Exam 14: B: Mistakes,fraud,and Voluntary Consent

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?

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

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

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

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 in?crease sub?stantially.Nora buys 500 shares of OKGI at $10 per share,but the price soon drops to $2.Nora can successfully recover

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

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

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

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

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

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

Misrepresentation of a material fact cannot occur through conduct alone.

Intent to deceive is an element of fraud.

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

In effect,negligent misrepresentation is treated as fraudulent misrepresentation.

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-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

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

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

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