Question 1

The use of threats to force a party to enter into a contract is undue influence.

Accepted Answer

The use of threats to force a party to enter into a contract is considered duress, not undue influence. Undue influence involves taking advantage of a position of power over another person.

Question 2

Most courts require a showing of injury when an action is to rescind a contract for fraud.

Accepted Answer

The answer of Most courts require a showing of injury...

Question 3

Misrepresentation can occur by words or actions, but not by silence.

Accepted Answer

Misrepresentation can also occur by silence when one party has a duty to speak and intentionally fails to disclose relevant information. This is referred to as fraudulent concealment.

Question 4

A deceived person must have a justifiable reason for relying on a misrepresentation.

Accepted Answer

According to the legal principle of deceit, a person must have a justifiable reason for relying on a misrepresentation in order to claim that they were deceived. This means that if a person could have easily detected the misrepresentation, or if they had no reasonable grounds for believing the misrepresentation, they may not be able to claim that they were deceived.

Question 5

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

Accepted Answer

This is because the dominant party has a greater ability to influence the decisions of the other party and may use this advantage to benefit themselves at the expense of the other party. As a result, the law presumes that the dominant party may have exerted undue influence over the other party, unless proven otherwise.

Question 6

Intent to deceive is an element of fraud.

Accepted Answer

Intent to deceive, or the intent to misrepresent information, is a necessary element of fraud. Without intent to deceive, a person's actions may be negligent or careless, but not fraudulent.

Question 7

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

Accepted Answer

Misrepresentation of a material fact can occur both by words and actions.

Question 8

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

Accepted Answer

Reliance on a misrepresentation, even if it is an obviously extravagant statement, is not justified as it is still a misrepresentation and can lead to harm or loss for the person relying on it.

Question 9

The use of threats to force a party to enter into a contract is duress.

Accepted Answer

Duress involves the use of threats or coercion to force someone to enter into an agreement against their will.

Question 10

A contract entered into under undue influence is voidable.

Accepted Answer

A contract entered into under undue influence is voidable, meaning it can be invalidated by the aggrieved party. This is because undue influence involves one party using their position of power or trust to manipulate the other party into agreeing to terms that are not in their best interest. As a result, the contract is considered to be lacking in free consent and is subject to being voided.

Question 11

Byron agrees to sell to Charity, for $1,500, a remote parcel of land. They be?lieve the land to be worthless, but beneath it is a gold mine. A court would

Accepted Answer

The court would enforce the contract, despite the fact that the parties believed the land to be worthless. In contract law, parties are generally held to the terms they agreed to, even if it turns out that one party got a better deal than the other. The fact that the parties were mistaken about the land's value is not necessarily a basis for cancelling the contract.

Question 12

Jane and Phil enter into a contract, but make a bilateral mistake. For the contract to be rescinded by either party, the bilateral mistake must be about

Accepted Answer

For a bilateral mistake to be grounds for rescinding a contract, it must be about a material fact. This means that the mistake must relate to a fact that is essential to the contract and would have influenced the parties' decision to enter into the contract. Mistakes about opinions or predictions are generally not sufficient to rescind a contract. Mistakes about value are also generally not sufficient, unless the value is tied to a material fact (e.g. a mistake about the value of a house due to an undisclosed structural issue).

Question 13

Misrepresentation of a material fact cannot occur through conduct alone.

Accepted Answer

Misrepresentation of a material fact can occur through conduct alone, such as a seller showing a buyer a flawed product but not disclosing the flaw.

Question 14

Katie and Linda enter into a contract for Katie to buy Linda's house in which there are several terms that are subject to more than one reasonable interpretation. If Katie and Linda attach materially different meanings to a term

Accepted Answer

If Katie and Linda attach materially different meanings to a term, it means that there is no mutual agreement as to what the term means. Therefore, there is a lack of mutual assent or meeting of the minds, and the contract is voidable by either party.

Question 15

Kathleen sells Richard a racehorse for $1,000. Both Kathleen and Richard think that the horse is too slow to win any races. Richard then enters the horse in a race, and it wins easily. He enters it in more races, and the horse soon wins more than $1 million. Kathleen tries to rescind the contract to sell the horse, claiming that it was worth more than $1,000. A court will

Accepted Answer

The court will likely enforce the contract as both parties agreed to the sale of the horse for $1,000, regardless of their beliefs about its value or potential. The concept of caveat emptor ("buyer beware") applies, meaning it was Richard's responsibility to assess the horse's worth before purchasing it. Kathleen cannot rescind the contract simply because the horse ended up being more valuable than they both originally thought.

Question 16

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

Accepted Answer

Punitive damages are awarded to punish and deter wrongful conduct. Fraud actions are considered wrongful conduct and therefore, courts may award punitive damages in addition to compensatory damages.

Question 17

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, as it means that one party was forced or coerced into agreeing to the contract. However, it can also be used as a defense to the enforcement of a contract, meaning that the party who was forced or coerced is arguing that they should not be required to perform their obligations under the contract.

Question 18

Garth owns two all-terrain vehicles (ATVs), worth $1,000 and $500, re?spec?tively. Helen agrees to buy "Garth's ATV" for $750. Garth 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

There is no contract in this situation because both parties have a different understanding of what is being sold. There is no meeting of the minds regarding the specific ATV being sold and for what price, therefore no enforceable contract exists.

Question 19

A seller's failure to disclose a serious defect about a product for sale may give rise to an action for fraud.

Accepted Answer

This statement is true. Failing to disclose a serious defect about a product for sale can be considered fraudulent, as it deceives the buyer and can harm them financially or physically. The seller has a duty to disclose all known defects to the buyer.

Question 20

Scienter exists if a party makes a statement that he or she be?lieves to be scientifically verifiable.

Accepted Answer

The answer of Scienter exists if a party makes a...

Quiz 12: Voluntary Consent