Question 1

Misrepresentation cannot result from an honest mistake.

Accepted Answer

A) True 
 B)False

Question 2

Simon put $5,000 worth of stocks and bonds into an asset management account at Fido Investments.One month later,his account statement indicated that he had a balance of $5 million.Simon quickly withdrew this amount from his account and put it into a Swiss bank account.Can Fido rescind its payment of $5 million to Simon on the grounds of mistake?

Accepted Answer

A)  No, because Simon and Fido made a mutual mistake. 
B)  Yes, because even though Fido was at fault, Simon was well aware of Fido's mistake in crediting the extra amount to his account. 
C)  No, because Fido should have exercised reasonable care while crediting the amount to Simon's account. 
D)  Yes, because Fido was a victim of fraud by execution. 
A)  No, because Simon and Fido made a mutual mistake. 
B)  Yes, because even though Fido was at fault, Simon was well aware of Fido's mistake in crediting the extra amount to his account. 
C)  No, because Fido should have exercised reasonable care while crediting the amount to Simon's account. 
D)  Yes, because Fido was a victim of fraud by execution.

Question 3

Williams bought a house from Smith.He was not told before the sale that the house was broken down and reconstructed two times.This has caused the structure of the building to weaken.Williams sued Smith and his real estate agent,seeking to rescind the sale.Can he rescind the contract?

Accepted Answer

Yes.In order to rescind the contract,Wil

Question 4

Blackhawk Corporation contracted to sell Greeneye Corporation some materials that Greeneye needed to fulfill a contract it had with a third party.Knowing that Greeneye was in desperate need of the materials,Blackhawk called Greeneye the day before delivery was due and threatened to withhold delivery unless Greeneye agreed to pay a higher price.Greeneye could not get the materials elsewhere and would suffer a huge financial loss without them,so it agreed to pay the higher price.Greeneye later asserts that its promise to pay the higher price is unenforceable because it was the product of duress.Which of the following statements is true of this situation?

Accepted Answer

A)  Blackhawk only exercised superior bargaining powers and therefore is not at fault. 
B)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm could be considered duress and the contract may be considered voidable. 
C)  Blackhawk's threat could not be considered duress because they had a legal right to seek a higher price for its goods. 
D)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm may be unintentional tort, but not duress. 
A)  Blackhawk only exercised superior bargaining powers and therefore is not at fault. 
B)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm could be considered duress and the contract may be considered voidable. 
C)  Blackhawk's threat could not be considered duress because they had a legal right to seek a higher price for its goods. 
D)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm may be unintentional tort, but not duress.

Question 5

The intent to deceive is also known as capacity.

Accepted Answer

A) True 
 B)False

Question 6

Undue influence renders a contract voidable and is a ground for rescission.

Accepted Answer

A) True 
 B)False

Question 7

The elements of fraud are the same as the elements for the tort of deceit.

Accepted Answer

A) True 
 B)False

Question 8

Fraud in the execution involves misstatements about the content or legal effect of something usually contained in a form or preprinted contract.

Accepted Answer

A) True 
 B)False

Question 9

A contract is voidable even if duress and undue influence are exerted on a party after entering into a contract.

Accepted Answer

A) True 
 B)False

Question 10

Gilles tampers with the odometer of a car he is trying to sell.In order to convince the buyer that the car has run fewer miles than it actually has,he manually sets the odometer to the numbers of miles he wants displayed.In this scenario,Gilles is guilty of _____.

Accepted Answer

A)  fraud with intent to deceive 
B)  fraud by silence 
C)  duress 
D)  caveat emptor 
A)  fraud with intent to deceive 
B)  fraud by silence 
C)  duress 
D)  caveat emptor

Question 11

The basic rule of unilateral mistake is that if only one of the parties to the agreement is acting under a mistaken belief,this is not grounds for rescission.

Accepted Answer

A) True 
 B)False

Question 12

Most of the cases in which undue influence is charged involve:

Accepted Answer

A)  force or threat of injury resulting in economic damages. 
B)  misstatements about the content or legal effect of something usually contained in a form or preprinted contract. 
C)  unilateral or mutual mistakes resulting in serious injustice. 
D)  longtime advisors of elderly or sick people, who are alleged to have gotten the victim to make gifts/sales at unfair prices. 
A)  force or threat of injury resulting in economic damages. 
B)  misstatements about the content or legal effect of something usually contained in a form or preprinted contract. 
C)  unilateral or mutual mistakes resulting in serious injustice. 
D)  longtime advisors of elderly or sick people, who are alleged to have gotten the victim to make gifts/sales at unfair prices.

Question 13

After Julie's death,her children discovered that she had sold her house a week prior to her death to her niece,Yolanda,for $50,000.Julie lived the last ten years of her life in Yolanda's house,under her care.The market value of the house at the time of the sale was $500,000.Julie's children may attempt to have the sale set aside,arguing that it was the product of _____.

Accepted Answer

A)  undue influence 
B)  duress 
C)  fraud 
D)  mutual mistake 
A)  undue influence 
B)  duress 
C)  fraud 
D)  mutual mistake

Question 14

Which of the following best defines scienter?

