Exam 14: Mistakes, Fraud, and Voluntary Consent

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

If the parties to a contract attach materially different meanings to a contract term, the contract cannot be rescinded.

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

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

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

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. Under these circumstances, Deepwater's best course of action is most likely to

Alpha Investments, Inc., offers to buy Beta Computer Corporation. On May 1, Beta gives Alpha copies of Beta's financial statements for the previous 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 financial statements, buys Beta. On June 10, Alpha discovers the inventory overstatement. Can Alpha succeed in a suit against Beta for fraud

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

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

An innocent party can enforce a fraudulent contract.

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

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

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. Moore's misstatement of the price is

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

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

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

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

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

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

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