Question 1

Ordinarily,a party to a contract has no duty to volunteer information to the other party.

Accepted Answer

A) True 
 B)False  True

Question 2

The seller of a painting is not bound by the sales contract if the painting purchased was considered of little value and only later discovered to be valuable to the surprise of both buyer and seller.

Accepted Answer

A) True 
 B)False  True

Question 3

A contract obtained by physical duress is void.

Accepted Answer

A) True 
 B)False  False

Question 4

A claim of undue influence will be unsuccessful unless the contracting parties have a close relationship of trust.

Accepted Answer

A) True 
 B)False

Question 5

Fraud requires intent that the listener rely on the false statement of fact.

Accepted Answer

A) True 
 B)False

Question 6

Ordinarily,every party to a contract is presumed to have contractual capacity until the contrary is shown.

Accepted Answer

A) True 
 B)False

Question 7

A finding of undue influence would most likely not occur in a contract between:

Accepted Answer

A)  parent and child. 
B)  attorney and client. 
C)  neighbor and neighbor. 
D)  guardian and ward. 
A)  parent and child. 
B)  attorney and client. 
C)  neighbor and neighbor. 
D)  guardian and ward.

Question 8

When a minor avoids contracts,the minor always must return the other contracting parties to their original financial positions.

Accepted Answer

A) True 
 B)False

Question 9

Discriminatory and punitive incapacities have largely disappeared.

Accepted Answer

A) True 
 B)False

Question 10

Contractual capacity can exist even though a party does not understand every provision of the contract.

Accepted Answer

A) True 
 B)False

Question 11

The key time for determining whether a party lacked contractual capacity is:

Accepted Answer

A)  the time the contract was made. 
B)  the time the value of the bargain becomes clear. 
C)  the time set for performance of the contract. 
D)  the time the plaintiff expresses dissatisfaction with the contract terms. 
A)  the time the contract was made. 
B)  the time the value of the bargain becomes clear. 
C)  the time set for performance of the contract. 
D)  the time the plaintiff expresses dissatisfaction with the contract terms.

Question 12

A factual incapacity may exist when,because of a mental condition caused by medication,drugs,alcohol,illness,or age,a person does not understand that a contract is being made or understand its general nature.

Accepted Answer

A) True 
 B)False

Question 13

At common law,a minor cannot be held contractually liable for his or her necessary medical expenses when the parent is unable or unwilling to pay.

Accepted Answer

A) True 
 B)False

Question 14

In order for fraud liability to arise,the listener must actually rely on the false statement of fact.

Accepted Answer

A) True 
 B)False

Question 15

A contract made by an incompetent person after a guardian has been appointed is voidable.

Accepted Answer

A) True 
 B)False

Question 16

A young stockbroker was rather overwhelmed by a flood of new clients.Assunta,one of his clients,had purchased XYZ Corp.stock through the broker at a price of $35 per share.The price had gone down to $29 by the time Assunta telephoned the broker.Assunta told the broker that she wanted to sell the stock if it went below $30 and inquired as to the price.The broker did not check the price,but thinking it could not have fallen below the $30 threshold,simply reassured Assunta that it was still "in the low 30s."
Marta,Assunta's cousin,also had purchased XYZ stock at $35 per share and made a similar call to the broker and received the same response.Marta,however,coincidentally saw the price on a stock ticker tape when she hung up and realized the broker had made an error.Both Assunta and Marta held the stock and did not sell.
Later that same day,the stock price fell an additional $7 per share.Facing sizable losses,both Assunta and Martha decided to sue for fraud when Marta told Assunta of the broker's misstatement.Discuss the probable outcome of the lawsuits.

Accepted Answer

The broker's reckless disregard for the

Question 17

An apparently voluntary agreement may in fact not be voluntary if:

Accepted Answer

A)  undue influence is present. 
B)  physical duress is present. 
C)  economic duress is present. 
D)  all of the above. 
A)  undue influence is present. 
B)  physical duress is present. 
C)  economic duress is present. 
D)  all of the above.

Question 18

Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles.Fraud has occurred if:

Accepted Answer

A)  Jim bought the car solely because of its color. 
B)  Jim knew that the mileage was more than 12,000 miles. 
C)  Jim relied upon Jack's statement. 
D)  Jack is a merchant. 
A)  Jim bought the car solely because of its color. 
B)  Jim knew that the mileage was more than 12,000 miles. 
C)  Jim relied upon Jack's statement. 
D)  Jack is a merchant.

Question 19

The maximum amount of time that a minor has to disaffirm a contract is:

Accepted Answer

A)  one year from the date of the agreement. 
B)  30 days from learning of his or her right to disaffirm. 
C)  the age of majority. 
D)  a reasonable period of time after reaching the age of majority. 
A)  one year from the date of the agreement. 
B)  30 days from learning of his or her right to disaffirm. 
C)  the age of majority. 
D)  a reasonable period of time after reaching the age of majority.

Question 20

A contract based on a mutual mistake in judgment is:

Accepted Answer

A)  voidable by the adversely affected party. 
B)  not voidable by the adversely affected party. 
C)  void ab initio. 
D)  none of the above. 
A)  voidable by the adversely affected party. 
B)  not voidable by the adversely affected party. 
C)  void ab initio. 
D)  none of the above.

Exam 14: Capacity and Genuine Assent

Ordinarily,a party to a contract has no duty to volunteer information to the other party.

The seller of a painting is not bound by the sales contract if the painting purchased was considered of little value and only later discovered to be valuable to the surprise of both buyer and seller.

A contract obtained by physical duress is void.

A claim of undue influence will be unsuccessful unless the contracting parties have a close relationship of trust.

Fraud requires intent that the listener rely on the false statement of fact.

Ordinarily,every party to a contract is presumed to have contractual capacity until the contrary is shown.

A finding of undue influence would most likely not occur in a contract between:

When a minor avoids contracts,the minor always must return the other contracting parties to their original financial positions.

Discriminatory and punitive incapacities have largely disappeared.

Contractual capacity can exist even though a party does not understand every provision of the contract.

The key time for determining whether a party lacked contractual capacity is:

A factual incapacity may exist when,because of a mental condition caused by medication,drugs,alcohol,illness,or age,a person does not understand that a contract is being made or understand its general nature.

At common law,a minor cannot be held contractually liable for his or her necessary medical expenses when the parent is unable or unwilling to pay.

In order for fraud liability to arise,the listener must actually rely on the false statement of fact.

A contract made by an incompetent person after a guardian has been appointed is voidable.

An apparently voluntary agreement may in fact not be voluntary if:

Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles.Fraud has occurred if:

The maximum amount of time that a minor has to disaffirm a contract is:

A contract based on a mutual mistake in judgment is:

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

The Legal Environment of International Trade

Crimes

Torts

Intellectual Property Rights

Cyberlaw

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Instruments, parties, and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor-Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

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