Deck 13: Genuineness of Assent and Undue Influence

Question 1

________ is a mistake made by both parties concerning an object that is important to the subject matter of a contract.

A) Mutual mistake of value
B) Mutual mistake of material fact
C) Elementary unilateral mistake
D) Fraud by concealment

Answer 1

B

Question 2

Heather chooses to buy a scarf at Macy's and reads the price on the tag as $50. She uses her credit card to pay for the scarf, but post-purchase, she notices that the price tag actually says $500. This is an instance of a(n) ________.

A) bilateral mistake
B) mutual mistake of value
C) innocent misrepresentation
D) unilateral mistake

Answer 2

D

Question 3

A material fact is a fact that is irrelevant to the subject matter of a contract but pertains to the conduct of the parties.

Answer 3

False

Question 4

Explain the three kinds of mistakes that can be made by either party while entering a contract. When are contracts involving mistakes rescinded?

Question 5

John buys a watch for $100 at a vintage store. Later, the store learns that the watch was worn by Sean Connery in a James Bond movie and wishes to rescind the sales contract they have with John. Which of the following statements is true in this scenario?

A) The store can rescind the contract immediately and refund $100 to John.
B) The store can recover from John the difference between the value of the watch and the amount paid by John.
C) The store can declare the contract void and pay John no money.
D) The store cannot rescind or void the contract.

Question 6

Kevin goes to the store to purchase a fully automatic washing machine. He browses through several models of washing machines, but does not let the salesperson know that he wants a fully automatic model. While signing the sales contract, he does not notice that the model he is purchasing is a semi-automatic machine. After purchase, which of the following options does Kyle have?

A) Exchange the machine with a fully automatic one and sue the store if it does not accept it.
B) Demand a full cash refund from the store for fraud in concealment.
C) Sue the store for its innocent misrepresentation.
D) Keep the semi-automatic washing machine as he made a unilateral mistake.

Question 7

Which of the following is true of a unilateral mistake?

A) Only one mistake or ambiguity is present in the subject matter of the entire contract.
B) Out of several contracts drafted simultaneously between two parties, one has a mistake in its subject matter that does not concern the other contracts.
C) Only one party is mistaken about a material fact regarding the subject matter of a contract.
D) A single mistake about a material fact in the subject matter of a contract appears several times in the contract.

Question 8

Mistakes in clerical or mathematical errors that are not the result of gross negligence are considered unilateral mistakes.

Question 9

An ambiguity in a contract may constitute a mutual mistake of a material fact.

Question 10

Unilateral mistake is a mistake in which only one party is mistaken about a material fact regarding the subject matter of a contract.

Question 11

In which of the following cases of assent is the rescission of a contract unenforceable?

A) mutual mistake of value
B) misrepresentation of a material fact
C) silence as misrepresentation
D) innocent misrepresentation

Question 12

When a mutual mistake of value occurs, the contract remains enforceable by either party.

Question 13

Which of the following constitutes a mutual mistake of a material fact?

A) Martha selling her house to Graham and hiding the fact that its first floor is damaged
B) Martha and Graham agreeing on the sale of a house, both referring to different houses
C) Graham buying a house from Martha without asking her details of damages
D) Martha selling Graham an old vase for $20, both of them unaware that it is a valuable antique collectible

Question 14

A unilateral mistake occurs if both parties know the object of the contract but are mistaken as to its value.

Question 15

An action to undo a contract is called restitution.

Question 16

Assent of a party to a contract may be manifested in any manner sufficient to show agreement, including conduct.

Question 17

In most cases of a unilateral mistake, the mistaken party is permitted to rescind the contract.

Question 18

A contract in which both parties are mistaken about the value of the object of the contract is considered ________.

A) unenforceable
B) unconscionable
C) enforceable
D) void

Question 19

If there has been a mutual mistake of material fact, the contract cannot be rescinded.

Question 20

________ is an action to undo a contract.

A) Rescission
B) Recession
C) Restitution
D) Inception

Question 21

________ occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing.

A) Fraud in the inducement
B) Fraud in the inception
C) Fraud by concealment
D) Fraud by suppression

Question 22

What should be shown to prove fraud?

