Question 1

Darla sells a all-terrain,off-road vehicle to Esteban without disclosing that the odometer,which reads 30,000 miles,was disconnected 50,000 miles ago.Darla is most likely liable for

Accepted Answer

Darla's failure to disclose the disconnection of the odometer constitutes fraud, as she intentionally concealed material information about the vehicle's true mileage in order to induce Esteban to purchase it.

Question 2

Genie.com initiates an online dating service.To attract subscribers and encourage participation,Genie.com creates and posts profiles of fictitious persons and exaggerated profiles of actual users.Fooled by the false profiles,Ham buys a subscription.He is most likely a victim of

Accepted Answer

Ham is a victim of fraud because Genie.com created and posted false profiles to attract subscribers, making him believe that the profiles and service offered were genuine, causing him to purchase a subscription under false pretenses.

Question 3

Moore Properties, Inc., offers in writing to sell to Lawn Acres Development Corporation a certain half-acre of land for "$112,000." After Lawn Acres signs the offer in acceptance and returns it, Moore discovers that the price should have been stated as "$121,000."
-Refer to Fact Pattern 13-3.Moore's misstatement of the price is

Accepted Answer

Moore's misstatement of the price is a unilateral mistake, as it was made by Moore, not both parties involved. This mistake could potentially allow Moore to rescind the offer, but Lawn Acres may argue that it had already accepted the offer and therefore a binding contract had been formed.

Question 4

Grover contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but under these circumstances the deal would adversely affect Hank.
-Refer to Fact Pattern 13-2.Because of the parties' belief about the adjacency of the property,their contract is

Accepted Answer

The contract is voidable because although both parties agreed to the terms, there was a mistake about a material fact (adjacency of the tracts) that would adversely affect Hank. Therefore, Hank has the option to rescind (cancel) the contract.

Question 5

Olin convinces Pia,who has no artistic ability,that Pia has considerable talent and induces Pia to pay Olin $10,000 for art lessons.When Pia realizes the truth,she files a suit against Olin.Pia is most likely to recover on the basis of

Accepted Answer

Olin's actions can be classified as fraud since he made a misrepresentation of a material fact (Pia's artistic ability) with the intention to induce Pia to pay him money for art lessons. Pia relied on Olin's misrepresentation and suffered harm as a result, making her eligible to file a suit against Olin for fraud.

Question 6

Grover contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but under these circumstances the deal would adversely affect Hank.
-Refer to Fact Pattern 13-2.The parties' belief about the adjacency of the property is

Accepted Answer

The parties share a common mistake about the adjacency of the property, making it a bilateral mistake.

Question 7

In selling inventory control software to Apex Auto Parts Corporation,Bond tells Apex's purchasing agent that the software is "almost human." This is

Accepted Answer

The statement "almost human" is an example of puffery, which is exaggerated sales talk that a reasonable person would not take literally. Puffery is not considered to be fraudulent because it does not involve false representations or material facts.

Question 8

Metro City and Nu Hi-way Construction Company enter into a construction contract that includes six pages of detailed estimates.Later Metro,whose engineer compiled the figures,discovers that some numbers were added incorrectly,but Nu refuses to make changes.Metro may

Accepted Answer

Metro may rescind the contract on the basis of mistake if the incorrect addition of numbers was a mutual mistake or a significant unilateral mistake that the other party knew or should have known about.

Question 9

Business Investment Company and Chic Properties,Inc.,contract for the sale of a retail mall.A mutual mistake of fact will make it possible for either party to rescind the contract

Accepted Answer

A mutual mistake of fact that is material can allow either party to rescind the contract, as the mistake would affect the basis of the agreement. An immaterial mistake of fact would not have a significant impact on the contract, so it would not provide grounds for rescission. Under no circumstances would either party be able to rescind the contract if there were no mutual mistake of fact.

Question 10

Roc buys a farm from Steve,who claims that it would be a prime site for a housing subdivision.Roc later learns that the law does not permit the land to be used for housing.Roc may

Accepted Answer

The answer of Roc buys a farm from Steve,who claims...

Question 11

Cooper offers to sell Gable his sport utility vehicle (SUV)and says that it has never been in an accident.Relying on Cooper's statement,Gable buys the SUV.Later,when it develops mechanical problems,Gable can

Accepted Answer

Cooper's statement that the SUV has never been in an accident was a misrepresentation of fact, and Gable relied on that misrepresentation when making the decision to buy the SUV. This constitutes fraud, which would allow Gable to rescind the contract.

