Question 1

Explain undue influence.

Accepted Answer

The basic idea behind undue influence is to protect the old, the timid, and the physically or mentally weak from those who gain their confidence and attempt to take advantage of them. Victims of undue influence must have the mental capacity to contract but lack the ability to adequately protect themselves against unscrupulous persons who gain their confidence. In most states, a confidential relationship raises a presumption of undue influence that the benefiting party must disprove.
Most of the cases in which undue influence is charged involve relatives, friends, or long-time advisors (such as lawyers or bankers) of an elderly or sick person, who are alleged to have gotten the victim to make gifts or sales at unfair prices. In determining whether under influence occurred, each case is very fact-specific.

Question 2

Harry owns a Cadillac and a Porsche. Ryan has always wanted a Porsche and knows Harry owns one. Harry decides to sell his Cadillac and buy a BMW. A mutual friend of Ryan and Harry tells Ryan, "Harry's selling his car." Thinking Harry is selling the Porsche (he does not know he also has a Cadillac), Ryan calls Harry and says, "I'll give you $9,500 for your car." Harry, thinking Ryan is talking about the Cadillac, says, "You've got a deal." On what grounds is the above agreement open for rescission?

Accepted Answer

A)  Mutual mistake 
B)  Fraud 
C)  Misrepresentation 
D)  Unilateral mistake 
A)  Mutual mistake 
B)  Fraud 
C)  Misrepresentation 
D)  Unilateral mistake A

Question 3

Blackhawk Corporation contracted to sell Greeneye Corporation some materials that Greeneye needed to fulfill a contract it had with a third party. Knowing that Greeneye was in desperate need of the materials, Blackhawk called Greeneye the day before delivery was due and threatened to withhold delivery unless Greeneye agreed to pay a higher price. Greeneye could not get the materials elsewhere and would suffer a huge financial loss without them, so it agreed to pay the higher price. Greeneye later asserts that its promise to pay the higher price is unenforceable because it was the product of duress. Which of the following statements is true of this situation?

Accepted Answer

A)  Blackhawk only exercised superior bargaining powers and therefore is not at fault. 
B)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm could be considered duress and the contract may be considered voidable. 
C)  Blackhawk's threat could not be considered duress because they had a legal right to seek a higher price for its goods. 
D)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm may be unintentional tort, but not duress. 
A)  Blackhawk only exercised superior bargaining powers and therefore is not at fault. 
B)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm could be considered duress and the contract may be considered voidable. 
C)  Blackhawk's threat could not be considered duress because they had a legal right to seek a higher price for its goods. 
D)  Under modern contract law, Blackhawk's threat to cause Greeneye economic harm may be unintentional tort, but not duress. B

Question 4

Which of the following statements is true of justifiable reliance?

Accepted Answer

A)  Misrepresentation of public facts amounts to justifiable reliance. 
B)  It cannot lead to rescission of a contract if the complaining party was aware of the truth. 
C)  There should not be any causal connection between a misrepresentation and the complaining party's entry into the contract. 
D)  It is an important element of unilateral mistakes. 
A)  Misrepresentation of public facts amounts to justifiable reliance. 
B)  It cannot lead to rescission of a contract if the complaining party was aware of the truth. 
C)  There should not be any causal connection between a misrepresentation and the complaining party's entry into the contract. 
D)  It is an important element of unilateral mistakes.

Question 5

Which of the following is true about unilateral mistakes?

Accepted Answer

A)  The court does not grant rescission even if the mistaken party is slightly negligent. 
B)  The court will grant relief even if the person's own negligence is the cause of his or her mistake. 
C)  The plaintiff needs to promptly notify the defendant when a mistake is discovered. 
D)  The basic rule is that it is grounds for rescission only if both parties to the agreement are acting under a mistaken belief. 
A)  The court does not grant rescission even if the mistaken party is slightly negligent. 
B)  The court will grant relief even if the person's own negligence is the cause of his or her mistake. 
C)  The plaintiff needs to promptly notify the defendant when a mistake is discovered. 
D)  The basic rule is that it is grounds for rescission only if both parties to the agreement are acting under a mistaken belief.

Question 6

Which of the following statements is considered an actionable misrepresentation?

