,the seller's agent was not.
Dialogue: 0,0:07:32.93,0:07:35.90,Default,,0000,0000,0000,,When the seller's agent\Nasked if there was any news
Dialogue: 0,0:07:35.90,0:07:39.36,Default,,0000,0000,0000,,calculated to enhance the\Nprice or value of the tobacco,
Dialogue: 0,0:07:39.36,0:07:41.50,Default,,0000,0000,0000,,the buyer's agent remains silent,
Dialogue: 0,0:07:41.50,0:07:44.81,Default,,0000,0000,0000,,despite the fact that the war's\Nend was likely to increase
Dialogue: 0,0:07:44.81,0:07:48.82,Default,,0000,0000,0000,,that value by much as\N50 percent.. At trial,
Dialogue: 0,0:07:48.82,0:07:50.81,Default,,0000,0000,0000,,the judge refused to allow the seller
Dialogue: 0,0:07:50.81,0:07:54.41,Default,,0000,0000,0000,,a defensive fraud and directed\Na verdict for the buyer.
Dialogue: 0,0:07:54.41,0:07:57.47,Default,,0000,0000,0000,,Though on appeal, the Supreme\NCourt remanded the case
Dialogue: 0,0:07:57.47,0:08:00.50,Default,,0000,0000,0000,,for a trial on the issue of actual fraud,
Dialogue: 0,0:08:00.50,0:08:04.50,Default,,0000,0000,0000,,the court had agreed that the\Nbuyer had no duty to disclose
Dialogue: 0,0:08:04.50,0:08:08.68,Default,,0000,0000,0000,,where the means of intelligence are\Nequally accessible to both parties.
Dialogue: 0,0:08:08.68,0:08:10.58,Default,,0000,0000,0000,,We will discover that there are
Dialogue: 0,0:08:10.58,0:08:13.40,Default,,0000,0000,0000,,other instances in which the\Nrestatement of contracts
Dialogue: 0,0:08:13.40,0:08:16.16,Default,,0000,0000,0000,,imposes an obligation on a party who is
Dialogue: 0,0:08:16.16,0:08:19.28,Default,,0000,0000,0000,,aware of the other party's\Nmistake and assumption of fact,
Dialogue: 0,0:08:19.28,0:08:23.26,Default,,0000,0000,0000,,either to correct that\Nassumption or alternatively
Dialogue: 0,0:08:23.26,0:08:27.50,Default,,0000,0000,0000,,face the possibility that the other\Nparty can avoid the contract.
Dialogue: 0,0:08:27.50,0:08:29.87,Default,,0000,0000,0000,,One such case is the doctrine of
Dialogue: 0,0:08:29.87,0:08:34.36,Default,,0000,0000,0000,,unilateral mistake under Section\N153(b) of the restatement,
Dialogue: 0,0:08:34.36,0:08:37.83,Default,,0000,0000,0000,,which we will explore in\Nthe very near future.