Deck 13: Defenses to Contract Enforceability

Question 1

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

Answer 1

False

Question 2

A contract entered into under undue influence is voidable.

Answer 2

True

Question 3

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

Answer 3

False

Question 4

An innocent party can rescind a fraudulent contract and be restored to his or her original position.

Question 5

Normally, a contract will be set aside because certain pertinent information was not volunteered.

Question 6

A seller's attempt to conceal a fact that is material to a contract can give rise to an action for fraud.

Question 7

Even when a naïve purchaser relies on an opinion from an expert, the innocent party is not entitled to rescission or reformation of a contract.

Question 8

Because fraud actions necessarily involve wrongful conduct, courts may award punitive damages.

Question 9

A threat to exercise a legal right ordinarily constitutes duress.

Question 10

Misrepresentation of law ordinarily entitles a party to relief from a contract.

Question 11

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

Question 12

When both parties to a contract are mistaken about the same material fact, the contract cannot be rescinded.

Question 13

Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.

Question 14

Misrepresentation of a material fact can occur by words or action.

Question 15

An oral contract for the transfer of an interest in land can sometimes be enforced if partial performance has taken place.

Question 16

If a contractor's bid contains a mistake in addition when totaling the estimated costs, the contract may not be enforceable.

Question 17

If a party against whom enforcement of an oral contract is sought admits under oath that a contract for sale was made, the contract will be enforceable.

Question 18

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.

Question 19

To be enforceable, a memorandum evidencing an oral contract must include the essential terms.

Question 20

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

Question 21

Under the Statute of Frauds, all contracts must be in writing to be enforceable.

Question 22

Oral evidence to "fill in the gaps" of a contract with incomplete terms can be introduced at a trial.

Question 23

Nora enters into a contract with Oceanic Transport, Inc., to insure and ship a painting from France to the United States for a certain price. But Oceanic 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)allow the parties to rescind the contract.
B)award damages to Nora for the mistake.
C)award damages to Oceanic for the mistake.
D)enforce the contract as is.

Question 24

A written contract for a transfer of land is usually enforceable.

Question 25

All collateral promises must be in writing to be enforceable.

Question 26

In La Junta, Carlos and Alvaro contract for the sale of five hundred head of Carlos’s cattle for $95 per head. Unknown to either party, a unforeseen storm has struck the herd and many of the cattle have died. Alvaro 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 27

Lewis, an employee of Silos, Inc., makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently, Silos’s bid is significantly low. Any contract with AgriCo-op that includes the mistake may be rescinded

A)if AgriCo-op knew or should have known of the mistake.
B)if Lewis’s supervisor did not know of the mistake.
C)if Silos knew or should have known of the mistake.
D)under no circumstances.

Question 28

To be enforceable, a writing evidencing an oral contract must have been signed by the party who seeks to enforce it.

Question 29

Misrepresentation cannot occur by silence.

Question 30

Dixon agrees to sell to Elmore, for $1,500, a remote parcel of land. They believe the land to be worthless, but beneath it is shale rock containing oil. 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 31

To be enforceable, a contract for a sale of goods priced at $500 or more should be in writing.

Question 32

A contract must be in writing to be enforceable if its performance is impossible within one year.

Question 33

The Statute of Frauds operates as a defense to the enforcement of an oral contract for the sale of land.

Question 34

A unilateral promise to make a monetary payment in consideration or marriage must be in writing to be enforceable.

Question 35

In Simone's selling a 300-acre farm to Rural Investments, Inc., she tells the buyer that the land "will be worth twice as much by next year." This is

A) ​adhesion.
B) ​fraud.
C) ​mistake.
D) ​
Opinion.

Question 36

Written evidence or an electronic record of a contract for a sale of goods priced at $500 or more is required by the Uniform Commercial Code.

Question 37

Evidence of prior agreements that differ from the written terms of a con­tract can be introduced in court to contradict the contract.

Question 38

All states require certain types of contracts to be in writing.

Question 39

A written contract that is intended to be the final statement of the terms of an agreement is an integrated contract.

Question 40

A contract in which a party assumes a primary obligation normally must be in writing to be enforceable.

Question 41

Grant and Hester enter into a contract for a sale of Hester's Pastoral Valley Orchard. This contract​

A) ​is prohibited.
B) ​must be oral to be enforceable.
C) ​must be in writing to be enforceable.
D) ​must be oral and in writing to be enforceable.

