Question 1

In selling a 300-acre tract to Organic Farm, Peyton tells the buyer that the land "will be worth twice as much by next year." This statement is not likely to support rescission of the contract because it is

Accepted Answer

Peyton's statement is an opinion, which is not a guarantee or a fact. As a result, it is unlikely to support rescission of the contract.

Question 2

Ralph enters into a contract with Skye to buy her land based on her assertion that the land is open to development. After the sale, Ralph learns that only a small section of the land can be built on. A local law prohibits construction on the rest of the property. Ralph can

Accepted Answer

The answer of Ralph enters into a contract with Skye...

Question 3

Bram, a salesperson for Cruisin' Motors, promises Deb a certain car will give her a "smooth ride." Bram offers a test drive, which Deb declines. She buys the car but soon realizes its suspension is in poor condition. Deb can rescind the contract on the ground of

Accepted Answer

The answer of Bram, a salesperson for Cruisin' Motors, promises...

Question 4

Orin, an employee of Plumbing LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Built Inc. is seeking bids. Consequently, Plumbing's bid is significantly low. Any contract with Quality Built that includes the mistake may be rescinded

Accepted Answer

Under the doctrine of mutual mistake, a contract may be rescinded by either party if it can be shown that both parties were mistaken as to a material fact at the time of formation. However, if only one party was aware of the mistake or should have been aware of it, the contract may not be rescinded. In this case, if Quality Built knew or should have known of the mistake, they may not be able to rescind the contract, but if they had no knowledge of the mistake, they may be able to do so.

Question 5

Huey, a tennis pro, convinces Ian, who has no athletic ability, that he has considerable skill and induces him to pay $1,000 for tennis lessons. This is most likely

Accepted Answer

The answer of Huey, a tennis pro, convinces Ian, who...

Question 6

Gary owns two all-terrain vehicles (ATVs), worth $1,000 and $500, respectively. Helen enters into a contract to buy "Gary's ATV" for $750. Gary believes, in good faith, that he is selling the $500 ATV. Helen believes, in good faith, that she is buying the $1,000 ATV. In this situation

Accepted Answer

The contract is not enforceable due to a mutual mistake. Both parties had different beliefs about which ATV was being sold, and therefore there was no meeting of the minds. As a result, the contract cannot be enforced.

Question 7

Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would

Accepted Answer

The contract would not be rescinded because the mistake was mutual and pertained to the value of the land, not the nature of the agreement itself. Both parties were mistaken about the value of the land due to the undiscovered oil, but this does not invalidate the contract. Mistakes of value, where both parties are unaware of the true value of the subject of the contract, typically do not provide grounds for rescission.

Question 8

Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl

Accepted Answer

Clay has made a fraudulent misrepresentation by claiming to be an experienced guide when he is not. Beryl can therefore rescind the contract and possibly recover damages. The fact that the misrepresentation was about Clay's expertise and not a mere opinion does make a difference.

Question 9

Analytics LLC processes misinterpreted data furnished by Botched Services to propose a marketing plan for Clientele Inc. Analytics and Clientele are both ignorant of the mistaken data. Their contract can be rescinded on the basis of

Accepted Answer

A bilateral mistake occurs when both parties are mistaken about the subject matter of the contract. In this case, both Analytics and Clientele are mistaken about the data provided by Botched Services, which forms the basis of their contract. As a result, they may rescind the contract due to mutual mistake.

Question 10

Al induces Beth to enter into a contract for the purchase of a Chef's Burger restaurant. Al knowingly misrepresents a number of material features about the restaurant and the business. When Beth discovers the truth, she can rescind the contract on the basis of

Accepted Answer

Al's misrepresentation is knowingly fraudulent and material, which gives Beth the right to rescind the contract on the basis of fraudulent misrepresentation. Undue influence requires a special relationship between the parties, and mistake would only apply if Beth had made an error regarding the terms of the contract. None of the other choices are applicable in this scenario.

Question 11

Big Dig LLC makes an offer to perform an excavation and related tasks for Commercial Development Corporation, but due to a substantial mathematical mistake, significantly underprices the work. Commercial accepts the offer. Data Big's best defense against enforcement of the contract is that Commercial knew

Accepted Answer

The answer of Big Dig LLC makes an offer to...