Accepted Answer

A)  A statement about the future 
B)  A statement that amounts to puffing 
C)  A statement concerning a present fact 
D)  A statement of opinion 
A)  A statement about the future 
B)  A statement that amounts to puffing 
C)  A statement concerning a present fact 
D)  A statement of opinion

Question 7

Which of the following best defines scienter?

Accepted Answer

A)  It refers to the sales talk that people make while trying to convince a person to sign a contract. 
B)  It refers to the mental state of the defendant. 
C)  It pertains to an actionable misrepresentation that concerns a present or past fact. 
D)  It is a causal connection between a misrepresentation and the complaining party's entry into the contract. 
A)  It refers to the sales talk that people make while trying to convince a person to sign a contract. 
B)  It refers to the mental state of the defendant. 
C)  It pertains to an actionable misrepresentation that concerns a present or past fact. 
D)  It is a causal connection between a misrepresentation and the complaining party's entry into the contract.

Question 8

Which of the following is best associated with "caveat emptor"?

Accepted Answer

A)  Scienter 
B)  Fraud by silence 
C)  Fraud in the execution 
D)  Undue influence 
A)  Scienter 
B)  Fraud by silence 
C)  Fraud in the execution 
D)  Undue influence

Question 9

Most of the cases in which undue influence is charged involve:

Accepted Answer

A)  force or threat of injury resulting in economic damages. 
B)  misstatements about the content or legal effect of something usually contained in a form or preprinted contract. 
C)  unilateral or mutual mistakes resulting in serious injustice. 
D)  longtime advisors of elderly or sick people, who are alleged to have gotten the victim to make gifts/sales at unfair prices. 
A)  force or threat of injury resulting in economic damages. 
B)  misstatements about the content or legal effect of something usually contained in a form or preprinted contract. 
C)  unilateral or mutual mistakes resulting in serious injustice. 
D)  longtime advisors of elderly or sick people, who are alleged to have gotten the victim to make gifts/sales at unfair prices.

Question 10

An auction house puts a painting up for sale, which they think to be Pablo Picasso's "Acrobat and Young Harlequin." A Japanese businessman purchases the painting for $50 million. The businessman appraises the painting for insurance purposes and discovers that it is a clever fake that is worth only a few thousand dollars. Which of the following statements is true of the scenario?

Accepted Answer

A)  The buyer cannot rescind because he was negligent; he should have investigated the authenticity of the work before bidding on it. 
B)  The buyer can rescind on the basis of unilateral mistake. 
C)  The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting. 
D)  The buyer can rescind on the basis of mutual mistake. 
A)  The buyer cannot rescind because he was negligent; he should have investigated the authenticity of the work before bidding on it. 
B)  The buyer can rescind on the basis of unilateral mistake. 
C)  The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting. 
D)  The buyer can rescind on the basis of mutual mistake.

Question 11

To prove a case of duress, modern courts require only:

Accepted Answer

A)  the plaintiff to drive a hard bargain. 
B)  that the threat be a wrongful one. 
C)  a contract to be more beneficial to one of the parties. 
D)  statements that amount to puffery. 
A)  the plaintiff to drive a hard bargain. 
B)  that the threat be a wrongful one. 
C)  a contract to be more beneficial to one of the parties. 
D)  statements that amount to puffery.

Question 12

A key point of differentiation between duress and undue influence lies in the:

Accepted Answer

A)  net worth of the contract in question. 
B)  time at which the contract was signed. 
C)  relationship between the parties at the time of the contract. 
D)  type of property in question. 
A)  net worth of the contract in question. 
B)  time at which the contract was signed. 
C)  relationship between the parties at the time of the contract. 
D)  type of property in question.

Question 13

Phil buys a laptop from Mark for $1,000. Mark knew that the laptop had hardware problems. However, he told Phil that it was in excellent condition. In this scenario, which of the following is most likely to be true?

