Question 1

If a lawyer persuades a client to guarantee a loan, the relationship of solicitor/client leads to a presumption of

Accepted Answer

The relationship of solicitor/client is one of trust and confidence, which can lead to a presumption of undue influence if a lawyer persuades a client to guarantee a loan. This is because the lawyer holds a position of power and influence over the client, potentially exploiting their trust to the client's detriment.

Question 2

When the courts find that undue influence is present, the resulting contract is

Accepted Answer

When courts find that undue influence is present, the resulting contract is considered voidable. This means that the party who was unduly influenced has the option to affirm or void the contract.

Question 3

When parties enters into a contract where a claim is made that a bargain is unconscionable, which of the following is correct?

Accepted Answer

Unconscionability in contract law often involves situations where there is a significant inequality between the parties, particularly where the weaker party's ignorance is exploited. This can raise a presumption of fraud, as the imbalance may indicate that the weaker party was unfairly taken advantage of, making the contract potentially voidable or subject to revision.

Question 4

In which of the following instances would the court most likely hold the contract to be void on the basis of a mistake?

Accepted Answer

In instance B, the contract would most likely be held void due to a mutual mistake regarding a basic assumption on which the contract was made (the existence of the shipload of fish). Both parties were unaware that the ship had sunk and the fish had been lost at the time of the contract, making the contract voidable due to the mistake.

Question 5

Which of the following is an example of duress?

Accepted Answer

Duress involves coercion or a threat of harm to force someone to act against their will. In option E, Joe's threat to smash Harry's car if he doesn't sell it to him is a clear example of duress, as it involves a threat of physical damage to coerce Harry into selling his car.

Question 6

On September 1, Beeton contracted to sell $4000 worth of specified Kenyan lumber to Cairns. Beeton expected the arrival of the lumber soon, so the delivery date was set for September 8. On September 5, Beeton assigned, in writing, his contractual right to receive the $4000 to his bank, which was pressing him to reduce his $17,000 debt. The bank sent a written notice to Cairns instructing him to forward the $4000 to the bank and not to pay Beeton directly. Unknown to either Beeton or Cairns, the lumber had been lost at sea in August, before they had even entered the contract. On these facts, which of the following is true?

Accepted Answer

The contract is void because the goods (lumber) were destroyed before the contract was made, making the contract's subject matter nonexistent. This principle is based on the doctrine of impossibility or frustration of purpose, which renders a contract void if the performance becomes impossible due to circumstances beyond the control of the parties involved.

Question 7

Mr. Copperfield, a collector of movie memorabilia, bid $250,000 on the Batmobile. After taking delivery, he discovered the car was not the car actually used in the film "Batman," it was merely one of five cars used to promote the film. He is suing the seller, Mr. Eisenberg. In which of the following cases would Mr. Copperfield not be entitled to a remedy? (Assume that in each case the facts could be proven.)

Accepted Answer

In the case of a unilateral mistake, where only Mr. Copperfield was mistaken about the nature of the Batmobile without any misrepresentation or breach of contract by Mr. Eisenberg, Mr. Copperfield would not be entitled to a remedy. This is because the mistake was solely on his part without any fault from the seller.

Question 8

Randal embezzled $6000 of his employer's money and then disappeared. The employer's accountant called at Randal's residence and found out that his wife had a $3500 term deposit. When the accountant threatened to have her husband arrested and imprisoned if she did not agree, she assigned the term deposit to the employer to help to defray the loss from the embezzlement. If the wife were later to sue for return of the term deposit, what would be her ground for avoiding the assignment?

Accepted Answer

The wife's ground for avoiding the assignment would be duress, as she was coerced into assigning the term deposit by the threat of her husband's arrest and imprisonment.

Question 9

The victim of ________ can seek monetary compensation as well as rescission for any loss incurred.

Accepted Answer

Fraudulent misrepresentation allows the victim to seek monetary compensation and rescission for any loss incurred.

Question 10

Which of the following will have the likely consequence of the court finding the contract void on the grounds of mistake?

Accepted Answer

The answer of Which of the following will have the...

Question 11

________ attempts to return both parties to their original positions. The subject matter of the contract must be returned to the original owner, and any monies paid under the contract must also be returned.

