Exam 14: Mistakes, fraud, and Voluntary Consent

Intent to deceive is an element of fraud.

Gary threatens physical harm to force Hugh to sell his business,Imports from Asia,Inc.,to Gary for a below-market price.This is

Danton,a popular performer,dies.His spouse Caitlin sells their house to Buck.Un?known to Caitlin or Buck,in one of the closets is the mas?ter recording of an unreleased album.With respect to this recording,Buck can

Cartier,an accountant,convinces his client Bianca to sign a contract to invest her savings in a nonexistent social-networking Web site.When Bianca learns the truth,she can

An innocent party can enforce a fraudulent contract.

Reformation is a remedy in which the terms of a contract are altered to reflect the true intentions of the parties.

Overestimating the value of an object is a mistake for which a court will normally provide relief.

Nero makes an honest but erroneous statement that misrepresents a ma?te?rial fact in a contractual transaction with Odell.Nero is guilty of

In effect,negligent misrepresentation is treated as fraudulent misrepresentation.

Misrepresentation of a material fact cannot occur through words alone.

A contract is always enforceable even if one party is aware that the other party made a mistake of fact.

Alpha Investments,Inc.,offers to buy Beta Computer Corporation.On May 1,Beta gives Alpha copies of Beta's financial statements for the pre?vious year.The statements show an inventory of $1 million.On May 15,Beta discovers that the previous year's inventory is overstated by $500,000,but does not inform Alpha.On June 1,Alpha,relying on the fi?nancial statements,buys Beta.On June 10,Alpha discovers the inven?tory over?statement.Can Alpha succeed in a suit against Beta for fraud?

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.On learning the truth,Deepwater's chief loan officer confronts Flip,who says,"I didn't know." This is

Jill and Karl contract for the sale of Jill's horse for $1,000.Unknown to either party,the horse has died.Karl is

An expert's false statement to a naive buyer about a technical detail will not usually entitle the buyer to rescind a contract.

Gina induces Hu to enter into a contract for the purchase of a condominium about which Gina knowingly misrepresents a number of material features.When Hu discovers the truth,Hu can

If a price quotation contains a mistake in the adding of a number of fig?ures,the contract may not be enforceable.

Sylvia creates a profile for Today's Date,Inc.,an online dating service.She exaggerates her appealing features and posts a photo of her friend Uva,whom Sylvia thinks is prettier.Enticed by the profile,Van subscribes to the service so that he can contact Sylvia.Van is most likely a victim of

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.In terms of the impact on Linea's agreement with HLI,Newt's misdiagnosis is

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