Question 1

Which one of the following mistakes voids a contract?
A)Two parties contract for a shipload of coal,but unknown to both parties,at the time of the contract the ship had sunk and the coal had been lost.
B)Sally and Wacky had a serious misunderstanding about a term in the contract; the court found that the more reasonable interpretation was Sally's.
C)Two parties contracted for the sale and purchase of a painting for the price of $800.When the contract was written up,the price was incorrectly stated as $900.
D)Sam bought three gallons of paint,but found he had made a mistake; two would have been sufficient.
E)When Mr.and Mrs.Houston put their property up for sale,Sam without speaking to the Houstons or their agent about the land,offered close to the asking price because he thought it was suitable for growing wheat.After his offer was accepted,he learned it was not suitable for wheat.

Accepted Answer

Mistake as to the subject matter of the contract (the ship sinking and the coal being lost) makes the contract void.

Question 2

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?
A)This assignment was not a statutory assignment; i.e.,it failed to satisfy the statutory requirements for enforcement by the assignee against the debtor.
B)Because the assignment was made by Beeton to his bank in good faith,Cairns must pay the bank $4000.
C)The assignee would receive whatever the assignor had assigned to him,namely,the $4000.
D)Because the goods bargained for had perished before the parties had contracted for them,the court would hold the contract void.
E)The time for determining the "equities between the parties" is always the time that notice of the assignment is given.

Accepted Answer

The contract was for the sale of a specific type and quantity of Kenyan lumber, which was lost at sea before the parties entered into the contract. Therefore, the contract is void under the doctrine of impossibility because the subject matter of the contract has perished. As a result, the assignment of Beeton's right to receive payment from Cairns is also void because there is no underlying contract for the assignee to enforce. Therefore, the bank cannot collect the $4000 from Cairns.

Question 3

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?
A)She can successfully use the plea of non est factum if there is evidence that she was careless when she signed the document.
B)She can successfully use the plea of non est factum if she was not misled about the very nature of the document.
C)If the court presumes that undue influence was used by the adult who gained from the contract with an aged parent,the contract is automatically set aside.
D)If the lawyer were the daughter's husband,his advice would be seen as independent legal advice.
E)If the aged mother received independent legal advice,it would be good evidence for the daughter that the mother's transferring the property was done freely,without undue influence being exerted.

Accepted Answer

The answer of An 80-year-old woman signed,in the presence of...

Question 4

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?
A)If a court held that the property was obtained by undue influence,the contract would be voidable at the option of grandmother,the weaker person.
B)In a court action,if she claimed the return of her property on the basis of undue influence,the court would presume undue influence and the doctor would have to prove that the property was freely given.
C)A presumption of undue influence doesn't mean the weaker party will automatically get her property back.
D)If grandmother had gone to her own lawyer for independent advice before conveying her property to the doctor,she would have more difficulty arguing undue influence.
E)It would be easier for her to argue duress than undue influence.

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 5

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.)
A)Fraudulent misrepresentation by Mr.Eisenberg
B)Innocent misrepresentation by Mr.Eisenberg
C)Breach of contract by Mr.Eisenberg
D)Negligent misrepresentation by Mr.Eisenberg
E)Unilateral mistake by Mr.Copperfield

Accepted Answer

If Mr.Copperfield made a unilateral mistake in the purchase, meaning that the mistake was not caused by any action or misrepresentation from Mr.Eisenberg, then he would not be entitled to a remedy. It is the responsibility of the buyer to ensure that they are purchasing what they believe they are purchasing, and if they make a mistake, they cannot hold the seller responsible.

Question 6

If a lawyer persuades a client to guarantee a loan,the relationship of solicitor/client leads to a presumption of
A)duress.
B)mental incapacity.
C)lack of intention.
D)unconscionability.
E)undue influence.

Accepted Answer

The relationship between a lawyer and client is one of trust, and therefore the lawyer has a position of power and influence over the client. If the lawyer uses this influence to persuade the client to guarantee a loan, it may be seen as undue influence, where the client is pressured into making a decision they may not have freely chosen.

