Question 1

Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence?
A) Wife and husband
B) Clergy and parishioner
C) Brother and sister
D) Parent and child

Accepted Answer

While all of these relationships can potentially lead to scrutiny of a contract for undue influence, siblings are not typically among the relationships that are closely scrutinized. This is because siblings generally do not hold a position of authority or trust over each other in the same way that spouses, clergy, parents, or others might.

Question 2

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. If, because of the threat, Kenneth signs the contract:
A) the contract is voidable at Kenneth's option.
B) James has committed physical duress against Kenneth.
C) this is an example of economic duress.
D) All of these.

Accepted Answer

The answer of James threatens to hit Kenneth on the...

Question 3

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, although it is such a good imitation that even the dealer thought it was authentic. In this case:
A) Fred has made a unilateral mistake and cannot avoid the contract.
B) the dealer has committed fraud in the inducement.
C) the sale is voidable by the purchaser for mutual mistake.
D) the sale is voidable, because the dealer has made a fraudulent misrepresentation.

Accepted Answer

The sale is voidable by the purchaser for mutual mistake because both Fred and the dealer believed the violin was a genuine Stradivarius when in fact it was not. This mutual error about a basic assumption on which the contract was made allows the contract to be voidable.

Question 4

The remedies of damages and rescission are available for:
A) fraudulent misrepresentation.
B) negligent misrepresentation.
C) innocent misrepresentation.
D) All of these.

Accepted Answer

Both remedies, damages and rescission, are available for all types of misrepresentation - fraudulent, negligent, and innocent.

Question 5

Contracts induced by threats of unlawful act. A) civil prosecution B) criminal prosecution C) tortious conduct _d._physica_l_force Are voidable, regardless of whether the coerced party has committed an

Accepted Answer

Contracts induced by threats of criminal prosecution are voidable because they involve coercion through unlawful means, regardless of the coerced party's actions.

Question 6

Kyle wants to buy a six-passenger car. The salesperson tells him that the two-seat sports car Kyle sees on the car lot would be just perfect for six people. Kyle test drives the car and then buys it. In this case:
A) Kyle has a valid cause of action for fraud.
B) Kyle was not justified in relying upon the salesperson's representation that the car would seat six people.
C) the element of scienter is missing.
D) the salesperson is a fiduciary.

Accepted Answer

The salesperson's representation that the two-seat sports car could seat six people was clearly false and misleading, and any reasonable person would not have justifiably relied on such a statement. Therefore, Kyle was not justified in relying on the salesperson's representation. While fraud requires the element of scienter (knowledge of the falsity), it is not necessary to prove fraud in this case as the salesperson's statement was clearly false. The salesperson is not a fiduciary in this case.

Question 7

A party to a contract may be able to avoid the contract if:
A) there is a mutual mistake, and the party undertook to bear the risk by conscious allocation.
B) there is a unilateral mistake, and the party undertook to bear the risk by conscious ignorance.
C) there was a mistake and the mistaken party was at fault in not discovering the problem before making the contract.
D) None of these.

Accepted Answer

The answer of A party to a contract may be...

Question 8

When both parties misunderstand the same set of facts relating to a basic assumption on which a contract is made, it is termed:
A) rescissionary mistake.
B) unilateral mistake.
C) mistake of law.
D) mutual mistake.

Accepted Answer

When both parties have a misunderstanding of the same set of facts relating to a basic assumption on which a contract is made, it is called a mutual mistake. This mistake can provide grounds for rescission of the contract.

Question 9

Which of the following is NOT an element of fraud?
A) Material misrepresentation
B) Competent parties
C) Knowledge of falsity
D) Justifiable reliance

Accepted Answer

Competent parties are not related to fraud. However, the other options are elements of fraud:
- Material misrepresentation: providing false information or withholding important information.
- Knowledge of falsity: the person making the false statement must know it is untrue.
- Justifiable reliance: the victim relied on the false statement, leading to damages or harm.

Question 10

Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is a "standard" contract for this type of situation. Is the contract which Thomas signed binding upon him?
A) No, because he did not read it
B) No, because he entered into it based upon fraud in the execution
C) Yes, because he has made a unilateral mistake of law
D) Yes, because he was negligent in not ascertaining its contents

Accepted Answer

Contracts are generally binding even if one party does not read the contents, as it is the responsibility of the signing party to understand what they are agreeing to. Negligence in not ascertaining the contents of a contract does not typically void the agreement.

Question 11

A misrepresentation is material if:
A) it would likely induce a reasonable person to enter into a transaction.
B) it changes the price paid by the buyer.
C) it is made knowingly.
D) All of these.

Accepted Answer

A misrepresentation is material if it would likely induce a reasonable person to enter into a transaction. Materiality is not based on whether it changes the price paid by the buyer or if it is made knowingly.

Question 12

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. The sale:
A) was a valid contract that should be enforced by the law.
B) can be voided based upon fraud in the execution.
C) can be voided based upon fraud in the inducement.
D) can be voided based upon mistake as to the identity of the subject matter.

Accepted Answer

The sale can be voided based upon fraud in the inducement, as Bob intentionally gave false information about the stone with the intention of inducing Albert to sell it for a lower price.

