Question 1

In Law, "utmost good faith" means: a level of trust in

Accepted Answer

A)  not using undue influence. 
B)  not making false assertions. 
C)  being aboveboard with all affairs. 
D)  only giving factual statements. 
E)  disclosing all pertinent information concerning the contract. 
A)  not using undue influence. 
B)  not making false assertions. 
C)  being aboveboard with all affairs. 
D)  only giving factual statements. 
E)  disclosing all pertinent information concerning the contract. E

Question 2

Caveat Emptor means buyer beware.

Accepted Answer

A) True 
 B)False  True

Question 3

Monetary compensation is not available together with rescission as a remedy for misrepresentation.

Accepted Answer

A) True 
 B)False  False

Question 4

Scott, an independent businessman, is asking his wife to pledge her inherited family homestead towards a business loan he has arranged at the bank. She seems perfectly willing to do this. Yet, to avoid a possible later legal claim of undue influence, which would be wisest for Scott to do?

Accepted Answer

A)  Have his wife get independent legal counsel. 
B)  Explain very carefully what would transpire. 
C)  Have the wife sign a paper to the effect that she was not unduly influenced. 
D)  Have his business lawyer explain thoroughly the legal implications. 
E)  Place all transactions under seal. 
A)  Have his wife get independent legal counsel. 
B)  Explain very carefully what would transpire. 
C)  Have the wife sign a paper to the effect that she was not unduly influenced. 
D)  Have his business lawyer explain thoroughly the legal implications. 
E)  Place all transactions under seal.

Question 5

Linda's lawyer took a city lot in payment for services rendered. Now Linda is claiming undue influence and suing to get the land back. What must she prove and what must the lawyer try to prove?

Accepted Answer

Linda must show the circumstances were s

Question 6

Jack is sailing on Crystal Lake when he notices Cathy, an acquaintance, in obvious distress. He sails close to her and quickly learns that her boat has sunk and she does not have a life preserver. Jack quickly assesses the situation and offers to sell her his life preserver for
$2,400. Cathy agrees, and Jack delivers the life preserver. Later that day Jack goes to Cathy's residence to collect his $2,400. Cathy refuses to pay. What basis would Cathy have to refuse to pay and what remedies is Jack entitled to?

Accepted Answer

Cathy's basis of claim would be that the

Question 7

Explain why an insurance contract needs the utmost good faith.

Accepted Answer

In order for an insurance company to ass

Question 8

Regarding misrepresentation in a sale of land, the following applies:

Accepted Answer

A)  caveat emptor. 
B)  rescission is liberally given for misrepresentation. 
C)  the purchaser must take it with all its faults. 
D)  all defects must be revealed. 
E)  the seller is required to disclose all interests in ownership. 
A)  caveat emptor. 
B)  rescission is liberally given for misrepresentation. 
C)  the purchaser must take it with all its faults. 
D)  all defects must be revealed. 
E)  the seller is required to disclose all interests in ownership.

Question 9

Linda took out a new auto insurance policy. She signed without reading each of the papers presented to her by the agent. What she didn't realise is that the insurance only covered accidents on "public roads". This term in no way was brought to her attention nor explained. A few days later she got into a serious accident in a large housing development where the roads had not as yet been turned over to the municipality. The insurance company refused to pay the claim. Can Linda get damages under misrepresentation?

Accepted Answer

A)  No, because Linda is presumed to have read and understood the document. 
B)  Yes, since the terms correspond to commonly understood principles. 
C)  Yes, since Linda is fully aware of the distinction between public and private. 
D)  Yes, since this is an example of misrepresentation by omission. 
E)  No, because this is a standardised document that has been fully approved. 
A)  No, because Linda is presumed to have read and understood the document. 
B)  Yes, since the terms correspond to commonly understood principles. 
C)  Yes, since Linda is fully aware of the distinction between public and private. 
D)  Yes, since this is an example of misrepresentation by omission. 
E)  No, because this is a standardised document that has been fully approved.

Question 10

If rescission is unavailable in a case of innocent misrepresentation, and the misstatement was an important inducement, and the aggrieved party has suffered substantial loss, the court may look at the misrepresentation as

Accepted Answer

A)  a breach of contract. 
B)  a contractual nuisance. 
C)  negligent, and award damages. 
D)  an obligation in tort. 
E)  a term to the agreement. 
A)  a breach of contract. 
B)  a contractual nuisance. 
C)  negligent, and award damages. 
D)  an obligation in tort. 
E)  a term to the agreement.

Question 11

Donna Brown owned a flower shop which she was anxious to sell. Charles Blue visited her shop and discussed a possible purchase. During those discussions Donna stated that she was sure 1998 sales would exceed $400,000 and that sales for 1997 were more than $360,000. Charles was impressed with those figures and offered to purchase the flower shop for $110,000 cash. The sale was completed one week later (November 24, 1997) and was documented with a brief written agreement which did not include anything about past sales. In April 1998, Charles had the 1997 financial statement for the flower shop prepared and actual sales for 1997 were $320,000. In addition, Charles knew that 1998 sales were 5% below sales for the same period a year earlier. Charles confronted Donna with those figures and Donna was evasive and refused to accept any responsibility, saying only that the written agreement contained no mention of sales figures. Charles asks you the following questions:
a. Do I have a right to sue Donna and if so, what is the legal basis for my action? What must I prove and what are my chances of success?
b. What remedies could I seek and do I have different remedies from which I can choose?