Question 23

The measure of damages awarded to the innocent party for fraud is the difference between the value of the property as represented and the actual value of the property.

Question 24

Which of the following is true of misrepresentation of a material fact?

A) It can occur only by the words of the wrongdoer.
B) A misrepresentation is actionable as fraud only if it is the sole factor in inducing the innocent party to enter into the contract.
C) It is actionable as fraud if the misrepresentation is of a past or existing material fact.
D) Predictions about the future are considered basis for fraud.

Question 25

Predictions about the future generally do not form the basis for fraud.

Question 26

What is scienter?

A) knowledge that a representation is false
B) undue influence used on a party to sign a contract
C) another term for duress
D) damages paid to a victim of a scam

Question 27

Scienter means knowledge that a representation is false or that it was made without sufficient knowledge of the truth.

Question 28

How is a mistake different from fraud?

Question 29

Intentional misrepresentation is considered fraud.

Question 30

A misrepresentation of a material fact is actionable as fraud only if it occurs by words.

Question 31

Millie receives a parcel from her aunt in Indonesia. The delivery man asks her to sign an authorization document to receive the parcel. Millie signs without reading the document, as she is in a hurry. However, on the other side of the document are contract terms that transfer all of Millie's property to the delivery man. This is an instance of ________.

A) fraud in the inception
B) fraud in the inducement
C) fraud by concealment
D) misrepresentation of law

Question 32

Intentional misrepresentation is commonly referred to as ________.

A) erroneous misrepresentation
B) fraud
C) duress
D) undue influence

Question 33

Jeffrey became a victim of fraud when he entered a pyramid scheme which turned out to be a scam. In order to claim damages, Jeffrey has to prove which of the following?

A) misrepresentation
B) motive of the fraudster
C) economic injury
D) involvement in the pyramid scheme

Question 34

To be actionable as fraud, the misrepresentation must have been the sole factor in inducing the innocent party to enter into the contract.

Question 35

Sally entered into a contract to purchase a car at Acme Auto Sales. During a sales pitch, the Acme salesperson told Sally that the automobile was in excellent condition and that she could expect to drive it for many years because of its extremely low mileage. The odometer on the automobile read 10,000 miles. A week after her car purchase, Sally took the car to a trusted mechanic to get the engine checked out. The mechanic inspected the engine and told Sally that the car had many more miles on it than the odometer indicated. The mechanic told Sally that she had undoubtedly been the victim of odometer rollback.
What kind of fraud (intentional misrepresentation) was likely committed? Why?
What are the required elements of fraud and were all of these elements present in this scenario?

Question 36

________ is an event that occurs when one person consciously decides to induce another person to rely and act on a misrepresentation.

A) Fraudulent misrepresentation
B) Unilateral mistake
C) Bilateral mistake
D) Erroneous misrepresentation

Question 37

The measure of damages from a misrepresentation is ________.

A) the actual value of the property
B) the represented value of the property
C) the difference between the value of the property as represented and the actual value of the property
D) twice the actual value of the property which includes punitive damages

Question 38

Which of the following is true of misrepresentation?

A) A misrepresentation is not actionable unless the innocent party relied on the misrepresentation and acted on it.
B) An innocent party who acts in reliance on a misrepresentation need not justify his or her reliance.
C) An innocent party must prove that the wrongdoer's misrepresentation was the sole reason he or she entered into the contract.
D) An innocent party need not prove economic injury to recover damages for fraud.

Question 39

A misrepresentation is considered fraud even if it is made without intent to deceive another party.

Question 40

To prove fraud, which of the following elements must be shown?

A) The innocent party knew the wrongdoer.
B) The innocent party was the one who detected fraud.
C) The wrongdoer assumed a false identity.
D) The wrongdoer intended to deceive the innocent party.

Question 41

________ occurs when the party knows what he or she is signing but has fraudulently been led into the contract.

A) Fraud in the factum
B) Fraud in the inducement
C) Fraud by concealment
D) Misrepresentation of law

Question 42

A misrepresentation of law is actionable as fraud as the innocent party cannot know every legal detail that applies to the situation.