Question 7

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?
A)Misunderstanding
B)Common mistake or shared mistake
C)Unilateral mistake or one-sided mistake
D)Fraudulent misrepresentation
E)Non est factum

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 8

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?
A)Statutory assignment
B)Mistake
C)Non est factum
D)Duress
E)Privity

Accepted Answer

The wife was coerced into assigning the $17,000 to Jones under duress, which means she was threatened with harm and had no reasonable alternative. Therefore, she could argue that the agreement was void due to duress.

Question 9

When the courts find that undue influence is present,the resulting contract is
A)voidable.
B)void.
C)unenforceable.
D)binding.
E)illegal.

Accepted Answer

Undue influence is a situation where one party exerts a dominating influence on another party and persuades them to enter a contract against their will. In such cases, the contract can be voidable, meaning the affected party has the option to either affirm or reject the contract. They can choose to continue with the contract or choose to avoid it. Therefore, option A is the correct answer.

Question 10

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?
A)Undue influence
B)Duress
C)Mistake of law
D)Fraudulent misrepresentation
E)Non est factum

Accepted Answer

The wife can avoid the assignment on the ground of duress, as the accountant threatened to have her husband arrested and imprisoned if she did not agree to assign the term deposit to the employer. This threat constituted duress, which is a wrongful act or threat that overcomes the free will of a person and coerces them to do something against their will.

Question 11

In which of the following instances would the court most likely hold the contract to be void on the basis of a mistake?
A)Barry and Mary contracted for the sale and purchase of a boat for the price of $1200.When the contract was written up,the price was incorrectly stated as $1700.
B)Two parties contracted for a shipload of fish,but unknown to both parties,at the time of the contract the ship had sunk and the fish had been lost.
C)Carson and Leno had a serious misunderstanding about a term in the contract and the court found that the more reasonable interpretation was that of Leno.
D)Sarah bought three rolls of wallpaper,but found she had made a mistake,since two would have been sufficient.
E)Although the seller said nothing to the buyer about the characteristics of the answering machine,the buyer bought it,thinking that it would tell him the date and time of the call.Later,he learned that it did not perform this function.

Accepted Answer

In this instance, both parties were mistaken about the subject matter of the contract (the fish) as it had been lost before the contract was formed. This mistake renders the contract void. In the other instances, the mistake would not void the contract. In A, the mistake was unilateral and not fundamental to the contract. In C, there was no mistake, just a dispute over interpretation. In D, there was no mistake, just a change of mind. In E, the buyer assumed a characteristic that was not explicitly stated in the contract, so there was no mistake.

Question 12

Which of the following is an example of duress?
A)Joe refuses to sell Harry his car unless Harry offers him more money.
B)Joe,knowing of Harry's financial situation,refuses to sell him his car.
C)Joe counteroffers Harry's original offer.
D)Joe wants to purchase Smith's car from him,and Smith sells it to someone else.
E)Joe threatens to smash Harry's car if Harry won't sell it to him.

Accepted Answer

Duress is the use of force, threats, or other forms of coercion to make someone do something against their will. In this scenario, Joe is using a threat of property damage to force Harry into selling his car, which qualifies as duress. The other options do not involve the use of force or coercion.

Question 13

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?
A)If she were influenced to sign the mortgage by her doctor and the mortgage benefited the doctor,the court would presume undue influence.
B)If she were influenced to sign the mortgage by her doctor and the court found undue influence,the mortgage would be void and she wouldn't have to pay the mortgage company.
C)If she failed to read the mortgage agreement,the mortgage would be void on the basis of non est factum.
D)If the person who misled her as to the contents of the mortgage agreement honestly thought what he was stating was correct,she could sue for only damages,not rescission.
E)If the court found that there was undue influence by her doctor,who obtained the money from the mortgage,she would not have to repay the mortgage company.

Accepted Answer

The answer of A woman sought to set aside a...

Question 14

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.?
A)An unconscionable transaction is one in which one party has been seriously taken advantage of,and the courts,in their equitable jurisdiction,can set such a contract aside.
B)If a contract favours the stronger party in a relationship (e.g.,if a lawyer bought property from a client at far below the market value),the court would presume undue influence (i.e.,that the stronger party abused his dominant position).
C)If the court presumes the existence of undue influence,the person asking for the return of the property will automatically get it back.
D)A contract entered into because of a threat of violence is voidable at the option of the victim.
E)Independent legal advice given to a person who wants to give a gift to a dominant person (e.g.,his doctor)is good evidence to rebut a presumption of undue influence.