Question 13

Sam wants to sell his Golden Retriever to Jordan. Sam tells Jordan that the dog is three years old and that he will point, back, and retrieve. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). Jordan relies on these statements and purchases the bird dog. The buyer has most probably been a victim of:
A) duress.
B) undue influence.
C) fraud in the inducement.
D) fraud in the execution.

Accepted Answer

Sam made a false statement concerning the dog's ability to back, which induced Jordan to purchase the dog. This is an example of fraud in the inducement.

Question 14

Tom tries to sell his classic car to Victoria for $12,000. Tom tells Victoria, "I paid $12,000 for the car in 1978 and it's worth twice that today." Tom really paid $8,000 for the car in 1978. If Victoria buys the car, basing her decision on Tom's statement, which of the following correctly states the situation?
A) Tom's statements amount to puffing only.
B) Tom's statements provide grounds to set the contract aside.
C) Tom's statements are actionable only if negligently made.
D) Tom's statements amount to fraud in the execution.

Accepted Answer

The answer of Tom tries to sell his classic car...

Question 15

A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. The goods failed to arrive on time. If the buyer sues for breach of contract:
A) the seller must pay damages because the seller breached.
B) the seller is guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain the goods.
C) no contract exists due to mutual mistake of fact as to the existence or identity of the subject matter of the contract.
D) All of these.

Accepted Answer

Since both parties were mistaken about the identity of the ship carrying the cotton, there was no mutual agreement on the subject matter of the contract. Therefore, no contract exists, and the buyer cannot sue for breach of contract or recover damages. A mutual mistake of fact voids a contract because there was no meeting of the minds, and the essential terms were not agreed upon. Neither party is at fault, and neither can be held responsible for the failure of the goods to arrive on time because the contract was never formed.

Question 16

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed.
A) This is a mistake of law.
B) This is a mutual mistake of fact.
C) Stewart is obligated to buy land elsewhere and have the complex constructed on property zoned for apartments.
D) Will is liable to Stewart since Will is a contractor.

Accepted Answer

This is a mistake of law because both parties were unaware of the recent zoning change. As a result, the contract is unenforceable since it involves illegal activity (constructing a 10-unit apartment complex on land only zoned for single-unit dwellings). Stewart may need to buy land elsewhere and have the complex constructed on property zoned for apartments, but this is not guaranteed and would require negotiation with the local government. Will is not liable for the mistake of law unless he knew or should have known about the zoning change and did not disclose it to Stewart.

Question 17

A fiduciary is a:
A) person in a subservient position.
B) person who owes a duty of trust, confidence, and loyalty to another.
C) form of formal conduct.
D) person of equal power and control.

Accepted Answer

A fiduciary is someone who is in a position of trust and owes a duty of loyalty to another person, typically a client or beneficiary. This includes financial advisors, attorneys, and trustees, who have legal and ethical obligations to act in the best interest of their clients or beneficiaries.

Question 18

If untrue, which of the following would probably be considered a misrepresentation of a material fact?
A) "This is the one that I think is the best buy."
B) "This is the best computer on the market."
C) "This car has new brakes."
D) "These tires will wear like iron."

Accepted Answer

The answer of If untrue, which of the following would...

Question 19

Which of the following would ordinarily be a basis for making a contract void for mutual mistake?
A) Market conditions
B) Genuineness of the source of the subject matter of the contract
C) The financial situation of the parties
D) All of these.

Accepted Answer

A mutual mistake occurs when both parties to a contract are mistaken about the same basic assumption regarding the subject matter of the contract. If this mistake is about a material aspect of the contract, then the contract can be voided. The genuineness of the source of the subject matter of the contract would fall under this category, while market conditions and the financial situation of the parties would not necessarily be material aspects of the contract that would result in a voidable contract.

Question 20

Which of the following results in a void, rather than voidable, agreement?
A) Duress by improper threat
B) Fraud in the execution
C) Fraud in the inducement
D) Undue influence

Accepted Answer

Fraud in the execution results in a void agreement because one party is deceived as to the nature of the agreement they are signing, rendering their consent to the agreement nonexistent. In contrast, duress by improper threat, fraud in the inducement, and undue influence may result in a voidable agreement, which is an agreement that can be voided by the harmed party but remains valid until voided.

Quiz 11: Conduct Invalidating Assent

Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence?

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. If, because of the threat, Kenneth signs the contract:

The remedies of damages and rescission are available for:

Contracts induced by threats of unlawful act.

Kyle wants to buy a six-passenger car. The salesperson tells him that the two-seat sports car Kyle sees on the car lot would be just perfect for six people. Kyle test drives the car and then buys it. In this case:

A party to a contract may be able to avoid the contract if:

When both parties misunderstand the same set of facts relating to a basic assumption on which a contract is made, it is termed:

Which of the following is NOT an element of fraud?

A misrepresentation is material if:

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed.

A fiduciary is a:

If untrue, which of the following would probably be considered a misrepresentation of a material fact?

Which of the following would ordinarily be a basis for making a contract void for mutual mistake?

Which of the following results in a void, rather than voidable, agreement?