Question 1

Because value is variable, mistakes of value affect the enforceability of contracts.

Accepted Answer

A) True 
 B)False

Question 2

Because of the potential for punitive damages, plaintiffs often include a claim for fraudulent misrepresentation in their contract disputes.

Accepted Answer

A) True 
 B)False

Question 3

Flo enters into a contract with Global Shipping Ltd. to insure and ship a painting from France to the United States for a certain price. Global makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost. Most likely, a court would

Accepted Answer

A)  allow the parties to rescind the contract. 
B)  award damages to Flo for the mistake. 
C)  award damages to Global for the mistake. 
D)  enforce the contract as is. 
A)  allow the parties to rescind the contract. 
B)  award damages to Flo for the mistake. 
C)  award damages to Global for the mistake. 
D)  enforce the contract as is.

Question 4

A bilateral mistake occurs if one party to a contract is mistaken about a material fact and the other party knew or should have known that a mistake was made.

Accepted Answer

A) True 
 B)False

Question 5

Ralph enters into a contract with Skye to buy her land based on her assertion that the land is open to development. After the sale, Ralph learns that only a small section of the land can be built on. A local law prohibits construction on the rest of the property. Ralph can

Accepted Answer

A)  not avoid the contract because persons are assumed to know the law. 
B)  avoid the contract due to a bilateral mistake. 
C)  avoid the contract due to undue influence. 
D)  avoid the contract due to fraud. 
A)  not avoid the contract because persons are assumed to know the law. 
B)  avoid the contract due to a bilateral mistake. 
C)  avoid the contract due to undue influence. 
D)  avoid the contract due to fraud.

Question 6

Car Lot's salesperson Dick offers to sell Ernie, who is twenty years old, a car. Dick intentionally misrepresents the vehicle's use and repairs. In reliance, Ernie buys the car. To prove fraud, Ernie does not have to show that

Accepted Answer

A)  Dick intentionally deceived Ernie. 
B)  Dick misrepresented material facts. 
C)  Ernie is under twenty-one. 
D)  Ernie justifiably relied on Dick's misrepresentation. 
A)  Dick intentionally deceived Ernie. 
B)  Dick misrepresented material facts. 
C)  Ernie is under twenty-one. 
D)  Ernie justifiably relied on Dick's misrepresentation.

Question 7

If a mistake concerns the quality of the object of the contract, the mistake is one of fact.

Accepted Answer

A) True 
 B)False

Question 8

Bram, a salesperson for Cruisin' Motors, promises Deb a certain car will give her a "smooth ride." Bram offers a test drive, which Deb declines. She buys the car but soon realizes its suspension is in poor condition. Deb can rescind the contract on the ground of

Accepted Answer

A)  the salesperson's fraudulent misrepresentation. 
B)  the car maker's undue influence. 
C)  the buyer's mistake. 
D)  none of the choices. 
A)  the salesperson's fraudulent misrepresentation. 
B)  the car maker's undue influence. 
C)  the buyer's mistake. 
D)  none of the choices.

Question 9

A fact that is important and central to the subject matter of a contract is a material fact.

Accepted Answer

A) True 
 B)False

Question 10

Data Inc. offers to provide certain services to Enterprise LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprise accepts the written offer. Enterprise's best argument in favor of enforcement of the contract is

Accepted Answer

A)  a bilateral mistake does not afford relief from a contract. 
B)  a mistake of value does not afford relief from a contract. 
C)  a unilateral mistake does not afford relief from a contract. 
D)  the price was below the prices of comparable services. 
A)  a bilateral mistake does not afford relief from a contract. 
B)  a mistake of value does not afford relief from a contract. 
C)  a unilateral mistake does not afford relief from a contract. 
D)  the price was below the prices of comparable services.

Question 11

The party on whom duress is exerted can choose to carry out the contract.

Accepted Answer

A) True 
 B)False

Question 12

If contracting parties attach materially different meanings to a contract word or term subject to more than one reasonable interpretation, the contract is void.

Accepted Answer

A) True 
 B)False

Question 13

Nero is an elderly man who lives with his nephew Mervyn. Nero is dependent on Mervyn for support. Mervyn advises Nero to "invest" in Mervyn's "professional gambling" venture, or Mervyn will no longer support him. Nero liquidates his other investments and signs a contract with Mervyn, to whom Nero gives the funds. Can Nero set aside this contract?

Accepted Answer

This situation describes undue influence

Question 14

Ray, an employee of Shipping Company, makes a substantial mathematical mistake in totaling estimated transportation costs for Tonnage Inc., which is seeking bids. Consequently, Shipping's bid is substantially low. Any contract with Tonnage that includes the mistake may be rescinded

Accepted Answer

A)  if the mistake was made inadvertently and without gross negligence. 
B)  if the mistake was intentional. 
C)  if the mistake was unilateral. 
D)  under no circumstances. 
A)  if the mistake was made inadvertently and without gross negligence. 
B)  if the mistake was intentional. 
C)  if the mistake was unilateral. 
D)  under no circumstances.

Question 15

Consent to the terms of a contract is voluntary even if one of the parties is forced into the agreement.