Question 42

Edward and First Star Company enter into an oral contract under which Edward agrees to provide delivery service for First Star for nine months. This contract is enforceable by

A) ​none of the choices.
B) ​either Edward or First Star.
C) ​any interested third party, such as a First Star customer.
D) ​First Star only.

Question 43

Air Flo, Inc., and Banyan Grove Apartments enter into an oral contract in which Air Flo agrees to provide air-conditioning and heating maintenance for Banyan Grove's facilities for two years. This contract is enforceable by​

A) ​Air Flo.
B) ​Banyan Grove.
C) ​any third party, such as a HVAC supplies provider.
D) ​none of the choices.

Question 44

Camille, a tennis pro, convinces Dante, who has no athletic ability, that he has considerable skill and induces him to pay Camille $1,000 for tennis lessons. When Dante realizes the truth, he files a suit against Camille. Dante is most likely to recover on the basis of

A) ​opinion.
B) ​fraud.
C) ​mistake.
D) ​undue influence.

Question 45

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

A) ​opinion.
B) ​fraud.
C) ​mistake.
D) ​nothing.

Question 46

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

A) ​not avoid the contract because persons are assumed to know the law.
B) ​avoid the contract due to a mutual mistake.
C) ​avoid the contract due to a mistake in value.
D) ​avoid the contract due to fraud.

Question 47

Morris threatens physical harm to force Barb to contract to pay him for protecting her store Barb's Baubles against vandalism and destruction. Barb may​

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

Question 48

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

A) ​undue influence.
B) ​fraud.
C) ​mistake.
D) ​nothing

Question 49

Gene, an accountant, convinces his client Hazel to sign a contract to invest her savings in 2Gether, a nonexistent social-networking Web site. There is clear and convincing evidence that Hazel did not act out of her free will. This is​

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

Question 50

Abner tells a representative of Brass & Woodwind Musical Instruments, Inc., that he will pay for Claudia's trumpet if she does not. Abner does not secure any personal benefit for this promise. This promise is enforceable as a contract

A) ​under any circumstances.
B) ​only if Claudia agrees to it
C) ​only if the value of the trumpet is more than $500.
D) ​only if it is in writing.

Question 51

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

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

Question 52

Dumont threatens physical harm to force Eddie to sell his business, Citywide Vending, Inc., to Dumont for a below-market price. This is

A) ​duress.
B) ​fraud.
C) ​none of the choices.
D) ​undue influence

Question 53

ActioNOW and Becca enter into an oral contract in which Becca agrees to work on a project for ActioNOW's Living Opportunities Center for eighteen months. This con­tract is enforceable by​

A) ​ActioNOW.
B) ​Becca.
C) ​any third party, such as ActioNOW's clients.
D) ​none of the choices.

Question 54

Creighton applies to BigData Corporation for a position as a software engineer. Creighton has no training in computers or programming and no background as an engineer. After Creighton is hired, BigData learns the truth. BigData can​

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 55

The chief executive officers of Chemico, Inc., and Petro Products Corporation orally agree that Chemico will sell a refinery and the land on which it is situated to Petro. Under the Statute of Frauds, this deal is enforceable by​

A) ​Chemico.
B) ​Petro.
C) ​any interested third party, such as a shareholder
D) ​none of the choices.

Question 56

Guardian Security, Inc., and Hedge Fund Corporation enter into an oral contract under which Guardian Security agrees to provide security services for Hedge Fund's offices for as long as Hedge Fund needs them. This contract may be enforceable by

A) ​none of the choices.
B) ​Hedge Fund only.
C) ​any interested third party, such as a Hedge Fund shareholder.
D) ​either Guardian Security or Hedge Fund.

Question 57

Garland induces Jules to enter into a contract for the purchase of a Chef's Burger House restaurant. Garland knowingly misrepresents a number of material features about the restaurant and the business. When Jules discovers the truth, he can​

A) ​not rescind the contract because Jules assumed the risk that the bargain would prove to be different from what he thought.
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 58

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

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

Question 59

Sharon agrees to assume a debt owed by Tom's Guitars Inc. to United Funds Bank. The agreement is not in writing. To be enforceable under the "main purpose" rule, the promise must be for the benefit of​

A) ​any third party, such as a Tom's customer.
B) ​Sharon.
C) ​Tom's.
D) ​the bank.

