Question 1

A misrepresentation must be expressly made through the words or writings of another.

Accepted Answer

A) True 
 B)False

Question 2

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 3

A statement of opinion cannot be used in a claim of fraud.

Accepted Answer

A) True 
 B)False

Question 4

Fact Pattern 13-4 In selling a warehouse, Riley tells Sam that he knows 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.
Refer to Fact Pattern 13-4. On learning the truth, Sam confronts Riley, who says he was not trying to fool Sam-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)  undue influence. 
A)  a mistake of value. 
B)  a valid defense to a charge of fraud. 
C)  fraudulent misrepresentation. 
D)  undue influence.

Question 5

An otherwise valid contract is enforceable even if the parties have not genuinely agreed to its terms.

Accepted Answer

A) True 
 B)False

Question 6

Dana believes that a new phone to be sold by Ear Fruit Inc. will become the most popular phone in the market. Dana enters into a contract to buy 500 shares of Ear Fruit stock, anticipating an increase in its value. The phone does not become popular, and the price of the stock does not rise. Dana can recover

Accepted Answer

A)  nothing. 
B)  the amount of the purchase price. 
C)  the amount of the purchase price plus the expected increase. 
D)  the amount of the purchase price plus the unexpected decrease. 
A)  nothing. 
B)  the amount of the purchase price. 
C)  the amount of the purchase price plus the expected increase. 
D)  the amount of the purchase price plus the unexpected decrease.

Question 7

Fact Pattern 13 - 2 Owen, an employee of Plumbing & Pipes LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Construction Inc. is seeking bids. Consequently, Plumbing & Pipes' bid is significantly low.
Refer to Fact Pattern 13-2. The contract with Quality Construction that includes the mistake may be rescinded

Accepted Answer

A)  if the mistake involves a material fact. 
B)  if the mistake involves any fact. 
C)  if the mistake is one of value or quality. 
D)  under no circumstances. 
A)  if the mistake involves a material fact. 
B)  if the mistake involves any fact. 
C)  if the mistake is one of value or quality. 
D)  under no circumstances.

Question 8

Lee applies to Marketing Corporation for a position as a software engineer. Lee has no training in computers or programming and no background as an engineer. After Lee is hired, Marketing 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 9

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

Accepted Answer

A) True 
 B)False

Question 10

Fact Pattern 13 - 2 Owen, an employee of Plumbing & Pipes LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Construction Inc. is seeking bids. Consequently, Plumbing & Pipes' bid is significantly low.
Refer to Fact Pattern 13-2. Any contract with Quality Construction that includes the mistake may be rescinded

Accepted Answer

A)  if Quality Construction knew or should have known of the mistake. 
B)  if Owen's supervisor did not know of the mistake. 
C)  if Plumbing & Pipes knew or should have known of the mistake. 
D)  under no circumstances . 
A)  if Quality Construction knew or should have known of the mistake. 
B)  if Owen's supervisor did not know of the mistake. 
C)  if Plumbing & Pipes knew or should have known of the mistake. 
D)  under no circumstances .

Question 11

Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraudulent misrepresentation if

Accepted Answer

A)  Mark is not aware of the fact or his failure to reveal it. 
B)  the fact concerns value or quality. 
C)  the fact concerns a serious defect known to Mark but not to Nancy. 
D)  any of the choices. 
A)  Mark is not aware of the fact or his failure to reveal it. 
B)  the fact concerns value or quality. 
C)  the fact concerns a serious defect known to Mark but not to Nancy. 
D)  any of the choices.

Question 12

The element of justifiable reliance requires the misrepresentation to be an important factor in inducing the deceived party to enter into the contract.

Accepted Answer

A) True 
 B)False

Question 13

Don enters into a contract with Eve, who claims to have access to a stock-trading algorithm that will multiply an investment many times over. When the results do not match this claim, Don learns that Eve does not have access to the algorithm and files a suit, alleging fraud. Proof of an injury is required to

Accepted Answer

A)  recover damages. 
B)  rescind the contract. 
C)  undo Eve's influence. 
D)  punish the defendant. 
A)  recover damages. 
B)  rescind the contract. 
C)  undo Eve's influence. 
D)  punish the defendant.

Question 14

In actions based on fraud, courts often award punitive damages.

Accepted Answer

A) True 
 B)False

Question 15

All parties to a contract have a duty to come forward and disclose all relevant facts.

Accepted Answer

A) True 
 B)False

Question 16

Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of

Accepted Answer

A)  duress. 
B)  fraudulent misrepresentation. 
C)  mistake. 
D)  opinion. 
A)  duress. 
B)  fraudulent misrepresentation. 
C)  mistake. 
D)  opinion.

Question 17

In a bike shop, Jessie, who is not knowledgeable about bikes, overhears Kevin say, "This bike could win any race!" Jessie buys the bike, but does not win any races with it. Kevin's statement is

Accepted Answer

A)  a mistake. 
B)  a fraudulent misrepresentation. 
C)  an opinion. 
D)  an attempt at undue influence. 
A)  a mistake. 
B)  a fraudulent misrepresentation. 
C)  an opinion. 
D)  an attempt at undue influence.

Question 18

Reliance on a misrepresentation is justified even if the innocent party knows the true facts.

Accepted Answer

A) True 
 B)False

Question 19

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 20

When both parties to a contract are mistaken about the same material fact, the contract can be rescinded by either party.

Accepted Answer

A) True 
 B)False

Exam 13: Voluntary Consent

A misrepresentation must be expressly made through the words or writings of another.

A statement of opinion cannot be used in a claim of fraud.

An otherwise valid contract is enforceable even if the parties have not genuinely agreed to its terms.

Lee applies to Marketing Corporation for a position as a software engineer. Lee has no training in computers or programming and no background as an engineer. After Lee is hired, Marketing learns the truth. The employer can rescind the contract on the basis of

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

Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraudulent misrepresentation if

The element of justifiable reliance requires the misrepresentation to be an important factor in inducing the deceived party to enter into the contract.

In actions based on fraud, courts often award punitive damages.

All parties to a contract have a duty to come forward and disclose all relevant facts.

Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of

In a bike shop, Jessie, who is not knowledgeable about bikes, overhears Kevin say, "This bike could win any race!" Jessie buys the bike, but does not win any races with it. Kevin's statement is

Reliance on a misrepresentation is justified even if the innocent party knows the true facts.

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

When both parties to a contract are mistaken about the same material fact, the contract can be rescinded by either party.

Introduction to the Law

Ethics in Business

The Courts and Our Legal System

Constitutional Law

Business Torts

Intellectual Property

Business Crimes

Introduction to Contracts

Offer and Acceptance

Consideration

Capacity

The Legality of Agreements

Written Contracts

Third Party Rights

Termination and Remedies

Introduction to Sales and Lease Contracts

Title and Risk of Loss

Performance and Breach

Warranties and Product Liability

Consumer Protection

The Essentials of Negotiability

Negotiable Instruments: Transfer and Liability

Banking in the Digital Age

Agency Relationships

Employment, Immigration, and Labor Law

Employment Discrimination

Types of Business Organizations

Formation and Ownership of a Corporation

Management of a Corporation

Combining and Dissolving a Corporation

Credit and Security

Mortgages

Bankruptcy

Insurance

Personal Property

Bailments

Real Property

Landlord and Tenant Law

Wills and Trusts

Administrative Law

Antitrust Law

International and Space Law

Filters