Question 43

Contracts involving fraud in inducement are not voidable.

Question 44

Fraud in the factum occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing.

Question 45

Which of the following occurs when one party intentionally hides a material fact from another party?

A) fraud in the inducement
B) fraud in concealment
C) silence as misrepresentation
D) misrepresentation of law

Question 46

If a seller does not disclose legal disputes involving the property being sold, he or she is liable for silence as misrepresentation.

Question 47

Contracts involving fraud in inducement are ________.

A) valid
B) void
C) voidable
D) non-rescindable

Question 48

Fraud in inducement occurs when the party does not know the terms of the contract.

Question 49

While signing a contract, one of the parties misinterpreted a legal clause. Neither of the parties is a legal professional. Which of the following statements holds well in this scenario?

A) The party who misinterpreted the law is actionable for fraud.
B) The party who misinterpreted the law may rescind the contract.
C) The party who misinterpreted the law is not actionable for fraud.
D) The contract is declared unenforceable as the law has been misinterpreted.

Question 50

Misrepresentation of law is a fraud that occurs when a person makes a statement of fact that he or she honestly and reasonably believes to be true even though it is not.

Question 51

Harry finds an old stereo in his attic. He sells the stereo to Jake for $50 telling him that it is fully functional, which Harry thinks is true. However, it turns out to be broken. Which of the following statements is true in this context?

A) Jake can sue Harry for fraud in the inducement.
B) Jake cannot rescind the deal but can sue Harry for fraud by concealment.
C) Jake can sue Harry for innocent misrepresentation.
D) Jake can rescind the deal but cannot sue Harry for innocent misrepresentation.

Question 52

Alice offers Richard a chance to work in her affiliate marketing program which, she claims, will make him a millionaire in three months. Richard makes the "mandatory investment" of $12,000 and becomes an affiliate. Soon, he realizes that such a program does not exist and that Alice has disappeared with the money. This is an instance of ________.

A) misrepresentation of law
B) fraud in the factum
C) fraud in inducement
D) duress

Question 53

Melissa Harrison, a realtor, sells a house to the Smiths. Before the sale is finalized, Mr. Smith asks Melissa for details of repairs the house has undergone over the years. Melissa gives him details of minor repairs but hides all documents regarding a major plumbing defect that was repaired last year. Three months after the Smiths moved in, the defect reappeared flooding the first floor, damaging their expensive carpet and furniture. Melissa is liable for which of the following frauds?

A) fraud in the inception
B) fraud in the inducement
C) fraud by concealment
D) fraud in the factum

Question 54

When one party takes specific action to cover a material fact from another party, fraud by enticement occurs.

Question 55

Which of the following is generally NOT actionable as fraud?

A) misrepresentation of law
B) silence as misrepresentation
C) marriage to obtain rights of immigration
D) identity theft

Question 56

During the sale of a house, if the seller does not inform the buyer about construction flaws of the house despite the buyer's inquiry, the seller is liable for fraud by concealment.

Question 57

If an innocent misrepresentation has been made, the aggrieved party may sue for damages.

Question 58

Joe buys a trailer from a used-car dealership. On enquiry, the dealer tells him that the trailer is in great condition. However, three days later, the trailer breaks down. Investigation by Joe reveals that the trailer had seven previous owners and that the engine has been replaced thrice. An automobile expert tells Joe that the trailer is dangerous. Which of the following frauds would the dealer be liable for?

A) fraud in the factum
B) fraud in the inducement
C) fraud by concealment
D) misrepresentation of law

Question 59

Contracts involving fraud in the inception are void.

Question 60

Which of the following is true of misrepresentation?

A) Innocent misrepresentation is grounds for the aggrieved party to sue for damages.
B) Misrepresentation of law is generally not actionable as fraud.
C) Innocent misrepresentation cannot be treated as a mutual mistake.
D) Misrepresentation of law can never be grounds for rescission of the contract.

Question 61

When Stella Finman found out that she was terminally ill, she drafted a will leaving all her property to her son. During her period of illness, Stella was financially and emotionally supported by her lawyer as her son was mostly away. When the will was read upon her death, it said that her lawyer would get a 20 percent stake in Finman Corp., a company Stella owned. Upon investigation, it was revealed that Stella's lawyer took advantage of Stella's weakness and persuaded her to change the contractual terms. This is an instance of ________.

A) undue influence
B) battery
C) duress
D) fraud

Question 62

Which of the following is true of undue influence in entering contracts?

A) Undue influence need not require the overcoming of the innocent party's free will.
B) Undue influence is not grounds for prosecution, as the innocent party has complete freedom to evaluate the terms of the contract.
C) A contract that is entered into because of undue influence is not voidable.
D) A fiduciary or confidential relationship must have existed between the parties for undue influence to be proven.

Question 63

Duress is said to have occurred only where a threat involved a physical harm.

Question 64

Explain fraud in the inducement with an example.

Question 65

Innocent misrepresentation is treated as a unilateral mistake.

Question 66

Does threatening a lawsuit unless someone signs a contract constitute duress? Why or why not? Explain your answer for both criminal and civil lawsuits.

Question 67

What is physical duress?

A) physically damaging the contract documents
B) signing a contract without the knowledge that it represents fraudulent information
C) threatening to physically harm someone if he or she does not sign a contract
D) persuading a person to rescind a valid contract by misrepresenting the facts

Question 68

________ is a situation in which one party threatens to do a wrongful act unless the other party enters into a contract.

A) Scienter
B) Duress
C) Battery
D) Assault

Question 69

Which of the following constitutes duress?

A) an event that occurs when one person consciously decides to induce another person to rely and act on a misrepresentation
B) a situation in which one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to enter into a contract
C) a threat to commit extortion unless someone enters into a contract
D) the knowledge that a representation is false or that it was made without sufficient knowledge of the truth

Question 70

Gary and Mary are siblings involved in a legal tangle over who gets possession of their ancestral home. Gary threatens to kill Mary's husband if she does not sign papers declaring Gary's sole ownership of their home. This is an instance of ________.

A) scienter
B) battery
C) undue influence
D) duress

Question 71

Which of the following scenarios makes Tim liable for undue influence?

A) Tim uses a false identity, borrows $10,000 from Kelly, and disappears with the money.
B) Tim threatens to kill Carlos if Carlos does not sign a contract that transfers all his property to Tim.
C) Tim takes advantage of his grandmother's illness and persuades her to sign a will leaving all her property to him.
D) Tim threatens to bring a lawsuit against David if David does not make him a partner in his firm.

Question 72

A threat to bring a civil lawsuit does not constitute duress unless such a suit is frivolous or brought in bad faith.

Question 73

________ is a situation in which one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to enter into a contract.

A) Duress
B) Undue influence
C) Fraud
D) Scienter

Question 74

Which of the following is true of duress?

A) It is liable for fraud.
B) A threat should involve physical harm for it to be actionable as duress.
C) It is a threat issued to make another person sign a contract.
D) Intoxicating a person to sign a contract is considered duress.

Question 75

If there is a confidential relationship between two people, any contract made by the servient party that benefits the dominant party is presumed to be entered into under undue influence.

Question 76

Lucy wants a divorce from her husband but he wants to stay in the marriage. She threatens to bring a false criminal lawsuit claiming physical abuse from him if he does not sign the divorce papers. This is an instance of ________.

A) fraud
B) duress
C) undue influence
D) scienter

Question 77

Physical duress occurs when there is physical harm to the contractual document, such as complete or partial destruction or manipulation of content.

Question 78

Which of the following constitutes duress?

A) a plaintiff threatening a criminal lawsuit unless the defendant enters into a contract
B) a teacher threatening a student that he will be expelled if he is found with cigarettes again
C) a wife threatening to commit suicide if her abusive husband does not stop beating her
D) a father using his dominant and fiduciary position to unduly influence his son into committing a crime

Question 79

Duress is a situation in which one party threatens to do a wrongful act unless the other party enters into a contract.

Question 80

Taking advantage of another person's mental, emotional, or physical weakness and unduly persuading that person to enter into a contract constitutes duress.