Exam 15: Mistakes, Fraud, and Voluntary Consent

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 The contract between Doyle and Ezra that includes the mistake may be rescinded if the mistake involves

A statement of opinion is generally subject to a claim of fraud.

Gene, an accountant, convinces his client Hazel to sign a contract to invest her savings in 2Gether, a nonexistent social-networking Web site. There is clear and convincing evidence that Hazel did not act out of her free will. This is

In selling a 300 acres of rural land to Organic Farms, Peyton tells the buyer that the land "will be worth twice as much by next year." This is

A seller's attempt to conceal a fact that is material to a contract can give rise to an action for fraud.

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

Mona is induced by her guardian Newt to sign a contract to invest her student loan funds in OptiBank through Newt's investment firm. Unknown to Mona, Newt realizes a commission from the investment. Most likely, Mona may rescind the contract on the basis of

An innocent party does not need to suffer an injury to collect damages as a result of a misrepresentation.

A threat to exercise a legal right ordinarily constitutes duress.

If a mistake concerns the future value of the object of the contract, a court will normally provide relief.

If a contractor's bid contains a mistake in addition when totaling the estimated costs, the contract may not be enforceable.

Scienter clearly exists if a party knows a fact is not as stated.​

Dana believes that a new phone to be sold by Ear Fruit Inc. will become the most popular phone in the global 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

Misrepresentation cannot occur by silence.

Duress is a possible ground for rescission of a contract.​

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. If Doyle and Ezra are both ignorant of the mistake, it is

Fact Pattern 15-1​ Data Storage Inc. offers to provide cloud-computing services to Enterprises, LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprises accepts the written offer. -Refer to Fact Pattern 15-1. Data Storage's best defense against enforcement of the contract is that Enterprises knew

Health Source, Inc., offers to buy Medico Equipment & Supplies Corporation. On June 1, Medico gives Health Source copies of Medico's financial statements for the previous year. The statements show an inventory of $10 million. On June 15, Medico discovers that the previous year's inventory is overstated by $500,000, but does not inform Health Source. On July 1, Health Source, relying on the financial statements, buys Medico. On July 10, Health Source discovers the inventory overstatement. Can Health Source succeed in a suit against Medico? On what basis?

A contract entered into under undue influence is voidable.

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