Question 1

When one party wrongly threatens to injure another person financially in order to get agreement to a contract, economic duress occurs.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following statements is true of fraud in the execution?

Accepted Answer

A) It occurs when a party intends to make a contract based on a false statement of terms. 
B) It  occurs when a party does not intend to sign a contract, as the nature of the writing is not understood. 
C) It refers to a party forced to sign a contract under duress. 
D) It occurs when a party signs a contract based on an innocent misrepresentation. 
A) It occurs when a party intends to make a contract based on a false statement of terms. 
B) It  occurs when a party does not intend to sign a contract, as the nature of the writing is not understood. 
C) It refers to a party forced to sign a contract under duress. 
D) It occurs when a party signs a contract based on an innocent misrepresentation. B

Question 3

Which of the following is true regarding parties who make mutual mistakes of law?

Accepted Answer

A) The contract becomes null and nonbinding on the parties. 
B) One of the parties can annul the contract stating that it is a mistake of law. 
C) It will generally not invalidate a contract. 
D) Both parties can claim relief and compensation through a court of law. 
A) The contract becomes null and nonbinding on the parties. 
B) One of the parties can annul the contract stating that it is a mistake of law. 
C) It will generally not invalidate a contract. 
D) Both parties can claim relief and compensation through a court of law. C

Question 4

A contract is void if parties to a contract are mutually mistaken about their expectations.

Accepted Answer

A) True 
 B)False

Question 5

If a contract is voidable due to a mistake such as fraud in the inducement, duress or undue influence, a person might elect to rescind the contract.

Accepted Answer

A) True 
 B)False

Question 6

A false statement made in the belief that it is true is known as innocent misrepresentation.

Accepted Answer

A) True 
 B)False

Question 7

Allen enters into a contract with Joe to sell his car. However by mistake, he undervalues his car. Though the actual value of the car is $6000, he sells it to Joe for $3000. During the purchase, Joe is aware of the actual value but does not communicate this fact to Allen. Which of the following is likely to be true in such a scenario?

Accepted Answer

A) Allen is entitled to compensation through a court of law. 
B) Allen is entitled to cancel the contract because he was not aware of the actual value. 
C) Joe is entitled to keep the car because the contract is valid. 
D) Joe must pay the difference to Allen in order to validate the purchase. 
A) Allen is entitled to compensation through a court of law. 
B) Allen is entitled to cancel the contract because he was not aware of the actual value. 
C) Joe is entitled to keep the car because the contract is valid. 
D) Joe must pay the difference to Allen in order to validate the purchase.

Question 8

​ Mark, a civil engineer, entered into a contract with David. As per the contract, Mark agreed to design and build a house for David for a specified fee. Mark provided David with an estimation of the total cost and the contract was mutually agreed upon. However, during construction, when Mark increased the price due to a miscalculation on his part, David refused to pay the amount. This scenario is an example of a mistake.

Accepted Answer

A) mutual 
B) collective 
C) collateral 
D) unilateral 
A) mutual 
B) collective 
C) collateral 
D) unilateral

Question 9

Mary contracts to sell Rachel her violin for $10,000, based on an appraisal of the instrument.  Their contract provides that even if the appraisal is later found to be mistaken, the sale price will not be altered.  One month after the sale, Rachel learns that the violin is only worth $5000. Which of the following is true:

Accepted Answer

A) Because the contract specified what would happen in the case of a mistake, the sale price will not be altered. 
B) Mary must refund Rachel $5000, because the appraisal was mistaken. 
C) The contract is unenforceable, because the appraisal was mistaken. 
D) The contract is void, because the sale is fraudulent. 
A) Because the contract specified what would happen in the case of a mistake, the sale price will not be altered. 
B) Mary must refund Rachel $5000, because the appraisal was mistaken. 
C) The contract is unenforceable, because the appraisal was mistaken. 
D) The contract is void, because the sale is fraudulent.

