Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Mary induces Nick to sign a contract by placing a gun to Nick's head. The contract is void

Accepted Answer

A)  only if the contract has an illegal purpose. 
B)  only if the terms are unfair to Nick. 
C)  under any circumstances. 
D)  under no circumstances. 
A)  only if the contract has an illegal purpose. 
B)  only if the terms are unfair to Nick. 
C)  under any circumstances. 
D)  under no circumstances.

Question 3

Roc buys a farm from Steve, who claims that it would be a prime site for a housing subdivision. Roc later learns that the law does not permit the land to be used for housing. Roc may

Accepted Answer

A)  not rescind the contract. 
B)  rescind the contract only if Roc did not know the law before the deal. 
C)  rescind the contract only if Steve knew about the law before the deal. 
D)  rescind the contract only if the law is not common knowledge. 
A)  not rescind the contract. 
B)  rescind the contract only if Roc did not know the law before the deal. 
C)  rescind the contract only if Steve knew about the law before the deal. 
D)  rescind the contract only if the law is not common knowledge.

Question 4

If the subject matter of a contract turns out to be more valuable than one of the parties believed it would be, that party can rescind the contract.

Accepted Answer

A) True 
 B)False

Question 5

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 6

To reform a contract is to cancel it.

Accepted Answer

A) True 
 B)False

Question 7

A mistake in judgment as to value is a ground to avoid a contract.

Accepted Answer

A) True 
 B)False

Question 8

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 circumstance

Question 9

A general contractor who knows that a subcontractor's bid is a mistake cannot enforce the bid.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

Rally offers to sell Sophie, who is seventeen years of age, a car about which Rally intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that

Accepted Answer

A)  Rally intentionally deceived Sophie. 
B)  Rally made statements that were obviously exaggerated. 
C)  Sophie does not know anything about cars. 
D)  Sophie is under eighteen years of age. 
A)  Rally intentionally deceived Sophie. 
B)  Rally made statements that were obviously exaggerated. 
C)  Sophie does not know anything about cars. 
D)  Sophie is under eighteen years of age.

Question 13

Allen, who is Beth's guardian, convinces her to buy a certain parcel of land from Chris at a greatly inflated price. Allen may be liable for

Accepted Answer

A)  duress. 
B)  fraud. 
C)  puffery. 
D)  undue influence. 
A)  duress. 
B)  fraud. 
C)  puffery. 
D)  undue influence.

Question 14

Yvon convinces Zack, who has no athletic ability, that Zack has considerable talent and induces Zack to pay Yvon $10,000 for golf lessons. When Zack realizes the truth, he files a suit against Yvon. Zack is most likely to recover on the basis of

Accepted Answer

A)  duress. 
B)  misrepresentation. 
C)  unconscionability. 
D)  none of the choices. 
A)  duress. 
B)  misrepresentation. 
C)  unconscionability. 
D)  none of the choices.

Question 15

A seller's failure to disclose a serious defect about a product for sale may give rise to an action for fraud.

Accepted Answer

A) True 
 B)False

Question 16

Don, a salesperson for Excel Autos, promises Fern that a certain car will give her a "smooth ride." Don offers a test drive, which Fern de?clines. She buys the car but soon realizes that its suspension is in poor condi?tion. Fern

Accepted Answer

A)  can rescind the contract on the ground of fraud. 
B)  can rescind the contract on the ground of misrepresentation. 
C)  can rescind the contract on the ground of mistake. 
D)  was not defrauded. 
A)  can rescind the contract on the ground of fraud. 
B)  can rescind the contract on the ground of misrepresentation. 
C)  can rescind the contract on the ground of mistake. 
D)  was not defrauded.

Question 17

At an auction for the first time, Max bids on an object, believing that the auctioneer requested an amount less than the price actually asked. Max is

Accepted Answer

A)  liable on the bid. 
B)  not liable on the bid because Max misunderstood the auctioneer. 
C)  not liable on the bid because the auctioneer misstated the price. 
D)  not liable on the bid because the object is probably overpriced. 
A)  liable on the bid. 
B)  not liable on the bid because Max misunderstood the auctioneer. 
C)  not liable on the bid because the auctioneer misstated the price. 
D)  not liable on the bid because the object is probably overpriced.

Question 18

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

Accepted Answer

A)  Vic intentionally deceived Will. 
B)  Vic misrepresented several material facts. 
C)  Will is under twenty-one years of age. 
D)  Will justifiably relied on Vic's misrepresentations. 
A)  Vic intentionally deceived Will. 
B)  Vic misrepresented several material facts. 
C)  Will is under twenty-one years of age. 
D)  Will justifiably relied on Vic's misrepresentations.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Even if an obvious, significant clerical error exists in a written contract, the contract is enforceable.

Accepted Answer

A) True 
 B)False

Exam 14: Mistakes, Fraud, and Voluntary Consent

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

Mary induces Nick to sign a contract by placing a gun to Nick's head. The contract is void

Roc buys a farm from Steve, who claims that it would be a prime site for a housing subdivision. Roc later learns that the law does not permit the land to be used for housing. Roc may

If the subject matter of a contract turns out to be more valuable than one of the parties believed it would be, that party can rescind the contract.

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

To reform a contract is to cancel it.

A mistake in judgment as to value is a ground to avoid a contract.

A general contractor who knows that a subcontractor's bid is a mistake cannot enforce the bid.

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

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

Rally offers to sell Sophie, who is seventeen years of age, a car about which Rally intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that

Allen, who is Beth's guardian, convinces her to buy a certain parcel of land from Chris at a greatly inflated price. Allen may be liable for

Yvon convinces Zack, who has no athletic ability, that Zack has considerable talent and induces Zack to pay Yvon $10,000 for golf lessons. When Zack realizes the truth, he files a suit against Yvon. Zack is most likely to recover on the basis of

A seller's failure to disclose a serious defect about a product for sale may give rise to an action for fraud.

Don, a salesperson for Excel Autos, promises Fern that a certain car will give her a "smooth ride." Don offers a test drive, which Fern de?clines. She buys the car but soon realizes that its suspension is in poor condi?tion. Fern

At an auction for the first time, Max bids on an object, believing that the auctioneer requested an amount less than the price actually asked. Max is

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

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

Even if an obvious, significant clerical error exists in a written contract, the contract is enforceable.

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

The Statute of Fraudswriting Requirements

Ethics and Business Decision Making

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crimes

Nature and Terminology

Agreement

Consideration

Capacity and Legality

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

E-Contracts and E-Signatures

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks, the Banking System, and E-Money

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Liability to Third Parties and Termination

Employment and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporationsformation and Financing

Corporationsdirectors, Officers, Shareholders

Corporationsmerger, Consolidation, Termination

Corporationssecurities Law Corporate Governance

Law for Small Businesses

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Personal Property and Bailments

Real Property and Landlord-Tenant Relationships

Insurance

Wills and Trusts

Professional Liaility and Accountability

International Law in a Global Economy

Legal and Ethical Issues in Business

Legal Issues

Contracts and Business Law

Contracts and Liability

Banking and Payment Systems

Loan Security and Repossession in Credit Transactions

Employment Law and Ethics

Legal Issues in Corporate Governance and Business Operations

Legal and Ethical Issues in Environmental Protection and Consumer Rights