Exam 14: Voluntary Consent

Digital Storage,Inc.,offers to sell provide cloud-computing services to Entrepreneur Enterprises,Inc.,but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Entrepreneur Enterprisesaccepts the written offer. -Refer to Fact Pattern 14-1. Entrepreneur Enterprises'best argument in favor of enforcement of the contract is that

Used Car Lot's salesperson Vic offers to sell Will,who is twenty years of age,a car about which Vic intentionally misrepresents its past use and repairs. In reliance on the misrepresentations,Will buys the car. To prove fraud in this transaction,Will does not have to show that

In selling a 300-acre farm to Rural Land Investments,Inc.,Simone tells Rural's representative that the land "will be worth twice as much by next year." This is

Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraud

Hank,a salesperson for Ideal Autos,promises Jennie a certain car will give her a "smooth ride." Hank offers a test drive,which Jennie de-clines. She buys the car but soon realizes its suspension is in poor condi-tion. Jennie

Carlos and Alvaro contract for the sale of five hundred head of Carlos's cattle for $95 per head. Unknown to either party,an unforeseen storm has struck the herd and many of the cattle have died. Alvaro is

Gene sells a trail bike to Hollis without disclosing that the odome-ter,which reads 10,000 miles,was disconnected 90,000 miles ago. Gene is most likely liable for

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

Dwight believes that a new phone to be sold by Ear Candy Corporation will become the most widely bought and used phone in the global market. Dwight enters into a contract to buy 500 shares of Ear Candy stock,anticipating an increase in its value. If the price of the stock does not rise,Dwight can recover

The identity of one of the parties to a contract is an example of a material fact.

Intent to deceive is an element of fraud.

Because fraud actions necessarily involve wrongful conduct,courts may award punitive damages.

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

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

Morris threatens physical harm to force Barb to contract to pay him for protecting her store-Barb's Baubles-against vandalism and destruction. Barb may

Misrepresentation cannot occur by silence.

The elements of an action for fraud are (1)the misrepresentation of a material fact,(2)the intent to deceive,and (3)the innocent party's justifiable reli-ance on the misrepresentation. Ordinarily,no party to a contract has a duty to come forward and disclose facts. Each party is responsible for the use of common sense and normal business sense in negotiating a con-tract. An action for fraud can be based on a failure to disclose material facts when there is a certain relationship between the parties such as be-tween part-ners in a partnership or when a party could not reasonably discover a fact known to the other party. An action may also be maintained if,as here,a party that misstates a material fact later learns of the misstate-ment but does not disclose it to the other party.This is misrepresentation by conduct. Here,by providing finan-cial statements,Medico made certain representations. Those representa-tions were false,how-ever,as Medico learned. Medico's knowledge of the over-stated inventory and failure to disclose this to Health Source indicated intent to deceive. Health Source's reli-ance on Medico's statements was reasonable and justifiable. -Nero is an elderly man who lives with his nephew Mervyn. Nero is depend-ent on Mervyn for support. Mervyn advises Nero to "invest" in Mervyn's "profes-sional gambling" venture,or Mervyn will no longer support him. Nero liq-uidates his other investments and signs a contract with Mervyn,to whom Nero gives the funds. Can Nero set aside this contract?

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

Garland induces Jules to enter into a contract for the purchase of a Chef's Burger House restaurant. Garland knowingly misrepresents a number of material features about the restaurant and the business. When Jules discovers the truth,he can

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 James to Kate,the furnished information is mistaken. -Refer to Fact Pattern 14-3. The contract between James and Kate that includes the mistake may be rescinded