Question 1

Regarding insurance contracts, utmost good faith is important because

Accepted Answer

The answer of Regarding insurance contracts, utmost good faith is...

Question 2

The doctrine of caveat emptor refers to

Accepted Answer

The doctrine of caveat emptor refers to the principle of "let the buyer beware," where the buyer is responsible for checking and inspecting the quality and condition of goods before purchasing them. This principle applies to the sale of goods, not ownership or contracts with a dominant/subservient party. It also does not address the transfer of clear title or situations where one party has superior knowledge.

Question 3

Scott, an independent businessman, is asking his wife to pledge her inherited family homestead towards a business loan he has arranged at the bank. She seems perfectly willing to do this. Yet, to avoid a possible later legal claim of undue influence, which would be wisest for Scott to do?

Accepted Answer

Having his wife get independent legal counsel would ensure that she fully understands the legal implications of pledging her inherited family homestead towards a business loan and that there is no undue influence on her decision. This would protect Scott from a possible legal claim of undue influence in the future.

Question 4

Paul, a poor farmer, has just learned he has a serious medical problem. The medication needed is extremely expensive and not covered by medical insurance. Hearing of his plight, the next- door neighbour agrees to buy a prize steer, but at half its value. Legally speaking, what has this neighbour done?

Accepted Answer

The answer of Paul, a poor farmer, has just learned...

Question 5

An innocent party can lose her right to repudiate a contract made with undue influence by

Accepted Answer

An innocent party loses her right to repudiate the contract made with undue influence if she does not repudiate promptly after coming out from under the undue influence.

Question 6

A person seeking to avoid a contract for undue influence must do so promptly.

Accepted Answer

A person seeking to avoid a contract for undue influence must do so promptly, meaning they must act quickly and not delay in taking legal action to avoid the contract.

Question 7

Regarding misrepresentation in a sale of land, the following applies:

Accepted Answer

The answer of Regarding misrepresentation in a sale of land,...

Question 8

Damages are not available as a remedy for innocent misrepresentation.

Accepted Answer

This is true. Damages are only available as a remedy for fraudulent and negligent misrepresentation. Innocent misrepresentation only allows for rescission (cancellation) of the contract.

Question 9

Guido is an unsavory money lender who charges 35% interest. Upon learning that Sylvia, one of his clients, had become unable to make her weekly payment, Guido tells her that he has "a way of dealing with defaulters where they think twice next time." She then promptly signs a contract agreeing to a 50% rate over a longer period of time. Sylvia now wants to get out of this second contract. As a lawyer, what should you advise Sylvia to do?

Accepted Answer

Duress is a defense to the enforcement of a contract. In this scenario, Guido used improper coercion through his intimidating statement. Sylvia did not have a reasonable alternative to entering into the second contract and therefore the second contract can be voided.

Question 10

The legal concept where actual or threatened violence is used to persuade a party into entering a contract is called

Accepted Answer

Coercion is the use of actual or threatened violence to persuade a party into entering a contract. Assault and battery refer specifically to physical harm, while undue influence involves exploiting a special relationship or position of power to pressure someone into a contract. Pressure for harm is not a recognized legal term.

Question 11

Kevin was desperate to save his business records and equipment from the rising flood waters. A stranger with a large truck agreed to help if Kevin would give him his choice of equipment for payment. Kevin had no time to argue, so he agreed. After the flood, Kevin demanded everything back. The stranger refused to return a new laptop computer. On what legal grounds can Kevin get his computer back?

Accepted Answer

The answer of Kevin was desperate to save his business...

Question 12

Caveat emptor only applies to the

Accepted Answer

Caveat emptor means "buyer beware." It applies to the condition or quality of the goods. When a buyer purchases goods, they must be careful and examine the goods to ensure they are in the condition or quality that they desire. The seller is not responsible for disclosing any defects or issues with the goods, so the buyer must take responsibility for their purchase. It does not apply to the allocation of risks, ownership, warranty or implied performance of the goods.

Question 13

In Law, "utmost good faith" means: a level of trust in

Accepted Answer

"Utmost good faith" in law refers to the duty of parties in a contract to disclose all relevant information about the contract. This includes details about the subject matter, any potential risks, and any other factors that may influence the decision to enter into the contract. Failing to disclose such information goes against the principle of "utmost good faith." Therefore, the best answer is E.

Question 14

Jack really needs money to pay off his mortgage before the bank forecloses. He goes to "Shark" who agrees to lend Jack the money if Jack will pay 100% interest. This is an example of undue influence.

Accepted Answer

Undue influence occurs when one party takes advantage of a person's weakness or vulnerability to get them to agree to something they would not otherwise have agreed to. In this case, Jack is in a desperate financial situation and is willing to agree to Shark's exorbitant interest rate in order to avoid foreclosure. This is an example of undue influence.

Question 15

Undue influence:

Accepted Answer

The answer of Undue influence:
...

Question 16

Monetary compensation is not available together with rescission as a remedy for misrepresentation.

Accepted Answer

Rescission and monetary compensation can be awarded together if the compensation is for losses not directly related to the misrepresentation itself, such as consequential damages.

Question 17

A conditional promise to pay only if the debtor defaults is a guarantee.

Accepted Answer

A guarantee is a promise to pay if the debtor defaults, meaning it is a conditional promise to pay.

Question 18

For all but one of the following reasons the law distinguishes a separate category of contracts requiring "utmost good faith". Which is the EXCEPTION?

Accepted Answer

Contracts for the sale of land do not require "utmost good faith" because the sale of land is typically a simple transaction based on the physical condition and legal ownership of the property. The other reasons listed all involve situations where there is a higher level of complexity, risk, or potential for one party to have superior knowledge, making it necessary for both parties to act in utmost good faith.

Question 19

With the issue of undue influence, what must the victim do to shift the burden of proof to the dominant party?

Accepted Answer

The victim must show that circumstances likely to lead to undue influence existed.

Question 20

Caveat Emptor means buyer beware.

Accepted Answer

Caveat Emptor is a Latin term that means let the buyer beware, which implies that the purchaser is responsible for verifying the reliability and quality of goods and services before buying.

Quiz 9: Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress