Question 1

The term caveat emptor means:
A)The seller must disclose facts relevant to the contract.
B)The buyer must inform herself before entering the contract.
C)The courts will set aside a contract if one side is better informed.
D)The buyer and seller must disclose relevant information before entering the contract.
E)"Let the seller beware".

Accepted Answer

Caveat emptor is a Latin phrase meaning "let the buyer beware," indicating that the buyer is responsible for checking the quality and suitability of goods before a purchase is made.

Question 2

Which of the following is an element of misrepresentation?
A)The statement is false.
B)The statement must be made a term of the final contract.
C)The statement is one of fact.
D)Both A and B
E)All of the above

Accepted Answer

A

Question 3

A misrepresentation is an inaccurate statement that is:
A)A written term of a contract.
B)Made after a contract has been made.
C)Always made by a person clearly knowing that it is false.
D)Made before a contact and written down as part of the contract terms.
E)Made about a key term that induced the contract

Accepted Answer

A misrepresentation is an inaccurate statement made before a contract that induces the other party to enter into the contract.

Question 4

Fraudulent misrepresentation is:
A)a correct statement;
B)an inaccurate statement that may or may not have been done intentionally
C)an incorrect statement made knowingly with the intention of causing injury to another
D)an incorrect statement made without the intention to cause injury to another
E)a type of mistake in contract law

Accepted Answer

Fraudulent misrepresentation involves making an incorrect statement knowingly with the intention to deceive or cause harm to another party.

Question 5

Heine Aalto told Sandy Bell that the painting she was purchasing from him was a Picasso and wrote that statement in the purchase contract. An art critic later told Sandy that it was a clever copy that would fool most experts. Heine was surprised. What is the statement by Heine called in law?
A)Negligent misrepresentation.
B)Innocent misrepresentation
C)Breach of a term of the contract
D)Mistake
E)Opinion

Accepted Answer

Heine's statement is considered an innocent misrepresentation because he genuinely believed the painting was a Picasso and had no intention to deceive Sandy.

Question 6

Which of the following remedies is available for misrepresentation?
A)injunction
B)specific performance
C)declaration
D)rescission
E)rectification

Accepted Answer

Rescission is the primary remedy for misrepresentation, allowing the contract to be set aside and the parties to be restored to their pre-contractual position.

Question 7

What is the meaning of the term "caveat emptor"?
A)an exemption clause in an agreement
B)all of the agreement
C)let the buyer beware
D)let the seller beware
E)negotiate all terms

Accepted Answer

"Caveat emptor" is a Latin phrase that means "let the buyer beware," indicating that the buyer assumes the risk for the quality and condition of goods purchased.

Question 8

A court may set aside an otherwise valid contract for which of the following reasons?
A)Undue influence.
B)Duress
C)Misrepresentation
D)Non est factum
E)All of the above

Accepted Answer

A court may set aside a contract if it was formed under undue influence, duress, misrepresentation, or if the signer did not understand the nature of the document (non est factum).

Question 9

Which of the following creates an exception to caveat emptor?
A)A fiduciary relationship between the parties.
B)A statutory duty to disclose
C)A voluntary disclosure by the defendant
D)Both A and B
E)All of the above

Accepted Answer

The answer of Which of the following creates an exception...

Question 10

You purchase a computer for $1,500, having being told by the vendor that it is a 2002 model. After receiving it, you discover that it is a 2001 model, worth only about $1,200. What are your remedies?
A)If the vendor was honest but mistaken, you can return the computer and get your $1,500 back.
B)If the vendor should have known that facts, you cannot return the computer but you can get $300 back.
C)If the vendor knew the facts and lied about them, you can return the computer and get damages of $300.
D)If the vendor wasn't sure about the model, you cannot return the computer, but you can get $300 in damages
E)Buyer beware, there is nothing you can do you should have checked it out more carefully

Accepted Answer

If the vendor was honest but mistaken, you can return the computer and get your $1,500 back.

