Question 1

Under the Statute of Frauds, all contracts must be in writing to be enforceable except those involving insignificant transactions.​

Accepted Answer

Under the Statute of Frauds, certain types of contracts must be in writing to be enforceable, such as contracts for the sale of goods over a certain dollar amount and contracts for real property. However, there are also many contracts that do not need to be in writing to be enforceable, such as contracts for services or for the sale of small items. Therefore, not all contracts need to be in writing under the Statute of Frauds.

Question 2

An innocent party can rescind a fraudulent contract and be restored to his or her original position.​

Accepted Answer

This is because fraudulent contracts are voidable by the innocent party, and rescission is one of the remedies available to them. Rescission involves undoing the contract and restoring the parties to the position they were in prior to entering into the contract.

Question 3

Normally, a contract will be set aside because certain pertinent information was not volunteered.​

Accepted Answer

Normally, a contract will not be set aside simply because certain information was not volunteered; there must be a misrepresentation, fraud, or failure to meet a duty of disclosure in specific types of contracts for it to be set aside.

Question 4

A contract entered into under undue influence is voidable.​

Accepted Answer

A contract entered into under undue influence is not completely void, but it is voidable. This means that the innocent party can choose to either affirm the contract or rescind it due to the undue influence exerted by the other party.

Question 5

Misrepresentation cannot occur by silence.​

Accepted Answer

Misrepresentation can also occur by silence, i.e., when there is a duty to disclose certain information but it is intentionally withheld, which can mislead the other party.

Question 6

A threat to exercise a legal right ordinarily constitutes duress.​

Accepted Answer

A threat to exercise a legal right does not constitute duress unless the threat is wrongful or improper. The threat must be one that goes beyond a mere statement of a legal right which the other party is entitled to exercise. Duress requires coercion or pressure that deprives a person of his or her will and compels that person to do something that he or she would not have done otherwise.

Question 7

Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.​

Accepted Answer

If words or terms in a contract are subject to more than one reasonable interpretation, both parties may have a different understanding of what the contract actually means. This can lead to bilateral mistakes, in which both parties make the same error in understanding the contract.

Question 8

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.​

Accepted Answer

This is true. Undue influence occurs when a dominant party has abused their position of power or authority to influence the decision-making of a vulnerable party in a way that benefits the dominant party. In a fiduciary relationship, the dominant party (such as a trustee or executor) has a duty to act in the best interests of the vulnerable party (such as a beneficiary or client). When the dominant party benefits from that relationship, there is a presumption that they have abused their power and influenced the decision-making of the vulnerable party.

Question 9

A price quotation with a mistake in the adding of a number of figures will never render a contract unenforceable.​

Accepted Answer

A significant mistake in a price quotation, such as an error in adding figures, can affect the terms of a contract and potentially render it unenforceable if it goes to the essence of the agreement and if the mistake is mutual or if the other party knew or should have known of the mistake.

Question 10

Courts may award punitive damages in fraud actions.​

Accepted Answer

Punitive damages are sometimes awarded in fraud cases to punish the defendant for their misconduct and deter future similar behavior.

Question 11

When a naïve purchaser enters into a contract in reliance on the opinion of an expert, the innocent party is not entitled to rescind the deal.​

Accepted Answer

When a naïve purchaser relies on the opinion of an expert, it is known as misrepresentation. If the misrepresentation is innocent or negligent, the innocent party may rescind the contract. However, if it is fraudulent or reckless, the innocent party may rescind the contract and claim damages. Therefore, the innocent party is entitled to rescind the deal in such cases.

Question 12

A seller's attempt to conceal a fact that is material to a contract can give rise to an action for fraud.​

Accepted Answer

This statement is true. When a seller intentionally hides or conceals important information that may affect a contract, it is considered fraud, and the affected party can take legal action.

Question 13

Duress is a possible ground for rescission of a contract.​

Accepted Answer

Duress occurs when a party is forced to enter into a contract against their will due to threats or actual physical harm, and it can serve as a basis for rescinding the contract.

Question 14

The primary purpose of the Statute of Frauds is to ensure that all parties to a contract understand all of the terms of a contract.​

Accepted Answer

The primary purpose of the Statute of Frauds is to require certain contracts to be in writing and signed in order to be enforceable, rather than to ensure that all parties understand the terms of the contract.

