Deck 13: Voluntary Consent

Question 1

The identity of the parties to a contract is an example of a material fact.

Answer 1

True

Question 2

If a contractor's bid was significantly low because he or she made a mistake in adding up the total estimated costs, any contract resulting from the bid is still normally enforceable.

Answer 2

False

Question 3

When a seller uses "seller's talk" to tout their products and services, a seller risks being liable for fraud.

Answer 3

False

Question 4

If a mistake concerns the quality of the object of the contract, the mistake is one of fact, and the contract normally is enforceable.

Question 5

A bilateral mistake occurs when both parties are mistaken about the same material fact.

Question 6

Voluntary consent is not lacking if one or more of the parties is mistaken about an important fact concerning the subject matter of the contract.

Question 7

A misrepresentation must be expressly made through the words or writings of another.

Question 8

A statement of opinion cannot be used in a claim of fraud.

Question 9

One type of bilateral mistake can occur when a word or term in a contract is subject to more than one reasonable interpretation.

Question 10

A material fact is a fact that is important and central to the subject matter of a contract.

Question 11

The first element of proving fraud is to show that the innocent party is not easily fooled.

Question 12

Fraudulent misrepresentation is a tort.

Question 13

Any party who does not receive what he or she considers a fair bargain can successfully argue mistake.

Question 14

When both parties to a contract are mistaken about the same material fact, a unilateral mistake has occurred.

Question 15

Intent to deceive is an element of fraud.

Question 16

The reason that mistakes of value have legal significance is that value is invariable.

Question 17

A unilateral mistake does not give the mistaken party any right to avoid the contract.

Question 18

An innocent party does not need to suffer an injury to collect damages as a result of a misrepresentation.

Question 19

An otherwise valid contract is enforceable even if the parties have not genuinely agreed to its terms.

Question 20

When both parties to a contract are mistaken about the same material fact, the contract can be rescinded by either party.

Question 21

Persuasion that induces a person to act according to the will of the dominant party is undue influence .

Question 22

Reliance on a misrepresentation is justified even if the innocent party knows the true facts.

Question 23

All parties to a contract have a duty to come forward and disclose all relevant facts.

Question 24

Undue influence can arise from a confidential relationship or a relationship based on trust.

Question 25

S cienter clearly exists if a party knows a fact is not as stated.

Question 26

The element of justifiable reliance requires the misrepresentation to be an important factor in inducing the deceived party to enter into the contract.

Question 27

Even if the defects on a piece of property are obvious, the buyer can justifiably rely on the seller's misrepresentations concerning those defects.

Question 28

Forcing a party to enter into a contract under the fear of threats is legally defined as undue influence .

Question 29

Fact Pattern 13-1 Data Storage Inc. offers to provide cloud-computing services to Enterprise LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprise accepts the written offer.
Refer to Fact Pattern 13-1. Data Storage's best defense against enforcement of the contract is that Enterprise knew

A) a bilateral mistake supports the cancellation of a contract.
B) a mistake of value supports the cancellation of a contract.
C) a unilateral mistake supports the cancellation of a contract.
D) the price was below the prices of comparable services.

Question 30

In actions based on fraud, courts often award punitive damages.

Question 31

In general, a person should not rely on a non-lawyer's statement about a point of law.

Question 32

The party on whom duress is exerted can choose to avoid the entire transaction.

Question 33

Dana believes that a new phone to be sold by Ear Fruit Inc. will become the most popular phone in the market. Dana enters into a contract to buy 500 shares of Ear Fruit stock, anticipating an increase in its value. The phone does not become popular, and the price of the stock does not rise. Dana can recover

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.

Question 34

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is

A) still liable on the bid.
B) not liable on the bid because he underestimated the cost of repairs.
C) not liable on the bid because the auctioneer misrepresented the value.
D) not liable on the bid because an auction is not subject to contract law.

Question 35

Misrepresentation of law does not ordinarily entitle a party to avoid a contract.