Question 60

Drake 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 promise, Drake learns that Eve does not have access to any unique software and files a suit against her, 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 61

Whitewater Canyon Adventures, Inc., and Xtra Overstock Company enter into an oral contract for Xtra's sale to Whitewater of five rafts for $2,000 each. Before Whitewater takes possession of the rafts, this contract is enforceable by

A) ​Xtra only.
B) ​Whitewater only.
C) ​any interested third party, such as a Whitewater tour guide.
D) none of the choices.

Question 62

Hal's True Hardware Stores and Ideal Tools, Inc., sign a written con­tract for a sale of goods. To be enforceable, this written contract must include

A) ​a correct title, such as "Purchase Order" or "Sales Invoice."
B) ​a date, such as "October 2014" or "10/2014."
C) ​a quantity term, such as "50 hammers" or "100 boxes of assorted nails."
D) ​the parties' contact information.

Question 63

Dick's Burgers n' Shakes enters into an oral contract with Restaurant Equipment Warehouse (REW) for REW's sale to Dick's of a single-spindle milkshake mixer for $300. Assuming the terms can be proved, the con­tract is enforceable by​

A) ​Dick's or REW.
B) ​the manufacturer of the mixer.
C) ​ any third party with a material interest, such as one of Dick's suppliers.
D) ​ none of the choices.

Question 64

On Monday, Merlin buys a tablet for $500 from a Pads & Pods store. On Tuesday, he returns to the store and buys a GPS device for $200. On Wednesday, he downloads $100 worth of tunes from singsong.com. To be enforceable as a contract, a writing is required for the purchase of

A) ​the tunes, the GPS device, and the tablet.
B) ​the GPS device and the tablet only.
C) ​the tablet only.
D) ​the tunes only.

Question 65

Eleanora offers Flossy the amount of an investment in Flossy's start-up business venture if she marries Eleanora's son Glenn. This promise is enforceable​

A) ​only if it is in writing.
B) only if the amount of the investment is more than $500.
C) ​only if Glenn agrees to marry Flossy.
D) under no circumstances.

Question 66

Fact Pattern 13-1
Odell and Paula sign a contract for the sale of Odell's Pizza Parlor to Paula. The parties intend their written contract to be a final statement of most, but not all, of the terms of their agreement Odell must first buy the building from Quin, after which Odell and Paula will negotiate a final price.
Refer to Fact Pattern 13-1.Paula later disputes some of the provisions of the deal with Odell. If the dispute results in litigation, a court will most likely admit evidence of additional terms that are​

A) ​ambiguous.
B) ​consistent.
C) ​contradictory.
D) ​clear.

Question 67

Lucas orally agrees to sell his Mountain Spring Water Company to Natural Beverages, Inc. Lucas notes the terms on a sheet of Mountain Spring stationery and signs it. This agreement is most likely enforceable against

A) ​no one.
B) ​Lucas and Natural.
C) ​Lucas.
D) ​Natural.

Question 68

Donald and Etta orally agree on the sale of Donald's Electrical Supplies Company to Etta and jot down the terms on the back of one of Donald's blank invoices, which they both sign. A written memorandum evidencing an oral contract that would otherwise be unenforceable must contain

A) ​all terms.
B) ​the essential terms.
C) ​the preliminary terms.
D) ​the qualitative terms.

Question 69

In a transaction for the sale of a warehouse, Standard Storage Company tells Tri-County Investment Corporation that the office furniture is in­cluded. The contract says nothing about office furniture, but does state, "This document supersedes all oral promises relating to the sale." Is the furniture part of the sale? Why or why not?​

Question 70

Fact Pattern 13-1
Odell and Paula sign a contract for the sale of Odell's Pizza Parlor to Paula. The parties intend their written contract to be a final statement of most, but not all, of the terms of their agreement Odell must first buy the building from Quin, after which Odell and Paula will negotiate a final price.
Refer to Fact Pattern 13-1.The writing that Odell and Paula signed is a contract that is

A) ​completely integrated.
B) ​conditionally integrated.
C) ​partially integrated.
D) ​supplementally integrated.

Question 71

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 pre­vious 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?​

Question 72

Ranchland Properties and Prairie State Investments sign a writ­ten contract for a sale of land. In some states, to be enforceable, this con­tract must include​

A) ​a correct title, such as "Land Transfer" or "Real Estate Agreement."
B) ​a declaration of the contract's purpose.
C) ​a statement of the source of financing
D) ​a description of the land.