Jerry and Patricia A. Dixon, et al - Page 216




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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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