Question 15

For a party to a contract to receive relief from a mistake, the mistake must involve a material fact.​

Accepted Answer

A material fact is one that, had it been known, would have influenced the decision of one or both parties to enter into the contract. If a mistake involves a non-material fact, the party cannot generally receive relief from the contract.

Question 16

A contract must be in writing to be enforceable if it makes performance possible only over a period of more than one year.​

Accepted Answer

This is the Statute of Frauds requirement for contracts involving performance over a period of more than one year. Such contracts must be in writing in order to be enforceable.

Question 17

Any party who does not receive what he or she considers a fair bargain can rescind the deal on the basis of mistake.​

Accepted Answer

A mistake alone is not sufficient grounds for rescission of a contract. The mistake must be material to the agreement and not one that could have been easily avoided or corrected. Furthermore, the mistake must be one that affects the basic agreement, not just an incidental detail.

Question 18

A unilateral mistake always gives the mistaken party a right to relief from the contract.​

Accepted Answer

A unilateral mistake, where only one party is mistaken about a fundamental aspect of the contract, does not always give the mistaken party a right to relief. Relief may be granted under certain conditions, such as if the other party knew or should have known of the mistake, but it is not automatic.

Question 19

Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.​

Accepted Answer

Reliance on a misrepresentation is generally not justified, regardless of whether the misrepresentation is obviously extravagant or not. In fact, a misrepresentation that is obviously extravagant might be more likely to put a buyer on notice that it is not true, and therefore less likely to be relied on.

Question 20

Scienter clearly exists if a party knows a fact is not as stated.​

Accepted Answer

Scienter, also known as knowledge of wrongdoing, exists if a party knows that a fact is not as stated. If a party knowingly misrepresents a fact or conceals material information, they are acting with scienter.

Quiz 10: Defenses to Contract Enforceability

Under the Statute of Frauds, all contracts must be in writing to be enforceable except those involving insignificant transactions.​

An innocent party can rescind a fraudulent contract and be restored to his or her original position.​

Normally, a contract will be set aside because certain pertinent information was not volunteered.​

A contract entered into under undue influence is voidable.​

Misrepresentation cannot occur by silence.​

A threat to exercise a legal right ordinarily constitutes duress.​

Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.​

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.​

A price quotation with a mistake in the adding of a number of figures will never render a contract unenforceable.​

Courts may award punitive damages in fraud actions.​

When a naïve purchaser enters into a contract in reliance on the opinion of an expert, the innocent party is not entitled to rescind the deal.​

A seller's attempt to conceal a fact that is material to a contract can give rise to an action for fraud.​

Duress is a possible ground for rescission of a contract.​

The primary purpose of the Statute of Frauds is to ensure that all parties to a contract understand all of the terms of a contract.​

For a party to a contract to receive relief from a mistake, the mistake must involve a material fact.​

A contract must be in writing to be enforceable if it makes performance possible only over a period of more than one year.​

Any party who does not receive what he or she considers a fair bargain can rescind the deal on the basis of mistake.​

A unilateral mistake always gives the mistaken party a right to relief from the contract.​

Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.​

Scienter clearly exists if a party knows a fact is not as stated.​

Under the Statute of Frauds, all contracts must be in writing to be enforceable except those involving insignificant transactions.

An innocent party can rescind a fraudulent contract and be restored to his or her original position.

Normally, a contract will be set aside because certain pertinent information was not volunteered.

A contract entered into under undue influence is voidable.

Misrepresentation cannot occur by silence.

A threat to exercise a legal right ordinarily constitutes duress.

Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.

A price quotation with a mistake in the adding of a number of figures will never render a contract unenforceable.

Courts may award punitive damages in fraud actions.

When a naïve purchaser enters into a contract in reliance on the opinion of an expert, the innocent party is not entitled to rescind the deal.

A seller's attempt to conceal a fact that is material to a contract can give rise to an action for fraud.

Duress is a possible ground for rescission of a contract.

The primary purpose of the Statute of Frauds is to ensure that all parties to a contract understand all of the terms of a contract.

For a party to a contract to receive relief from a mistake, the mistake must involve a material fact.

A contract must be in writing to be enforceable if it makes performance possible only over a period of more than one year.

Any party who does not receive what he or she considers a fair bargain can rescind the deal on the basis of mistake.

A unilateral mistake always gives the mistaken party a right to relief from the contract.

Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.

Scienter clearly exists if a party knows a fact is not as stated.