Question 10

Which of the following is an example of passive fraud?

Accepted Answer

A) A homeowner tells a home buyer that the basement of the home never floods, when in fact the homeowner knows it has several significant leaks. 
B) An attorney fails to tell his or her client of an offer to settle a case. 
C) A thrift store sales clerk mistakenly tells a customer that a table is oak instead of pine. 
D) A car salesman tells a customer that he believes the latest model of certain pickup truck is more reliable than previous models. 
A) A homeowner tells a home buyer that the basement of the home never floods, when in fact the homeowner knows it has several significant leaks. 
B) An attorney fails to tell his or her client of an offer to settle a case. 
C) A thrift store sales clerk mistakenly tells a customer that a table is oak instead of pine. 
D) A car salesman tells a customer that he believes the latest model of certain pickup truck is more reliable than previous models.

Question 11

​ What is active fraud?  What four elements must be present to constitute fraud as a result of express misrepresentation?

Accepted Answer

Active fraud occurs when a party actuall

Question 12

Mistakes such as duress and undue influence render contracts void.

Accepted Answer

A) True 
 B)False

Question 13

​ As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

Accepted Answer

A) True 
 B)False

Question 14

is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

Accepted Answer

A) Passive fraud 
B) Duress 
C) Misrepresentation 
D) Undue Influence 
A) Passive fraud 
B) Duress 
C) Misrepresentation 
D) Undue Influence

Question 15

Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false statements made by the promisor.

Accepted Answer

A) True 
 B)False

Question 16

Failure to disclose information when there is duty to do so is known as passive fraud.

Accepted Answer

A) True 
 B)False

Question 17

Ordinarily, for a mistake to invalidate a contract, the mistake must be a mutual one about a material fact.

Accepted Answer

A) True 
 B)False

Question 18

If an unilateral mistake regarding price results arise from misunderstanding an oral quotation of the price, the contract is invalid.

Accepted Answer

A) True 
 B)False

Question 19

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of undue influence?

Accepted Answer

A) It occurs when one party threatens to cause physical harm to another. 
B) It refers to one party injuring another financially to influence him to enter into a contract. 
C) It takes place between people who are not known to each another. 
D) It refers to a person in a special relationship causing another's action contrary to free will. 
A) It occurs when one party threatens to cause physical harm to another. 
B) It refers to one party injuring another financially to influence him to enter into a contract. 
C) It takes place between people who are not known to each another. 
D) It refers to a person in a special relationship causing another's action contrary to free will.

Exam 9: Defective Agreements

When one party wrongly threatens to injure another person financially in order to get agreement to a contract, economic duress occurs.

Which of the following statements is true of fraud in the execution?

Which of the following is true regarding parties who make mutual mistakes of law?

A contract is void if parties to a contract are mutually mistaken about their expectations.

If a contract is voidable due to a mistake such as fraud in the inducement, duress or undue influence, a person might elect to rescind the contract.

A false statement made in the belief that it is true is known as innocent misrepresentation.

Which of the following is an example of passive fraud?

​ What is active fraud? What four elements must be present to constitute fraud as a result of express misrepresentation?

Mistakes such as duress and undue influence render contracts void.

​ As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false statements made by the promisor.

Failure to disclose information when there is duty to do so is known as passive fraud.

Ordinarily, for a mistake to invalidate a contract, the mistake must be a mutual one about a material fact.

If an unilateral mistake regarding price results arise from misunderstanding an oral quotation of the price, the contract is invalid.

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

Which of the following is true of undue influence?

Introduction to Law

Courts and Court Procedures

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Consideration

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Contracts

Warranties Product Liability and Consumer Protection

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties, Holders in Due Course and Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Introduction to Business Organizations

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corporation

Principles of Insurance

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills Inheritances and Trust

Filters

What is active fraud? What four elements must be present to constitute fraud as a result of express misrepresentation?

As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.