Accepted Answer

A)  Mark does not owe Phil anything because it was Phil's duty to check if Mark was lying. 
B)  Mark can dismiss any fraud accusations because it was a case of mutual misunderstanding. 
C)  Phil can sue for the difference between purchase price and true value of the laptop with hardware problems. 
D)  Phil can recover 20 percent of the repair costs on the condition that he returns the laptop to Mike. 
A)  Mark does not owe Phil anything because it was Phil's duty to check if Mark was lying. 
B)  Mark can dismiss any fraud accusations because it was a case of mutual misunderstanding. 
C)  Phil can sue for the difference between purchase price and true value of the laptop with hardware problems. 
D)  Phil can recover 20 percent of the repair costs on the condition that he returns the laptop to Mike.

Question 14

Those who discover that they have been the victim of misrepresentation, fraud, duress, undue influence, or mistake must act promptly to rescind or disaffirm their contracts.

Accepted Answer

A) True 
 B)False

Question 15

The elements of misrepresentation are ordinarily given as misrepresentation of a material fact justifiably relied on to the detriment of the person relying.

Accepted Answer

A) True 
 B)False

Question 16

The term mistake is used in contract law to describe the situation in which one or both of the parties to an agreement acted under an untrue belief about the existence or nonexistence of a material fact.

Accepted Answer

A) True 
 B)False

Question 17

Mutual mistake is always a basis for granting rescission of the contract at the request of either party.

Accepted Answer

A) True 
 B)False

Question 18

Gilles tampers with the odometer of a car he is trying to sell. In order to convince the buyer that the car has run fewer miles than it actually has, he manually sets the odometer to the numbers of miles he wants displayed. In this scenario, Gilles is guilty of _____.

Accepted Answer

A)  fraud with intent to deceive 
B)  fraud by silence 
C)  duress 
D)  caveat emptor 
A)  fraud with intent to deceive 
B)  fraud by silence 
C)  duress 
D)  caveat emptor

Question 19

Which of the following is true of the difference between fraud and misrepresentation?

Accepted Answer

A)  There is no requirement of materiality in fraud cases, whereas misrepresentation requires materiality. 
B)  Unlike misrepresentation, the injured party in fraud cases has the additional option of suing in tort for damages. 
C)  Misrepresentation requires knowledge of the falsity of the misstatement, but fraud doesn't. 
D)  False statements of opinion can be fraud, but not misrepresentation. 
A)  There is no requirement of materiality in fraud cases, whereas misrepresentation requires materiality. 
B)  Unlike misrepresentation, the injured party in fraud cases has the additional option of suing in tort for damages. 
C)  Misrepresentation requires knowledge of the falsity of the misstatement, but fraud doesn't. 
D)  False statements of opinion can be fraud, but not misrepresentation.

Question 20

Taking action to conceal a fact indicates scienter.

Accepted Answer

A) True 
 B)False

Exam 14: Voluntary Consent

Explain undue influence.

Which of the following statements is true of justifiable reliance?

Which of the following is true about unilateral mistakes?

Which of the following statements is considered an actionable misrepresentation?

Which of the following best defines scienter?

Which of the following is best associated with "caveat emptor"?

Most of the cases in which undue influence is charged involve:

To prove a case of duress, modern courts require only:

A key point of differentiation between duress and undue influence lies in the:

Phil buys a laptop from Mark for $1,000. Mark knew that the laptop had hardware problems. However, he told Phil that it was in excellent condition. In this scenario, which of the following is most likely to be true?

Those who discover that they have been the victim of misrepresentation, fraud, duress, undue influence, or mistake must act promptly to rescind or disaffirm their contracts.

The elements of misrepresentation are ordinarily given as misrepresentation of a material fact justifiably relied on to the detriment of the person relying.

The term mistake is used in contract law to describe the situation in which one or both of the parties to an agreement acted under an untrue belief about the existence or nonexistence of a material fact.

Mutual mistake is always a basis for granting rescission of the contract at the request of either party.

Gilles tampers with the odometer of a car he is trying to sell. In order to convince the buyer that the car has run fewer miles than it actually has, he manually sets the odometer to the numbers of miles he wants displayed. In this scenario, Gilles is guilty of _____.

Which of the following is true of the difference between fraud and misrepresentation?

Taking action to conceal a fact indicates scienter.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

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Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

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Consideration

Capacity to Contract

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The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

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Remedies for Breach of Sales Contracts

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Liability of Principals and Agents to Third Parties

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Introduction to Security

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