Accepted Answer

A) True 
 B)False

Question 16

Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would

Accepted Answer

A)  not rescind the contract. 
B)  rescind the contract on the basis of a mistake of quality. 
C)  rescind the contract on the basis of a mistake of value. 
D)  rescind the contract on the basis of a mistake of opinion. 
A)  not rescind the contract. 
B)  rescind the contract on the basis of a mistake of quality. 
C)  rescind the contract on the basis of a mistake of value. 
D)  rescind the contract on the basis of a mistake of opinion.

Question 17

Hua applies to Inventory Corporation for a position as a coder. Hua has no training in coding. After Hua is hired, Inventory learns the truth. The employer can rescind the contract on the basis of

Accepted Answer

A)  none of the choices. 
B)  fraudulent misrepresentation. 
C)  mistake. 
D)  undue influence. 
A)  none of the choices. 
B)  fraudulent misrepresentation. 
C)  mistake. 
D)  undue influence.

Question 18

Luc, a vehicle dealer, offers to sell May a truck and trailer, which Luc claims can haul a certain weight. He knows nothing about the capability of the truck, but it is not as he asserts. May buys the truck. On learning the truth, she confronts Luc, who says he was not trying to fool her-he was only trying to make a sale. This is

Accepted Answer

A)  a mistake of value. 
B)  a valid defense to a charge of fraud. 
C)  fraudulent misrepresentation. 
D)  puffery. 
A)  a mistake of value. 
B)  a valid defense to a charge of fraud. 
C)  fraudulent misrepresentation. 
D)  puffery.

Question 19

Each party to a contract assumes the risk that the value of the object of the deal will change in the future.

Accepted Answer

A) True 
 B)False

Question 20

In selling a vacant building, Riley, a real estate broker, tells Sam that the property has a certain capacity, making it suitable for a nightclub. Riley knows nothing about the capacity of the building, but it is not as he specifies. Sam buys the building. Sam's best course of action is most likely to

Accepted Answer

A)  scam Riley. 
B)  induce Riley to give him the commission on her next sale. 
C)  recover damages or rescind the contract to buy the building. 
D)  sabotage Riley's career with bad publicity. 
A)  scam Riley. 
B)  induce Riley to give him the commission on her next sale. 
C)  recover damages or rescind the contract to buy the building. 
D)  sabotage Riley's career with bad publicity.

Exam 14: Voluntary Consent

Because value is variable, mistakes of value affect the enforceability of contracts.

Because of the potential for punitive damages, plaintiffs often include a claim for fraudulent misrepresentation in their contract disputes.

Flo enters into a contract with Global Shipping Ltd. to insure and ship a painting from France to the United States for a certain price. Global makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost. Most likely, a court would

A bilateral mistake occurs if one party to a contract is mistaken about a material fact and the other party knew or should have known that a mistake was made.

Ralph enters into a contract with Skye to buy her land based on her assertion that the land is open to development. After the sale, Ralph learns that only a small section of the land can be built on. A local law prohibits construction on the rest of the property. Ralph can

Car Lot's salesperson Dick offers to sell Ernie, who is twenty years old, a car. Dick intentionally misrepresents the vehicle's use and repairs. In reliance, Ernie buys the car. To prove fraud, Ernie does not have to show that

If a mistake concerns the quality of the object of the contract, the mistake is one of fact.

Bram, a salesperson for Cruisin' Motors, promises Deb a certain car will give her a "smooth ride." Bram offers a test drive, which Deb declines. She buys the car but soon realizes its suspension is in poor condition. Deb can rescind the contract on the ground of

A fact that is important and central to the subject matter of a contract is a material fact.

Data Inc. offers to provide certain services to Enterprise LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprise accepts the written offer. Enterprise's best argument in favor of enforcement of the contract is

The party on whom duress is exerted can choose to carry out the contract.

If contracting parties attach materially different meanings to a contract word or term subject to more than one reasonable interpretation, the contract is void.

Ray, an employee of Shipping Company, makes a substantial mathematical mistake in totaling estimated transportation costs for Tonnage Inc., which is seeking bids. Consequently, Shipping's bid is substantially low. Any contract with Tonnage that includes the mistake may be rescinded

Consent to the terms of a contract is voluntary even if one of the parties is forced into the agreement.

Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would

Hua applies to Inventory Corporation for a position as a coder. Hua has no training in coding. After Hua is hired, Inventory learns the truth. The employer can rescind the contract on the basis of

Each party to a contract assumes the risk that the value of the object of the deal will change in the future.

Law and Legal Reasoning

Constitutional Law

Ethics in Business

Courts and Alternative Dispute Resolution

Tort Law

Product Liability

Intellectual Property Rights

Internet Law, Social Media, and Privacy

Criminal Law and Cyber Crime

Nature and Classification

Agreement

Consideration

Capacity and Legality

The Statute of Fraudswriting Requirement

Performance and Discharge

Breach and Remedies

Third Party Rights

The Formation of Sales and Lease Contracts

Title and Risk of Loss

Performance and Breach of Sales and Lease Contracts

Negotiable Instruments

International and Space Law

Banking in the Digital Age

Security Interests and Creditors Rights

Bankruptcy

Agency Relationships in Business

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

All Forms of Partnership

Limited Liability Companies and Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, and Shareholders

Corporate Mergers, Takeovers, and Termination

Investor Protection, Insider Trading, and Corporate Governance

Administrative Law

Antitrust Law and Promoting Competition

Consumer and Environmental Law

Liability of Accountants and Other Professionals

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance, Wills, and Trusts

Filters