Question 1

Because fraud actions necessarily involve wrongful conduct,courts may award punitive damages.

Accepted Answer

Punitive damages can be awarded in cases of fraud as a form of punishment for the wrongful conduct of the defendant.

Question 2

Dwight believes that a new phone to be sold by Ear Candy Corporation will become the most widely bought and used phone in the global market. Dwight enters into a contract to buy 500 shares of Ear Candy stock,anticipating an increase in its value. If the price of the stock does not rise,Dwight can recover

Accepted Answer

Dwight cannot recover anything if the stock price does not rise because investing in stocks involves risk, and there is no guarantee of a return.

Question 3

A contract entered into under undue influence is voidable.

Accepted Answer

A contract entered into under undue influence can be avoided or set aside by the party who was under the influence of the other party when entering into the contract. Therefore, it is considered voidable.

Question 4

A threat to exercise a legal right,such as the right to sue someone,ordinarily constitutes duress.

Accepted Answer

A threat to exercise a legal right, such as the right to sue, does not typically constitute duress because it involves a lawful action rather than an unlawful or coercive act.

Question 5

Misrepresentation cannot occur by silence.

Accepted Answer

Misrepresentation can occur by silence or omission of a material fact when there is a duty to disclose or when the circumstances imply a duty to disclose.

Question 6

The element of justifiable reliance requires the misrepresentation to be the sole factor in inducing the deceived party to enter into the contract.

Accepted Answer

The misrepresentation does not have to be the sole factor in inducing the deceived party to enter into the contract for the element of justifiable reliance to apply. The misrepresentation only needs to be a material factor that would have influenced the decision to enter into the contract.

Question 7

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

Accepted Answer

Reliance on a misrepresentation is not justified even if it is an obviously extravagant statement. Misrepresentations, whether obvious or not, can lead to harm and are therefore not justified to rely upon.

Question 8

Courts typically set aside contracts because a party did not volunteer pertinent information.

Accepted Answer

The answer of Courts typically set aside contracts because a...

Question 9

Misrepresentation of a material fact is an element of fraud.

Accepted Answer

Misrepresentation of a material fact is one of the necessary elements of fraud. The other elements include intentional or reckless deception and harm or loss suffered by the victim as a result of the fraud.

Question 10

Duress is a defense to the enforcement of a contract,but not a ground for rescission of a contract.

Accepted Answer

Duress can be a ground for rescission of a contract, which means the contract is canceled and both parties are restored to their prior positions. Duress is a situation where one party is forced to enter into a contract under threat or coercion by the other party. In such cases, the coerced party may seek to rescind the contract based on duress.

Question 11

Carlos and Alvaro contract for the sale of five hundred head of Carlos's cattle for $95 per head. Unknown to either party,an unforeseen storm has struck the herd and many of the cattle have died. Alvaro is

Accepted Answer

The situation described is an example of mutual mistake because both parties were unaware of the storm and its effects on the cattle. As such, the contract is voidable due to the mutual mistake and Alvaro is not required to pay.

Question 12

Misrepresentation of a material fact can occur by words or action.

Accepted Answer

Misrepresentation of a material fact can occur both by words (such as lying or making false statements) and action (such as concealing information or making an action that implies false information).

Question 13

At an auction for the first time,Darcy bids on a one-hundred-year-old Edison-brand phonograph,believing that it is worth more than the price asked. When the item proves to be less valuable,Darcy is

Accepted Answer

When Darcy bids on the phonograph at the auction, she becomes liable on the bid, regardless of whether she overestimated the phonograph's value or the auctioneer overstated its value. As a bidder, Darcy is accepting the risk that she may bid more than the item is actually worth.

Question 14

Reformation occurs when a court alters the terms of a contract to reflect the true intent of the parties.

Accepted Answer

Reformation is a legal doctrine that allows a court to change the terms of a contract to reflect the real intentions of the parties involved. This is typically done in cases where there has been a mistake or misunderstanding in the original agreement. It is a rare remedy that is only granted in specific circumstances.

Question 15

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

Accepted Answer

This is a well-established legal principle, wherein if the dominant party in a fiduciary relationship benefits from that relationship, it raises a presumption of undue influence. This means that the burden of proof falls on the dominant party to show that there was no undue influence, rather than on the weaker party to prove that there was.

Question 16

Even when a naïve purchaser relies on an opinion from an expert,the innocent party is not entitled to rescission or reformation of a contract.

Accepted Answer

The statement is false. In some cases, an innocent party who relied on an expert's opinion may be entitled to rescission or reformation of the contract if the expert's opinion was fraudulent or the expert had a conflict of interest.

Question 17

Shelby wants to sell his Bobcat Skidsteer for $21,000. He e-mails Dave and offers to sell Dave the Bobcat. Due to a typo,Shelby tells Dave that he wants $20,100 for the Bobcat. Dave accepts the offer and pays Shelby $20,100. Shelby is

Accepted Answer

Although Shelby made a mistake in the price offered, Dave accepted the offer and paid the agreed amount. This creates a legally binding contract between Shelby and Dave, and Shelby is obligated to sell the Bobcat for $20,100. The mistake was not so fundamental that it would make the contract void. Therefore, Shelby is bound by the contract.

Question 18

To recover for fraud,a plaintiff must be twenty-one or more years of age.

Accepted Answer

There is no age requirement for recovery for fraud.

Question 19

In selling a 300-acre farm to Rural Land Investments,Inc.,Simone tells Rural's representative that the land "will be worth twice as much by next year." This is

Accepted Answer

Simone's statement about the future value of the land is an opinion or prediction, not a factual assertion, and therefore does not constitute fraud.

Question 20

Scienterclearly exists if a party knows a fact is not as stated.

Accepted Answer

Scienter, meaning knowledge, is an important element in certain legal actions, such as fraud or misrepresentation. If a party has knowledge that a fact is not as stated, this constitutes scienter and can be used as evidence in court. Therefore, scienter clearly exists if a party knows a fact is not as stated.

Quiz 14: Voluntary Consent