Question 36

Bob wants to sell his recreational vehicle (RV) for $21,000. He e-mails Curt with an offer, but mistakenly types that the price is $20,100. Curt accepts the offer and pays Bob $20,100. Bob

A) can avoid the deal due to a unilateral mistake.
B) can avoid the deal due to a bilateral mistake.
C) can avoid the deal due to a mistake of value.
D) must deliver the RV.

Question 37

The party on whom duress is exerted can choose to carry out the contract.

Question 38

Fact Pattern 13-1 Data Storage Inc. offers to provide cloud-computing services to Enterprise LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprise accepts the written offer.
Refer to Fact Pattern 13-1. Enterprise's best argument in favor of enforcement of the contract is that

A) a bilateral mistake does not afford relief from a contract.
B) a mistake of value does not afford relief from a contract.
C) a unilateral mistake does not afford relief from a contract.
D) the price was below the prices of comparable services.

Question 39

If a seller knows of a serious potential problem that the buyer cannot reasonably be expected to discover, the seller may have a duty to speak.

Question 40

Consent to the terms of a contract is voluntary even if one of the parties is forced into the agreement.

Question 41

Ralph enters into a contract with Skye to buy her land based on her assertion that the land is open to development. After the sale, Ralph learns that only a small section of the land can be built on-a local law prohibits construction on the rest of the property. Ralph can

A) not avoid the contract because persons are assumed to know the law.
B) avoid the contract due to a bilateral mistake.
C) avoid the contract due to undue influence.
D) avoid the contract due to fraud.

Question 42

Ken, a real estate agent, assures Lily that a certain parcel of commercial property fronts on the most highly trafficked street in Metro City. Lily buys the property and then discovers that the street has no more traffic than any other in its vicinity. Lily is most likely a victim of

A) duress.
B) fraudulent misrepresentation.
C) mistake.
D) opinion.

Question 43

Fact Pattern 13-4 In selling a warehouse, Riley tells Sam that he knows that the property has a certain capacity, making it suitable for a nightclub. Riley knows nothing about the capacity of the building, but it is not as he specifies. Sam buys the building.
Refer to Fact Pattern 13-4. Riley's knowledge that facts were falsely represented to Sam is known as

A) unilateral mistake.
B) misrepresentation by silence .
C) scienter.
D) none of these.

Question 44

Bram, a salesperson for Cruisin' Motors, promises Deb a certain car will give her a "smooth ride." Bram offers a test drive, which Deb declines. She buys the car but soon realizes its suspension is in poor condition. Deb can rescind the contract on the ground of

A) fraudulent misrepresentation.
B) undue influence.
C) mistake.
D) none of the choices.

Question 45

Fact Pattern 13 - 2 Owen, an employee of Plumbing & Pipes LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Construction Inc. is seeking bids. Consequently, Plumbing & Pipes' bid is significantly low.
Refer to Fact Pattern 13-2. The contract with Quality Construction that includes the mistake may be rescinded if the mistake was

A) made inadvertently and without gross negligence.
B) intentional.
C) made with gross negligence.
D) unilateral.

Question 46

Dix agrees to sell Eli, for $1,500, a remote parcel of land. Soon after, the land becomes much more valuable due to the construction of a new highway nearby. A court would

A) not rescind the contract .
B) rescind the contract on the basis of fraud.
C) rescind the contract on the basis of mistake.
D) rescind the contract on the basis of undue influence.

Question 47

Car Lot's salesperson Dick offers to sell Ernie, who is twenty years old, a car. Dick intentionally misrepresents the vehicle's use and repairs. In reliance, Ernie buys the car. To prove fraud, Ernie does not have to show that

A) Dick intentionally deceived Ernie.
B) Dick misrepresented material facts.
C) Ernie is under twenty-one.
D) Ernie justifiably relied on Dick's misrepresentations.

Question 48

Alan induces Beth to enter into a contract for the purchase of a Chef's Burger House restaurant. Alan knowingly misrepresents a number of material features about the restaurant and the business. When Beth discovers the truth, she can rescind the contract on the basis of

A) fraudulent misrepresentation.
B) undue influence.
C) mistake.
D) duress.

