Question 1

A contract written exclusively by one party and presented to the other party on a take-it-or-leave-it basis is an adhesion contract.

Accepted Answer

A) True 
 B)False  True

Question 2

Eagle Properties,a real estate investment and sales firm,presents a form contract to its customer Floyd,who wants to buy a certain quarter acre of land in a proposed housing subdivision that Eagle is marketing.Eagle does not pressure Floyd to sign a contract,but offers its form on a take-it-or-leave basis.If Floyd signs the form,is it enforceable?

Accepted Answer

Possibly,but not under all circumstances.This standard form contract is not enforceable if enforcement would be unfair or oppressive.A standard form contract is often an adhesion contract,which may not be enforced if the adhering party-the buyer in this situation-shows that the parties were in substantially unequal bargaining positions and enforcement would be unfair or oppressive.Such a contract may be avoided on grounds of fraud,undue influence,duress,or unconscionability.Unconscionability is the most likely possibility in this question because the seller did not pressure its customer to sign the contract.

Question 3

Misrepresentation of a material fact is an element of fraud.

Accepted Answer

A) True 
 B)False  True

Question 4

Forcing someone to enter into a contract through fear created by threats is duress.

Accepted Answer

A) True 
 B)False

Question 5

To rescind a contract for fraud,a plaintiff must prove an injury.

Accepted Answer

A) True 
 B)False

Question 6

In selling paving stones to Yard & Garden Supply,Trey tells Yard & Garden's buying representative that the stones are "soft as carpet." This is

Accepted Answer

A) adhesion. 
B) fraud. 
C) mistake. 
D) puffery. 
A) adhesion. 
B) fraud. 
C) mistake. 
D) puffery.

Question 7

Bret is convicted of arson for burning down his warehouse to collect the in?surance.On an application for insurance from Cover-All Insurance Company on a new building,in answer to a question about prior convictions,Bret does not disclose his convic?tion.This makes the contract

Accepted Answer

A) binding because the omission is immaterial to Cover-All's decision to issue coverage. 
B) binding due to Cover-All's failure to discover Bret's conviction. 
C) voidable by Bret because the omission is immaterial to Cover-All's decision to issue coverage. 
D) voidable by Cover-All because the omission is material to its decision to issue coverage. 
A) binding because the omission is immaterial to Cover-All's decision to issue coverage. 
B) binding due to Cover-All's failure to discover Bret's conviction. 
C) voidable by Bret because the omission is immaterial to Cover-All's decision to issue coverage. 
D) voidable by Cover-All because the omission is material to its decision to issue coverage.

Question 8

Olin,a professional artist and art teacher,convinces Plato,who has no artistic ability,that he has considerable talent and induces him to pay Olin $10,000 for art lessons.When Plato realizes the truth,he files a suit against Olin.Plato is most likely to recover on the basis of

Accepted Answer

A) fraud. 
B) mistake. 
C) undue influence. 
D) none of the choices. 
A) fraud. 
B) mistake. 
C) undue influence. 
D) none of the choices.

Question 9

Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.

Accepted Answer

A) True 
 B)False

Question 10

Fact Pattern 14-A2 (Questions A5-A6 apply)
Moore Properties,Inc.,offers in writing to sell to New Development Corporation (NDC)a certain half-acre of land for "$112,000." After New Development signs the offer in acceptance and returns it,Moore discovers that the price should have been stated as "$121,000."
-Refer to Fact Pattern 14-A2.The effect of Moore's misstatement of the price will most likely fall on

Accepted Answer

A) Moore and NDC,who must split the difference. 
B) Moore only. 
C) NDC only. 
D) neither Moore nor NDC. 
A) Moore and NDC,who must split the difference. 
B) Moore only. 
C) NDC only. 
D) neither Moore nor NDC.

Question 11

Fact Pattern 14-A2 (Questions A5-A6 apply)
Moore Properties,Inc.,offers in writing to sell to New Development Corporation (NDC)a certain half-acre of land for "$112,000." After New Development signs the offer in acceptance and returns it,Moore discovers that the price should have been stated as "$121,000."
-Refer to Fact Pattern 14-A2.Moore's misstatement of the price is

Accepted Answer

A) a bilateral mistake. 
B) a fraudulent misrepresentation. 
C) a unilateral mistake. 
D) unconscionable. 
A) a bilateral mistake. 
B) a fraudulent misrepresentation. 
C) a unilateral mistake. 
D) unconscionable.

Question 12

Misrepresentation of a material fact cannot occur through conduct alone.

Accepted Answer

A) True 
 B)False

Question 13

Reliance on a non-expert's statement of opinion will not normally enti?tle a party to relief.

Accepted Answer

A) True 
 B)False

Question 14

Economic need generally is sufficient to constitute duress.

Accepted Answer

A) True 
 B)False

Question 15

Fact Pattern 14-A1 (Questions A2-A3 apply)
Linea,an employee of Hard Labor Industries (HLI),is injured in a work-related accident.Based on the diagnosis of Newt,a doctor,Linea accepts $50,000 from HLI and waives the right to future claims.Newt's diagnosis later proves to have been wrong.
-Refer to Fact Pattern 14-A1.Most likely,Linea may

Accepted Answer

A) obtain damages from HLI. 
B) obtain damages from Newt. 
C) recover nothing. 
D) set aside the settlement with HLI. 
A) obtain damages from HLI. 
B) obtain damages from Newt. 
C) recover nothing. 
D) set aside the settlement with HLI.

