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imposes upon the parties thereto an implied duty of good faith
and fair dealing. See San Jose Prod. Credit Association v. Old
Republic Life Ins. Co., 723 F.2d 700, 703 (9th Cir. 1984); Smith
v. Empire Sanitary Dist., 127 Cal. App. 2d 63, 71, 273 P.2d 37,
43 (1954); 3A Corbin on Contracts, sec. 654A, at 86 (1998 Supp.).
A contract generally is voidable if one party's assent to the
agreement is induced by a fraudulent or material
misrepresentation by the other party to the contract. See
Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320, 335 (1997);
1 Restatement, supra sec. 164(1). A party's nondisclosure of a
fact known to him is treated as an assertion that the fact does
not exist where he knows that the disclosure of the fact would
correct a mistake of the other party as to a basic assumption
on which that party relies in making the contract. See 1
Restatement, supra sec. 161(b). The nondisclosure of a fact
known to a party to a contract may be considered a fraudulent
misrepresentation if the party intends the nondisclosure to
mislead the other party. See id. sec. 162(1)(a). The Court has
held that a settlement stipulation may be set aside for
excusable, damaging reliance upon a false or untrue
representation of the other party. See Saigh v. Commissioner,
supra at 180; Fisher v. Commissioner, supra.
Although a contract may be voidable because of a fraudulent
or material misrepresentation, the right to avoid the contract
may lapse if the effect of the misrepresentation is cured or the
substance of the performance promised has been delivered before
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