Question 11

Roberts Communications owns a television station. Brodkin Davis, a law firm, wants to advertise on the station. The manager of the station calls his bank and asks them to do a credit check on the law firm. The bank writes back saying that the firm has an excellent rating. Unfortunately, the bank confused Brodkin Davis with Brodkin Davey. The latter firm has excellent credit; the former firm has just been formed and has no credit. They are unable to pay for the expensive advertising Roberts agrees to provide, so Roberts sues the bank. What is the result?
A)Roberts may rescind its contract with the bank.
B)Roberts may obtain damages from the bank.
C)Roberts may both rescind its contract with the bank and obtain damages from it.
D)Roberts has no claim against the bank.
E)Roberts may rescind its contract with the bank and obtain damages from Brodkin Davis.

Accepted Answer

The answer of Roberts Communications owns a television station. Brodkin...

Question 12

Angel Cabrera owns a store and is showing it to Crista D Alimonte who wants to lease it to run a coffee shop. Angel thinks he saw a newspaper report that a new bus route with a main stop across from the shop was to be started soon. He tells Crista that a new bus stop is soon to be established. She signs a lease that sets out only the rental amount and the length of the lease. There is no mention of the bus stop. After a year, there is still no bus stop across from the shop, and Crista sues. What remedy could a court award her?
A)Damages for business losses
B)A declaration that the lease was now rescinded
C)A reduction in rent
D)Both A and B
E)All of the above

Accepted Answer

The answer of Angel Cabrera owns a store and is...

Question 13

Negligent misrepresentation is:
A)an incorrect statement made with due care for its accuracy
B)an incorrect statement made without due care for its accuracy
C)a correct statement made with due care for its accuracy
D)more difficult to prove than fraudulent misrepresentation
E)not grounds to rescind a contract

Accepted Answer

Negligent misrepresentation involves making an incorrect statement without exercising due care to ensure its accuracy, leading to a party being misled.

Question 14

Nancy Kiro is selling her florist shop to Boris Kranz. In the course of negotiating the deal, Boris asks her if she is aware of any reason why the business might be less profitable after he takes over. Nancy tells him that she anticipates that costs generally will rise by 14% in the next 12 months. She does not tell him that her major customer, responsible for nearly 40% of her sales, is planning to leave town in two months. The written agreement contains no warranties. When Boris finds out the bad news - after the deal goes through - can he successfully sue Nancy?
A)No. Nancy did not make any misrepresentation.
B)No. Boris had a duty to make his own inquiries.
C)No. There was no special relationship between the parties.
D)Yes. Once Nancy chose to answer Boris's specific question, she was obliged to answer it honestly and fully.
E)Both B and C

Accepted Answer

Once Nancy chose to answer Boris's specific question, she was obliged to answer it honestly and fully, including any material facts that could affect the business's profitability.

Question 15

Angel Cabrera owns a store and is showing it to Crista D Alimonte who wants to lease it to run a coffee shop. Angel thinks he saw a newspaper report that a new bus route with a main stop across from the shop was to be started soon. He tells Crista that a new bus stop is soon to be established. She signs a lease that sets out only the rental amount and the length of the lease. There is no mention of the bus stop. It turns out the city had never said it was planning a new bus route in this area, it was in a different part of the city. Which of the following is TRUE?
A)Cirsta has no remedy because there is no term in the lease guaranteeing that a bus stop would be started at that location.
B)Crista has no remedy because Angel honestly believed a bus stop would be started at that location.
C)The statement by Angel was an innocent misrepresentation.
D)The statement by Angel was a negligent misrepresentation.
E)The statement by Angel was a fraudulent misrepresentation.

Accepted Answer

The answer of Angel Cabrera owns a store and is...

Question 16

The legal term for the termination of a contract by a court because of a breach of the contract is:
A)rectification.
B)damages
C)rescission
D)an injunction
E)novation

Accepted Answer

Rescission is the legal term for the termination of a contract by a court due to a breach, effectively canceling the contract and restoring the parties to their pre-contractual positions.