Question 12

Fess convinces Gwyn to enter into a contract for the purchase of a Falafel Waffle Food Cart by knowingly misrepresenting a number of material features about the facility and the business. Most likely, Gwyn can rescind the contract on the basis of

Accepted Answer

Fess knowingly misrepresented material features about the facility and the business, which amounts to fraudulent misrepresentation. A fraudulent misrepresentation occurs when a party to a contract knowingly makes a false statement of fact with the intention of inducing the other party to enter into the contract. In this case, Fess knowingly misrepresented the important details to convince Gwyn to enter into the contract for the purchase of the Falafel Waffle Food Cart. As a result, Gwyn can rescind the contract on the basis of fraudulent misrepresentation.

Question 13

County Title Company processes information furnished by others to transfer title to real estate from Dale to Ezra. The furnished information is mistaken. The contract between Dale and Ezra may be rescinded

Accepted Answer

If the mistaken information is about a material fact, such as the title to real estate, it could be a grounds for rescinding the contract. A mistake that goes to the heart of the transaction could invalidate the agreement.

Question 14

Ray, an employee of Shipping Company, makes a substantial mathematical mistake in totaling estimated transportation costs for Tonnage Inc., which is seeking bids. Consequently, Shipping's bid is substantially low. Any contract with Tonnage that includes the mistake may be rescinded

Accepted Answer

If the mistake was made inadvertently and without gross negligence, it is considered a mutual mistake, and Tonnage may rescind the contract. However, if the mistake was intentional or unilateral, Tonnage cannot rescind the contract.

Question 15

Car Lot's salesperson Dick offers to sell Ernie, who is twenty years old, a car. Dick intentionally misrepresents the vehicle's use and repairs. In reliance, Ernie buys the car. To prove fraud, Ernie does not have to show that

Accepted Answer

Ernie's age is not relevant to proving fraud, as long as he was of legal age to enter into a contract. The other factors listed - intentional deception, material misrepresentation, and justifiable reliance - are all key elements in proving fraud.

Question 16

A contract that includes a bilateral mistake may be rescinded if the mistake involves

Accepted Answer

A bilateral mistake occurs when both parties to a contract are mistaken about a material fact that is central to the contract. If this type of mistake exists, the parties may rescind the contract since there was no true meeting of the minds. Therefore, choice A is the best answer as the mistake must involve a material fact.

Question 17

Flo enters into a contract with Global Shipping Ltd. to insure and ship a painting from France to the United States for a certain price. Global makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost. Most likely, a court would

Accepted Answer

A court would likely allow the parties to rescind the contract due to the mutual mistake regarding the contract price, as it significantly affects the agreed terms.

Question 18

Carlos and David contract for the sale of five hundred head of Carlos's cattle for $195 per head. Unknown to either party, an unforeseen storm has struck the herd and many of the cattle have died. David is

Accepted Answer

The correct answer is B) not required to pay due to the bilateral mistake. This is because both parties were unaware of the significant fact that the cattle had died at the time of the contract, which materially affects the agreed-upon exchange. In contract law, a bilateral mistake where both parties are mistaken about a basic assumption on which the contract was made can render the contract voidable.

Question 19

Restaurant Food Inc. intends to sell a certain quantity of beef for $1,000. In e-mail, however, the firm's sales representative mistakenly offers to sell the beef to Steak House for $100, Steak's manager immediately accepts. The seller

Accepted Answer

The answer of Restaurant Food Inc. intends to sell a...

Question 20

Ken, a real estate agent, assures Lily that a certain parcel of commercial property fronts on the most highly trafficked street in Metro City. Lily buys the property and then discovers that the street has no more traffic than any other in its vicinity. Lily may recover damages for

Accepted Answer

Lily may recover damages for the agent's fraudulent misrepresentation. Ken made a false statement of fact regarding the property's location, which induced Lily to buy the property. This constitutes fraudulent misrepresentation.

Quiz 14: Voluntary Consent