Exam 15: Mistakes, Fraud, and Voluntary Consent

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

Olive, the owner of Olive's Orchard, contracts to sell its harvest to Pure Foods, Inc. Later Olive refuses to perform. Pure Foods files a suit to enforce the contract. Olive and Pure Foods are in a state that does not recognize the doctrine of unconscionability. To defend successfully against enforcement of the contract on similar grounds, Olive might rely on traditional notions of

Misrepresentation of a material fact is an element of fraud.

An innocent party can rescind a fraudulent contract and be restored to his or her original position.

Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.

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

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.

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?

When both parties to a contract are mistaken about the same material fact, the contract cannot be rescinded.

Fact Pattern 15-2 Lewis, an employee of Silos, Inc., makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently, Silos's bid is significantly low. -Refer to Fact Pattern 15-2. Any contract with AgriCo-op that includes the mistake may be rescinded

Fact Pattern 15-2 Lewis, an employee of Silos, Inc., makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently, Silos's bid is significantly low. -Refer to Fact Pattern 15-2. Any contract with AgriCo-op that includes the mistake may be rescinded

The concept of unconscionability under Section 2-302 of the Uniform Commercial Code has never been applied in any situation but a contract for a sale of goods.

Fact Pattern 15-3​ County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from Doyle to Ezra, the furnished information is mistaken. -Refer to Fact Pattern 15-3. The contract between Doyle and Ezra that includes the mistake may be rescinded if the mistake concerns

If the subject matter of a contract turns out to be more valuable than one of the parties believed it would be, that party can rescind the contract.

Moe threatens physical harm to force Norel to contract to pay him for protecting her store against vandalism and destruction. Norel may

Fact Pattern 15-4 In selling a commercial building, Riley 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. -Refer to Fact Pattern 15-4. Under these circumstances, Sam's best course of action is most likely to

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

Misrepresentation of a material fact can occur by words or action.

Avoiding the enforcement of a standard-form contract is not possible.​

Normally, a contract will be set aside because certain pertinent information was not volunteered.