Question 49

In selling a 300-acre farm to Organic Farms, Peyton tells the buyer that the land "will be worth a whole lot more in the future." This is

A) duress.
B) fraudulent misrepresentation.
C) mistake.
D) opinion.

Question 50

Fact Pattern 13 - 2 Owen, an employee of Plumbing & Pipes LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Construction Inc. is seeking bids. Consequently, Plumbing & Pipes' bid is significantly low.
Refer to Fact Pattern 13-2. Any contract with Quality Construction that includes the mistake may be rescinded

A) if Quality Construction knew or should have known of the mistake.
B) if Owen's supervisor did not know of the mistake.
C) if Plumbing & Pipes knew or should have known of the mistake.
D) under no circumstances .

Question 51

Fact Pattern 13 - 2 Owen, an employee of Plumbing & Pipes LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Construction Inc. is seeking bids. Consequently, Plumbing & Pipes' bid is significantly low.
Refer to Fact Pattern 13-2. The contract with Quality Construction that includes the mistake may be rescinded

A) if the mistake involves a material fact.
B) if the mistake involves any fact.
C) if the mistake is one of value or quality.
D) under no circumstances.

Question 52

Fact Pattern 13 - 3 County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from Dale to Ezra, the furnished information is mistaken.
Refer to Fact Pattern 13 - 3. The contract between Dale and Ezra that includes the mistake may be rescinded if the mistake concerns

A) a fact that is important and central to the contract.
B) a term in the contract subject to only one reasonable interpretation.
C) a detail on which the parties had a true "meeting of the minds."
D) a third party, such as County Title.

Question 53

Gary owns two all-terrain vehicles (ATVs), worth $1,000 and $500, respec-tively. Helen enters into a contract to buy "Gary's ATV" for $750. Gary believes, in good faith, that he is selling the $500 ATV. Helen believes, in good faith, that she is buying the $1,000 ATV. In this situation

A) Gary is entitled to $750 for the $500 ATV.
B) Helen is entitled to the $1,000 ATV for $750.
C) Helen must buy both ATVs for $1,500.
D) the contract is not enforceable.

Question 54

Honi, a tennis pro, convinces Ian, who has no athletic ability, that he has considerable skill and induces him to pay $1,000 for tennis lessons. This is most likely

A) mistake of law.
B) undue influence.
C) mistake of fact.
D) none of these.

Question 55

Dennis sells a motorcycle to Elton without disclosing that the odometer, which reads 10,000 miles, was disconnected 100,000 miles ago. Dennis is most likely liable for

A) fraudulent misrepresentation.
B) undue influence.
C) mistake.
D) duress.

Question 56

Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of

A) duress.
B) fraudulent misrepresentation.
C) mistake.
D) opinion.

Question 57

Flora enters into a contract with Global Shipping, Ltd., to insure and ship a painting from France to the United States for a certain price. Global makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost. Most likely, a court would

A) award allow the parties to rescind the contract.
B) damages to Flora for the mistake.
C) award damages to Global for the mistake.
D) enforce the contract as is.

Question 58

Fact Pattern 13 - 3 County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from Dale to Ezra, the furnished information is mistaken.
Refer to Fact Pattern 13-3. The contract between Dale and Ezra that includes the mistake may be rescinded if the mistake involves

A) a material fact.
B) any fact.
C) value.
D) quality.

Question 59

Carlos and David contract for the sale of five hundred head of Carlos's cattle for $195 per head. Unknown to either party, an unforeseen storm has struck the herd and many of the cattle have died. David is

A) entitled to recover the value of the lost cattle.
B) not required to pay due to the bilateral mistake.
C) not required to pay due to the unilateral mistake.
D) required to pay because he assumed the risk the cattle might die.

Question 60

Fact Pattern 13 - 3 County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from Dale to Ezra, the furnished information is mistaken.
Refer to Fact Pattern 13 - 3. If Dale and Ezra are both ignorant of the mistake, it is

A) a bilateral mistake.
B) a fraudulent misrepresentation.
C) a unilateral mistake.
D) undue influence.