Accepted Answer

Recession, in the context of contract law, refers to the process of unwinding a contract, returning both parties to their original positions before the contract was executed. This involves the return of any property or money exchanged as part of the contract.

Question 12

You and your parents were both surprised when grandmother said the doctor told her to come for weekly checkups, because she didn't seem sick. Nevertheless, you dutifully took her to and from her appointments for a period of about six months. She never talked about these sessions, but loved to go. Now she has come to the family and said that she is sorry that she gave him the oil paintings and sold him the farm. On these facts, which of the following is false?

Accepted Answer

Duress involves coercion or threats, which is different from undue influence that typically involves taking advantage of a position of power over someone who is vulnerable. The scenario suggests undue influence (exploiting the trust and dependency of the grandmother) rather than duress, making it less applicable and thus harder to argue duress in this context.

Question 13

With respect to having the court set aside a contract on the basis of undue influence, which of the following is false?

Accepted Answer

The statement that if the court presumes the existence of undue influence, the person asking for the return of the property will automatically get it back is false. The presumption of undue influence shifts the burden of proof to the dominant party to prove that the transaction was fair and not a result of undue influence. However, this does not guarantee automatic restitution; the court will consider evidence and arguments from both sides before making a decision.

Question 14

Which one of the following mistakes voids a contract?

Accepted Answer

A mistake that makes a contract void is one that is fundamental to the agreement itself, such as contracting for something that no longer exists or is impossible to fulfill. In choice A, both parties were contracting for a shipload of coal that, unknown to them, had already sunk and was lost. This is a mutual mistake about the existence of the subject matter of the contract, making the contract void.

Question 15

A real-estate agent, Jones, was owed a $17,000 commission, having sold property for Mr. Quick. Mr. Quick couldn't be found, but Jones did find his wife and learned that she had over $20,000 in treasury bills. Mr. Jones told her that if she didn't assign to him $17,000 of the $20,000, he would make sure her husband was imprisoned for his debts and "for other crimes" he knew about. If she did make an assignment in writing to Jones of the $17,000 but later tried to void the agreement, she would argue which of the following?

Accepted Answer

The correct answer is duress because Jones used threats to coerce Mr. Quick's wife into assigning him $17,000 of the treasury bills. This constitutes duress, as the agreement was made under a threat of harm, making it voidable by the party who was coerced.

Question 16

When two parties are involved in a mutual mistake (misunderstanding) as to the meaning of a term of the contract, which of the following is usually applied by the court to settle the matter?

Accepted Answer

The answer of When two parties are involved in a...

Question 17

Jones offers to sell Smith his car. Smith thinks Jones is selling his 2015 Toyota, and Jones thinks he is selling his 2014 Buick. This is an example of which of the following?

Accepted Answer

This scenario is an example of a misunderstanding because both parties have different beliefs about the subject matter of the contract, with neither party being aware of the other's belief. This lack of mutual agreement on the specific car being sold indicates a misunderstanding rather than a shared mistake, unilateral mistake, fraudulent misrepresentation, or non est factum.

Question 18

A woman sought to set aside a mortgage on the grounds of misrepresentation, undue influence, and non est factum. She had been persuaded to enter into that mortgage contract with a mortgage company by her doctor. Which of the following is true with regard to these challenges to the mortgage contract?

Accepted Answer

If she were influenced to sign the mortgage by her doctor and the mortgage benefited the doctor, the court would presume undue influence, shifting the burden of proof to the doctor to show that the influence was not undue.

Question 19

The law attempts to help persons who may feel forced to enter contracts. Which of the following is false with regard to the law of undue influence, duress, etc.?

Accepted Answer

The presumption of undue influence does not automatically result in the return of the property to the person asking for it. The court will investigate the circumstances and decide based on the evidence presented.

Question 20

An 80-year-old woman signed, in the presence of a solicitor, a contract for land by which she sold property to her daughter. She later asked the court to set the contract aside on the grounds of non est factum (mistake) and undue influence. Which of the following is true with regard to these grounds for the contract?

Accepted Answer

Independent legal advice can serve as evidence that the decision was made freely and without undue influence.

Quiz 8: Factors Affecting the Contractual Relationship