Question 12

Leyte believes an old comic book he owns has little value,but Milo is convinced it is a valuable collector's item.Leyte sells it to Milo for $10 before learning it is worth $1,000.Leyte can

Accepted Answer

The answer of Leyte believes an old comic book he...

Question 13

At an auction,Vigo bids on an object,believing that it is worth more than the price asked.When the item proves to be less valuable,Vigo is

Accepted Answer

When Vigo bids on an object at an auction, he is legally bound to honor his bid, regardless of whether he misestimated the value or the auctioneer misstated the value. Therefore, Vigo is liable on the bid, meaning he must pay the amount he bid for the item.

Question 14

Hillside Homes,Inc.,and Ideal Builders,Inc.,enter into a construction contract that includes six pages of detailed calculations.Later Hillside,whose project manager compiled the figures,discovers that some numbers were multiplied incorrectly,but Ideal refuses to make changes.A court would most likely

Accepted Answer

The answer of Hillside Homes,Inc.,and Ideal Builders,Inc.,enter into a construction...

Question 15

Gina induces Hugh to enter into a contract for the purchase of a condominium about which Gina knowingly misrepresents a number of material features.When Hugh discovers the truth,he can

Accepted Answer

Hugh can rescind the contract on the basis of fraud because Gina induced him to enter the contract by knowingly misrepresenting material features of the condominium. Fraudulent misrepresentation can nullify the formation of a contract and provide grounds for rescission. Rescission would mean that the parties are released from their contractual obligations and positions are restored to what they were before the contract was formed.

Question 16

Dom,a salesperson for Excel Autos,promises Fern that a certain car will give her a "smooth ride." Dom offers a test drive,which Fern declines.She buys the car but soon realizes that its suspension is in poor condition.Fern

Accepted Answer

The answer of Dom,a salesperson for Excel Autos,promises Fern that...

Question 17

Jill and Karl contract for the sale of Jill's horse for $1,000.Unknown to either party,the horse has died.Karl is

Accepted Answer

The mutual mistake doctrine is invoked when both parties are mistaken as to some material fact, and it can be shown that the parties would not have entered into the contract if they knew the truth. In this case, Jill and Karl were mistaken as to the fact that the horse was alive when they contracted for the sale. Since the horse has died and both parties were unaware of it, the sale contract is voidable. Therefore, Karl is not required to pay due to the mutual mistake.

Question 18

Ralph offers to sell Sophie,who is seventeen years of age,a car about which Ralph intentionally misrepresents several material facts.In reliance on the misrepresentations,Sophie buys the car.To prove fraud in this transaction,Sophie would have to show that

Accepted Answer

To prove fraud, Sophie needs to show that Ralph intentionally deceived her, which is a key element of the tort of fraud. The fact that Sophie is under eighteen years of age is not relevant to the proof of fraud. The fact that Sophie might not know anything about cars is not sufficient to prove fraud, as long as Ralph did not intentionally deceive her. Finally, the fact that Ralph made statements that were obviously exaggerated is not sufficient to prove fraud, as exaggeration is not the same as intentional misrepresentation.

Question 19

In selling paving stones to Yard & Garden Supply,Trey tells Yard & Garden's buying representative that the stones are "soft as carpet." This is

Accepted Answer

Trey's statement of the stones being "soft as carpet" is clearly an exaggerated claim and falls under the category of puffery. This statement is not a factual representation of the product and no reasonable person would believe that paving stones could be soft like carpet. Puffery is legal and acceptable in sales and advertising because it is considered to be subjective and not deceptive.

Question 20

Moore Properties, Inc., offers in writing to sell to Lawn Acres Development Corporation a certain half-acre of land for "$112,000." After Lawn Acres signs the offer in acceptance and returns it, Moore discovers that the price should have been stated as "$121,000."
-Refer to Fact Pattern 13-3.The effect of Moore's misstatement of the price will most likely fall on

Accepted Answer

Moore made a unilateral mistake in stating the price, and since Lawn Acres accepted the offer as presented, Moore is bound by the terms of the contract unless they can prove that Lawn Acres knew or should have known about the mistake.

Quiz 13: Voluntary Consent