Deck 9: Defective Agreements

Question 1

Which of the following is true of undue influence?

A) It occurs when one party threatens to cause physical harm to another.
B) It refers to one party injuring another financially to influence him to enter into a contract.
C) It takes place between people who are not known to each another.
D) It refers to a person in a special relationship causing another's action contrary to free will.

Answer 1

D

Question 2

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

Answer 2

False

Question 3

_____ is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

A) Passive fraud
B) Duress
C) Misrepresentation
D) Undue Influence

Answer 3

B

Question 4

Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false statements made by the promisor.

Question 5

Allen enters into a contract with Joe to sell his car. However by mistake, he undervalues his car. Though the actual value of the car is $6000, he sells it to Joe for $3000. During the purchase, Joe is aware of the actual value but does not communicate this fact to Allen. Which of the following is likely to be true in such a scenario?

A) Allen is entitled to compensation through a court of law.
B) Allen is entitled to cancel the contract because he was not aware of the actual value.
C) Joe is entitled to keep the car because the contract is valid.
D) Joe must pay the difference to Allen in order to validate the purchase.

Question 6

Mistakes such as duress and undue influence render contracts void.

Question 7

James orally entered into a contract to sell 100 tonnes of cotton to Bryan for a price of $1000 per ton. Both parties subsequently signed a written contract. However, the written contract mistakenly stated the price of cotton as $1100 per ton. While signing, Bryan failed to notice this mistake. Which of the following contract terms will govern in such a scenario?

A) Both parties must consider the contract null because a mutual mistake has occurred.
B) Bryan can hold James responsible for the error and cancel the contract.
C) James can nullify the contract stating Bryan's mistake of not noticing the error.
D) Both parties must carry on with the contract as agreed orally.

Question 8

Failure to disclose information when there is duty to do so is known as passive fraud.

Question 9

A contract is void if parties to a contract are mutually mistaken about their expectations.

Question 10

When a mistake occurs, the parties may specify a different outcome in their contract, irrespective of what the law provides.

Question 11

When can a person rescind a contract? In order to rescind, what are the four steps one must undertake after returning what one received under a contract?

Question 12

A false statement made in the belief that it is true is known as innocent misrepresentation.

Question 13

Economic duress occurs when:

A) one party offers a hard bargain and takes advantage of the other's urgent need to make a contract.
B) a person agrees to a contract merely because of difficult financial circumstances that are not the fault of the other party.
C) a person threatens to harm another person financially in order to get an agreement.
D) one party makes a threat of violence and the other agrees to contract to avoid injury.

Question 14

If an unilateral mistake regarding price results arise from misunderstanding an oral quotation of the price, the contract is invalid.

Question 15

Which of the following statements is true of fraud in the inducement?

A) It occurs when a party intends to make a contract based on a false statement of terms.
B) It refers to a defrauded party not signing a contract if the nature of writing cannot be understood.
C) It refers to a party forced to sign a contract under duress.
D) It takes place when a party unintentionally signs a contract after being misguided by another.

Question 16

As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

Question 17

Which of the following is true regarding parties who make mutual mistakes of law?

A) The contract becomes null and nonbinding on the parties.
B) One of the parties can annul the contract stating that it is a mistake of law.
C) The parties are expected to have knowledge of the law when making the contract.
D) Both parties can claim relief and compensation through a court of law.

Question 18

A false statement made in the belief that it is true is known as innocent misrepresentation.

Question 19

Mark, a civil engineer, entered into a contract with David. As per the contract, Mark agreed to design and build a house for David for a specified fee. Mark provided David with an estimation of the total cost and the contract was mutually agreed upon. However, during construction, when Mark increased the price stating a miscalculation on his part, David refused to pay the amount. This scenario is an example of a _____ mistake.

A) mutual
B) collective
C) collateral
D) unilateral

Question 20

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.