Question 1

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. D

Question 2

May is a stockbroker. Due to May's statements, Nora believes that the price of OK Goods, Inc. (OKGI), a widely traded stock, is going to increase substantially. Nora buys 500 shares of OKGI at $10 per share, but the price soon drops to $2. Nora can successfully recover

Accepted Answer

A)  nothing. 
B)  the amount of the purchase price. 
C)  the amount of the purchase price plus the expected increase. 
D)  the amount of the purchase price plus the unexpected decrease. 
A)  nothing. 
B)  the amount of the purchase price. 
C)  the amount of the purchase price plus the expected increase. 
D)  the amount of the purchase price plus the unexpected decrease. A

Question 3

Misrepresentation of a material fact cannot occur through words alone.

Accepted Answer

A) True 
 B)False  False

Question 4

Economic need generally is sufficient to constitute duress.

Accepted Answer

A) True 
 B)False

Question 5

A mistake of fact cannot be unilateral.

Accepted Answer

A) True 
 B)False

Question 6

Misrepresentation of a material fact is an element of fraud.

Accepted Answer

A) True 
 B)False

Question 7

Misrepresentation of a material fact cannot occur through conduct alone.

Accepted Answer

A) True 
 B)False

Question 8

In effect, negligent misrepresentation is treated as fraudulent misrepresentation.

Accepted Answer

A) True 
 B)False

Question 9

Fact Pattern 14-A3
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

Accepted Answer

A)  a mistake of value. 
B)  innocent misrepresentation. 
C)  negligent misrepresentation. 
D)  unconscionable. 
A)  a mistake of value. 
B)  innocent misrepresentation. 
C)  negligent misrepresentation. 
D)  unconscionable.

Question 10

Fact Pattern 14-A1
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

Accepted Answer

A)  a mistake of fact. 
B)  an expert's puffery. 
C)  innocent misrepresentation. 
D)  negligent misrepresentation. 
A)  a mistake of fact. 
B)  an expert's puffery. 
C)  innocent misrepresentation. 
D)  negligent misrepresentation.

Question 11

Bret is convicted of arson for burning down his warehouse to collect the insurance. 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 conviction. 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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  impose her own scam on Cartier without liability. 
B)  induce Cartier to give her his other clients' funds without recourse. 
C)  rescind the contract to invest in the Web site. 
D)  sabotage Cartier's career in any way possible. 
A)  impose her own scam on Cartier without liability. 
B)  induce Cartier to give her his other clients' funds without recourse. 
C)  rescind the contract to invest in the Web site. 
D)  sabotage Cartier's career in any way possible.

Question 14

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

Accepted Answer

A)  keep it because Caitlin should have known about it. 
B)  keep it because the sale of a house includes everything in it. 
C)  not keep it because there was no voluntary consent to its sale. 
D)  not keep it because the sale of a house includes nothing in it. 
A)  keep it because Caitlin should have known about it. 
B)  keep it because the sale of a house includes everything in it. 
C)  not keep it because there was no voluntary consent to its sale. 
D)  not keep it because the sale of a house includes nothing in it.

Question 15

Intent to deceive is an element of fraud.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  undue influence. 
B)  fraud. 
C)  mistake. 
D)  nothing. 
A)  undue influence. 
B)  fraud. 
C)  mistake. 
D)  nothing.

Question 17

Fact Pattern 14-A1
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 18

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

Accepted Answer

A) True 
 B)False

Question 19

Fact Pattern 14-A2
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 20

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

Exam 14: Mistakes, Fraud, and Voluntary Consent

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

May is a stockbroker. Due to May's statements, Nora believes that the price of OK Goods, Inc. (OKGI), a widely traded stock, is going to increase substantially. Nora buys 500 shares of OKGI at $10 per share, but the price soon drops to $2. Nora can successfully recover

Misrepresentation of a material fact cannot occur through words alone.

Economic need generally is sufficient to constitute duress.

A mistake of fact cannot be unilateral.

Misrepresentation of a material fact is an element of fraud.

Misrepresentation of a material fact cannot occur through conduct alone.

In effect, negligent misrepresentation is treated as fraudulent misrepresentation.

Bret is convicted of arson for burning down his warehouse to collect the insurance. 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 conviction. This makes the contract

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

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

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

Intent to deceive is an element of fraud.

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

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

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.

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

for Unit One

for Unit Two

for Unit Three

for Unit Four

for Unit Five

for Unit Sex

for Unit Seven

for Unit Eighet

for Unit Nine

for Unit Ten

Filters