Question 17

Sam Edjidian buys two cars from Silver Strip Auto Sales. One car is for his personal use and one is for his business. The dealer told Sam that both cars were from within the province. This was not put in writing. The dealer believed what he said was true. After purchasing the vehicles, Sam learned they were brought in from another province where safety standards were higher, and where they had both failed the safety tests. There is a standard exemption clause in the purchase agreement Sam signed saying that there are no representations except those in writing. Which of the following statement is TRUE?
A)The exemption clause is ineffective for the car that was bought for personal use.
B)The exemption clause is ineffective for the car purchased for business use.
C)The exemption clause is ineffective in both agreements.
D)The exemption clause is effective in both agreements.
E)The exemption clause is ineffective in British Columbia only

Accepted Answer

The exemption clause is likely ineffective for the car bought for personal use due to consumer protection laws, which often protect consumers from misleading statements, even if not in writing.

Question 18

In some cases, the Court will not grant the remedy of rescission. In which of the following situations would a court refuse to grant rescission?
A)resale of the property to a purchaser who knows of the misrepresentation
B)undue haste in claiming rescission
C)the goods involved were very expensive
D)resale of property to a bona fide purchaser who did not know of the misrepresentation
E)rescission is not granted in any of the above situations

Accepted Answer

A court will refuse to grant rescission if the property has been resold to a bona fide purchaser who did not know of the misrepresentation, as this would unfairly affect the rights of the innocent third party.

Question 19

You sell your used car to a stranger. He gives you a cheque he knows is bad. By the time you find that out, he has sold the car to a third party. The third party paid a fair price and did not know that the vendor was a fraudsman. What is the situation now as between you and the third party?
A)You can get the car returned. The fraudsman could not give good title, because he didn't have it.
B)You are out of luck. Title has passed to the innocent third party.
C)You can get the car returned. You and the third party are both innocent victims, so title reverts to the last party to have good title, which is you.
D)The third party may keep the car, but will have to pay you damages.
E)You can get the car returned, but you will have to pay the third party damages.

Accepted Answer

The third party, being an innocent purchaser for value without notice of the fraud, has acquired good title to the car.

Question 20

Mary was selling her house. The purchase asked if it had termites and Mary replied in horror, "absolutely not". However, it did have termites. But clever insects that they are, they kept well inside the wood so Mary never saw them and didn't have any idea that they were there. There was no mention of this statement in the contract for sale of the house. Mary's statement is considered in law to be
A)an innocent misrepresentation
B)a negligent misrepresentation
C)a false warranty
D)of no consequence because it was not included in the written contract
E)of no consequence because she believed that there were no termites and was honestly mistaken

Accepted Answer

Mary's statement is considered an innocent misrepresentation because she genuinely believed there were no termites and had no knowledge of their presence.

Quiz 7: Contract Defects and Breach of Contract

The term caveat emptor means:

Which of the following is an element of misrepresentation?

A misrepresentation is an inaccurate statement that is:

Fraudulent misrepresentation is:

Heine Aalto told Sandy Bell that the painting she was purchasing from him was a Picasso and wrote that statement in the purchase contract. An art critic later told Sandy that it was a clever copy that would fool most experts. Heine was surprised. What is the statement by Heine called in law?

Which of the following remedies is available for misrepresentation?

What is the meaning of the term "caveat emptor"?

A court may set aside an otherwise valid contract for which of the following reasons?

Which of the following creates an exception to caveat emptor?

You purchase a computer for $1,500, having being told by the vendor that it is a 2002 model. After receiving it, you discover that it is a 2001 model, worth only about $1,200. What are your remedies?

Negligent misrepresentation is:

The legal term for the termination of a contract by a court because of a breach of the contract is:

In some cases, the Court will not grant the remedy of rescission. In which of the following situations would a court refuse to grant rescission?

You sell your used car to a stranger. He gives you a cheque he knows is bad. By the time you find that out, he has sold the car to a third party. The third party paid a fair price and did not know that the vendor was a fraudsman. What is the situation now as between you and the third party?