Question 61

In a bike shop, Jessie, who is not knowledgeable about bikes, overhears Kevin say, "This bike could win any race!" Jessie buys the bike, but does not win any races with it. Kevin's statement is

A) a mistake.
B) a fraudulent misrepresentation.
C) an opinion.
D) an attempt at undue influence.

Question 62

Nero is an elderly man who lives with his nephew Mervyn. Nero is dependent on Mervyn for support. Mervyn advises Nero to "invest" in Mervyn's "professional gambling" venture, or Mervyn will no longer support him. Nero liquidates his other investments and signs a contract with Mervyn, to whom Nero gives the funds. Can Nero set aside this contract?

Question 63

Don threatens physical harm to force Ed to sell his Flower Shop to Don for a below-market price. This is

A) duress.
B) fraudulent misrepresentation.
C) mistake.
D) undue influence.

Question 64

Mona is induced by her guardian Newt to sign a contract to invest her student loan funds in Oil Inc. through Newt's investment firm. Unknown to Mona, Newt realizes a commission from the investment. Most likely, Mona may rescind the contract on the basis of

A) duress.
B) fraud.
C) mistake.
D) undue influence.

Question 65

Ruth, who is Sal's guardian, convinces him to buy a certain parcel of land from Tyrone at a greatly inflated price. Ruth may be liable for

A) duress.
B) fraudulent misrepresentation.
C) mistake.
D) undue influence.

Question 66

Don enters into a contract with Eve, who claims to have access to a stock-trading algorithm that will multiply an investment many times over. When the results do not match this claim, Don learns that Eve does not have access to the algorithm and files a suit, alleging fraud. Proof of an injury is required to

A) recover damages.
B) rescind the contract.
C) undo Eve's influence.
D) punish the defendant.

Question 67

Lee applies to Marketing Corporation for a position as a software engineer. Lee has no training in computers or programming and no background as an engineer. After Lee is hired, Marketing learns the truth. The employer can rescind the contract on the basis of

A) none of the choices.
B) fraudulent misrepresentation.
C) mistake.
D) undue influence.

Question 68

Eugene, an accountant, convinces his client Faye to enter into a contract to invest her savings in Gathering, a non-existent social media site. There is clear and convincing evidence that Faye did not act out of her free will. This is

A) fraudulent misrepresentation.
B) undue influence.
C) mistake.
D) duress.

Question 69

Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraudulent misrepresentation if

A) Mark is not aware of the fact or his failure to reveal it.
B) the fact concerns value or quality.
C) the fact concerns a serious defect known to Mark but not to Nancy.
D) any of the choices.

Question 70

Moe threatens physical harm to force Nora to contract to pay him for protecting her restaurant, Pasta Plates, from vandalism. Nora may

A) rescind the contract or refuse to comply with its terms.
B) do nothing once she has agreed to pay.
C) recover from her insurer for the cost.
D) recover from the local police for their failure to protect her store.

Question 71

Fact Pattern 13-4 In selling a warehouse, Riley tells Sam that he knows that the property has a certain capacity, making it suitable for a nightclub. Riley knows nothing about the capacity of the building, but it is not as he specifies. Sam buys the building.
Refer to Fact Pattern 13-4. On learning the truth, Sam confronts Riley, who says he was not trying to fool Sam-he was only trying to make a sale. This is

A) a mistake of value.
B) a valid defense to a charge of fraud.
C) fraudulent misrepresentation.
D) undue influence.

Question 72

Health Source, Inc., offers to buy Medico Equipment & Supplies Corporation. On June 1, Medico gives Health Source copies of Medico's financial statements for the pre-vious year. The statements show an inventory of $10 million. On June 15, Medico discovers that the previous year's inventory is overstated by $500,000, but does not inform Health Source. On July 1, Health Source, relying on the financial statements, buys Medico. On July 10, Health Source discovers the inventory overstatement. Can Health Source succeed in a suit against Medico? On what basis?