Accepted Answer

If the court presumes the existence of undue influence, it does not automatically mean that the person asking for the return of the property will get it back. The court will still have to consider all the facts and circumstances surrounding the transaction before making a decision.

Question 15

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?
A)The court will find that there is no contract because there is no meeting of the minds.
B)Non est factum
C)Caveat emptor
D)The reasonable person test
E)The equitable remedy of rectification

Accepted Answer

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

Question 16

Which of the following will have the likely consequence of the court finding the contract void on the grounds of mistake?
A)Mr.Twigg carelessly signed a mortgage for $24,000,which he was told was a mortgage for only $14,000.This was assigned to Mr.Jones.
B)Mr.Ideer bought some property,erroneously thinking that the province was planning to put a highway nearby,even though the seller had never made any such suggestion.
C)The parties signed a document that stated the consideration as $1200 instead of the $1100 that the buyer and seller had contracted for,but the buyer cannot prove the terms of the original contract.
D)Mr.Ille,although using due care,signed a cheque for $100 in favour of his secretary,who had told him it was a receipt for money received.
E)Mr.Jones,without reliance on a salesperson,purchased an HTC smartphone,thinking it was actually a Samsung smartphone.

Accepted Answer

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

Question 17

________ 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.
A)Damages
B)Remedies
C)Recession
D)Compensation
E)Avoidance

Accepted Answer

Recession is the correct choice as it refers to a remedy that attempts to restore both parties to their original positions. This means that the subject matter of the contract must be returned and any money paid under the contract must also be returned. Damages refer to monetary compensation for losses suffered, while remedies can refer to any action that is taken to correct a breach of contract. Compensation refers to any form of payment or award, and avoidance refers to a party's right to terminate a contract due to a breach by the other party.

Question 18

The victim of ________ can seek monetary compensation as well as rescission for any loss incurred.
A)innocent misrepresentation
B)negligent misrepresentation
C)fraudulent misrepresentation
D)misrepresentation
E)deceit

Accepted Answer

The victim of fraudulent misrepresentation can seek monetary compensation as well as rescission for any loss incurred. In fraudulent misrepresentation, the misrepresentation is made knowingly or without belief in its truth or recklessly, and with the intention that the victim will rely on it to their detriment. This is a more serious form of misrepresentation than innocent or negligent misrepresentation.

Question 19

When parties enters into a contract where a claim is made that a bargain is unconscionable,which of the following is correct?
A)There is an automatic presumption of undue influence due to the relationship of the parties.
B)A close relationship between business associates prevents a finding of unconscionability.
C)When one party lacks the intellect to enter into a contract,the contract continues to be binding on both parties.
D)A presumption of fraud is raised when there is an inequality in the position of the parties due to the ignorance of the weaker party.
E)Because a party to the contract is an uneducated immigrant,the contract is voidable.

Accepted Answer

When there is an inequality in the position of the parties due to the ignorance of the weaker party, a presumption of fraud is raised. This can make the contract unconscionable and thus, voidable.

Question 20

With respect to having the court set aside a contract on the basis of undue influence,which of the following is false?
A)If a client transferred property to his lawyer and later claimed the transfer was due to undue influence,the law would presume the transfer was due to undue influence.
B)If the court presumes the existence of undue influence,the person asking for the return of the property will automatically get it back.
C)A contract made in favour of a dominant person who exerted undue influence over the weaker party is voidable at the option of the weaker party.
D)If you are a dominant person in relation to an aged relative who wants to sell you his house below market value,you should insist that the aged relative receive independent legal advice.
E)Where undue influence is established,the resulting contract is voidable,not void.

Accepted Answer

If the court presumes the existence of undue influence, it does not automatically mean that the person asking for the return of the property will get it back. The court will first need to consider all the facts and circumstances surrounding the transaction before deciding whether to set aside the contract.

Quiz 8: Factors Affecting the Contractual Relationship

Which one of the following mistakes voids a contract?

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

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?

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

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

Which of the following is an example of duress?

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?

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.?

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?

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

________ 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.

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

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

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