Question 16

Crosscreek County and Bridgework Corporation enter into a construction contract that includes mathematical specifications.Later Crosscreek,whose engineer,Damon,compiled the specs,learns that some of the dollar figures are incorrect.Bridgework refuses to agree to changes.A court would most likely

Accepted Answer

A) award damages to both parties for the mistakes. 
B) order Damon to be discharged for fraud. 
C) enforce the contract without requiring changes. 
D) reform the contract to reflect the figures accurately. 
A) award damages to both parties for the mistakes. 
B) order Damon to be discharged for fraud. 
C) enforce the contract without requiring changes. 
D) reform the contract to reflect the figures accurately.

Question 17

Sam uses duress to force Tanya to agree to pay him for protecting her re?tail store-Tanya's Trends-against vandalism and destruction.Tanya may

Accepted Answer

A) avoid the contract or choose to carry it out. 
B) do nothing once she has agreed to pay. 
C) recover from her insurer for the cost 
D) recover from the local police for a failure to protect her store. 
A) avoid the contract or choose to carry it out. 
B) do nothing once she has agreed to pay. 
C) recover from her insurer for the cost 
D) recover from the local police for a failure to protect her store.

Question 18

Veronica offers to sell Rowena her luxury sedan and says that it has never been in an accident.Rowena hires Laszlo,a mechanic,to appraise the vehicle.Laszlo says that it most likely has been in an accident.In spite of this information,Rowena buys the car.Later,when it develops mechanical problems,she can

Accepted Answer

A) not rescind the contract. 
B) rescind the contract on the basis of fraud. 
C) rescind the contract on the basis of mistake. 
D) rescind the contract on the basis of unconscionability. 
A) not rescind the contract. 
B) rescind the contract on the basis of fraud. 
C) rescind the contract on the basis of mistake. 
D) rescind the contract on the basis of unconscionability.

Question 19

A mistake of fact cannot be unilateral.

Accepted Answer

A) True 
 B)False

Question 20

Fact Pattern 14-A3 (Questions A16-A17 apply)
Flip,an accountant,certifies an audit for Erstwhile Corporation,Flip's client,knowing that Erstwhile will use the audit to obtain a loan from Deepwater Bank.Flip believes that the audit is true and does not intend to deceive the bank,but does not check the audit before certifying it.
-Refer to Fact Pattern 14-A3.Under these circumstances,Deepwater's best course of action is most likely to

Accepted Answer

A) exert economic duress on Flip to retire from accounting. 
B) rescind the loan on the ground of unconscionability. 
C) recover damages from Flip for any loss on the loan. 
D) undercut Flip's career with negative puffery. 
A) exert economic duress on Flip to retire from accounting. 
B) rescind the loan on the ground of unconscionability. 
C) recover damages from Flip for any loss on the loan. 
D) undercut Flip's career with negative puffery.

Exam 14: Mistakes, fraud, and Voluntary Consent

A contract written exclusively by one party and presented to the other party on a take-it-or-leave-it basis is an adhesion contract.

Misrepresentation of a material fact is an element of fraud.

Forcing someone to enter into a contract through fear created by threats is duress.

To rescind a contract for fraud,a plaintiff must prove an injury.

In selling paving stones to Yard & Garden Supply,Trey tells Yard & Garden's buying representative that the stones are "soft as carpet." This is

Bret is convicted of arson for burning down his warehouse to collect the in?surance.On an application for insurance from Cover-All Insurance Company on a new building,in answer to a question about prior convictions,Bret does not disclose his convic?tion.This makes the contract

Olin,a professional artist and art teacher,convinces Plato,who has no artistic ability,that he has considerable talent and induces him to pay Olin $10,000 for art lessons.When Plato realizes the truth,he files a suit against Olin.Plato is most likely to recover on the basis of

Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.

Misrepresentation of a material fact cannot occur through conduct alone.

Reliance on a non-expert's statement of opinion will not normally enti?tle a party to relief.

Economic need generally is sufficient to constitute duress.

Crosscreek County and Bridgework Corporation enter into a construction contract that includes mathematical specifications.Later Crosscreek,whose engineer,Damon,compiled the specs,learns that some of the dollar figures are incorrect.Bridgework refuses to agree to changes.A court would most likely

Sam uses duress to force Tanya to agree to pay him for protecting her re?tail store-Tanya's Trends-against vandalism and destruction.Tanya may

A mistake of fact cannot be unilateral.

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability,defenses,and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Formation and Duties

Agency Liability and Termination

Employment,immigration,and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors,officers, Shareholders

Corporate Merger, consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

Legal and Ethical Considerations in Sustainability, Discovery, and Corporate Behavior

Legal and Ethical Issues in Contemporary Society

Contracts and Agreements

Legal Issues in Iowa's Video Game Labeling Statute, National Export Initiative, and Contract Law

Banking and Loan Liability

Bankruptcy and Agricultural Credit: Debts, Reporting, and Risk

Legal and Ethical Issues in Employment and Agency Relationships

Legal Issues in Business Franchising, LLC Management, Tax Collection, Director Liability, and Securities Regulations

Compliance and Ethics Issues in Business Operations

Risk Assessment, Virtual Property, Property Rights, and Building Moratoriums

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