Accepted Answer

A)  It refers to the sales talk that people make while trying to convince a person to sign a contract. 
B)  It refers to the mental state of the defendant. 
C)  It pertains to an actionable misrepresentation that concerns a present or past fact. 
D)  It is a causal connection between a misrepresentation and the complaining party's entry into the contract. 
A)  It refers to the sales talk that people make while trying to convince a person to sign a contract. 
B)  It refers to the mental state of the defendant. 
C)  It pertains to an actionable misrepresentation that concerns a present or past fact. 
D)  It is a causal connection between a misrepresentation and the complaining party's entry into the contract.

Question 15

Jimmy sells an old station wagon to Mary and tells her that it is in excellent condition.He did not bother to verify the statement of the previous owner that the car was making strange noises.Under these circumstances,Mary could best contest the agreement on the grounds of _____.

Accepted Answer

A)  mutual mistake 
B)  duress 
C)  fraud 
D)  unintentional tort 
A)  mutual mistake 
B)  duress 
C)  fraud 
D)  unintentional tort

Question 16

When Steve convinces Tom to buy a pre-owned car from him while withholding the fact that the car has a significant mechanical problem,it indicates _____.

Accepted Answer

A)  undue influence 
B)  duress 
C)  unintentional tort 
D)  scienter 
A)  undue influence 
B)  duress 
C)  unintentional tort 
D)  scienter

Question 17

An auction house puts a painting up for sale,which they think to be Pablo Picasso's "Acrobat and Young Harlequin." A Japanese businessman purchases the painting for $50 million.The businessman appraises the painting for insurance purposes and discovers that it is a clever fake that is worth only a few thousand dollars.Which of the following statements is true of the scenario?

Accepted Answer

A)  The buyer cannot rescind because he was negligent; he should have investigated the authenticity of the work before bidding on it. 
B)  The buyer can rescind on the basis of unilateral mistake. 
C)  The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting. 
D)  The buyer can rescind on the basis of mutual mistake. 
A)  The buyer cannot rescind because he was negligent; he should have investigated the authenticity of the work before bidding on it. 
B)  The buyer can rescind on the basis of unilateral mistake. 
C)  The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting. 
D)  The buyer can rescind on the basis of mutual mistake.

Question 18

Explain the duty of care that needs to be exercised by parties entering a contract.

Accepted Answer

People who enter into contracts are requ

Question 19

When might a court grant relief for a unilateral mistake even if it is negligent?

Accepted Answer

A court might grant relief for a neglige

Question 20

Which of the following is true of the difference between fraud and misrepresentation?

Accepted Answer

A)  There is no requirement of materiality in fraud cases, whereas misrepresentation requires materiality. 
B)  Unlike misrepresentation, the injured party in fraud cases has the additional option of suing in tort for damages. 
C)  Misrepresentation requires knowledge of the falsity of the misstatement, but fraud doesn't. 
D)  False statements of opinion can be fraud, but not misrepresentation. 
A)  There is no requirement of materiality in fraud cases, whereas misrepresentation requires materiality. 
B)  Unlike misrepresentation, the injured party in fraud cases has the additional option of suing in tort for damages. 
C)  Misrepresentation requires knowledge of the falsity of the misstatement, but fraud doesn't. 
D)  False statements of opinion can be fraud, but not misrepresentation.

Exam 14: Voluntary Consent

Misrepresentation cannot result from an honest mistake.

Williams bought a house from Smith.He was not told before the sale that the house was broken down and reconstructed two times.This has caused the structure of the building to weaken.Williams sued Smith and his real estate agent,seeking to rescind the sale.Can he rescind the contract?

The intent to deceive is also known as capacity.

Undue influence renders a contract voidable and is a ground for rescission.

The elements of fraud are the same as the elements for the tort of deceit.

Fraud in the execution involves misstatements about the content or legal effect of something usually contained in a form or preprinted contract.

A contract is voidable even if duress and undue influence are exerted on a party after entering into a contract.

Gilles tampers with the odometer of a car he is trying to sell.In order to convince the buyer that the car has run fewer miles than it actually has,he manually sets the odometer to the numbers of miles he wants displayed.In this scenario,Gilles is guilty of _____.

The basic rule of unilateral mistake is that if only one of the parties to the agreement is acting under a mistaken belief,this is not grounds for rescission.

Most of the cases in which undue influence is charged involve:

Which of the following best defines scienter?

Jimmy sells an old station wagon to Mary and tells her that it is in excellent condition.He did not bother to verify the statement of the previous owner that the car was making strange noises.Under these circumstances,Mary could best contest the agreement on the grounds of _____.

When Steve convinces Tom to buy a pre-owned car from him while withholding the fact that the car has a significant mechanical problem,it indicates _____.

Explain the duty of care that needs to be exercised by parties entering a contract.

When might a court grant relief for a unilateral mistake even if it is negligent?

Which of the following is true of the difference between fraud and misrepresentation?

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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