Accepted Answer

(a) Because the representation about sal

Question 12

Benny, who owns a classic car, lives in an apartment with a disabled roommate. Benny is approached by Dick Albert who advises Benny that if he does not sell his classic car for $2,000 (a fraction of its value), the roommate "will have both his arms broken". Benny then signs the contract and Dick pays him the $2,000. Benny was never threatened at any time during the transaction. What remedies can Benny pursue and what must he do in order to pursue those remedies? What is the likelihood of success?

Accepted Answer

Benny would claim duress, in other words

Question 13

If a preliminary bargaining statement is expected to influence the decision of the other party, then it is said to be to the contract.

Accepted Answer

A)  material 
B)  subject 
C)  tangible 
D)  substance 
E)  consequential 
A)  material 
B)  subject 
C)  tangible 
D)  substance 
E)  consequential

Question 14

Tom buys a piece of land based on the innocent misrepresentation of a real estate agent. He can get rescission of the contract

Accepted Answer

A)  if requested within 48 hours of the discovery. 
B)  up until the final closing date of the sale. 
C)  as long as it's after the transfer of title. 
D)  as well as receive damages, since this is the sale of real property. 
E)  but only up until the time a mortgage is placed on the land. 
A)  if requested within 48 hours of the discovery. 
B)  up until the final closing date of the sale. 
C)  as long as it's after the transfer of title. 
D)  as well as receive damages, since this is the sale of real property. 
E)  but only up until the time a mortgage is placed on the land.

Question 15

If an incident of misrepresentation is neither fraudulent nor negligent, yet it resulted in harm, then

Accepted Answer

A)  it is innocent misrepresentation which has no legal significance 
B)  the victim is guilty of having unreasonable reliance on the misrepresentation. 
C)  it does not qualify for a tort action. 
D)  the victim's one hope is to show that a provision in the contract was misrepresented. 
E)  a claim of tort can only be made with evidence the victim relied on the misrepresentation. 
A)  it is innocent misrepresentation which has no legal significance 
B)  the victim is guilty of having unreasonable reliance on the misrepresentation. 
C)  it does not qualify for a tort action. 
D)  the victim's one hope is to show that a provision in the contract was misrepresented. 
E)  a claim of tort can only be made with evidence the victim relied on the misrepresentation.

Question 16

The doctrine of caveat emptor refers to

Accepted Answer

A)  quality or condition of goods, not ownership. 
B)  the unconscionable transfer of goods. 
C)  contracts where both a dominant and subservient party exist. 
D)  transfer of clear title in the sale of goods. 
E)  the situation where one party is in a vastly superior position of knowledge with respect to some matter which is of vital importance to the other party. 
A)  quality or condition of goods, not ownership. 
B)  the unconscionable transfer of goods. 
C)  contracts where both a dominant and subservient party exist. 
D)  transfer of clear title in the sale of goods. 
E)  the situation where one party is in a vastly superior position of knowledge with respect to some matter which is of vital importance to the other party.

Question 17

What remedies are available to the innocent parties if they are the victims of an innocent misrepresentation? What is the remedy if they are the victims of a fraudulent misrepresentation?

Accepted Answer

If a person is a victim of an innocent m

Question 18

What is a material event?

Accepted Answer

An event could reaso

Question 19

Distinguish between negligent and fraudulent misrepresentation.

Accepted Answer

Negligent misrepresentation occurs when

Question 20

If innocent misrepresentation exists, the party who relied on it, upon learning the facts, should

Accepted Answer

A)  forfeit any claim to compensation or indemnity expenses. 
B)  wait a reasonable length of time to respond. 
C)  renounce the agreement promptly. 
D)  prepare a formal protest. 
E)  take any further benefits. 
A)  forfeit any claim to compensation or indemnity expenses. 
B)  wait a reasonable length of time to respond. 
C)  renounce the agreement promptly. 
D)  prepare a formal protest. 
E)  take any further benefits.

Exam 9: Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress

In Law, "utmost good faith" means: a level of trust in

Caveat Emptor means buyer beware.

Monetary compensation is not available together with rescission as a remedy for misrepresentation.

Scott, an independent businessman, is asking his wife to pledge her inherited family homestead towards a business loan he has arranged at the bank. She seems perfectly willing to do this. Yet, to avoid a possible later legal claim of undue influence, which would be wisest for Scott to do?

Linda's lawyer took a city lot in payment for services rendered. Now Linda is claiming undue influence and suing to get the land back. What must she prove and what must the lawyer try to prove?

Explain why an insurance contract needs the utmost good faith.

Regarding misrepresentation in a sale of land, the following applies:

If rescission is unavailable in a case of innocent misrepresentation, and the misstatement was an important inducement, and the aggrieved party has suffered substantial loss, the court may look at the misrepresentation as

If a preliminary bargaining statement is expected to influence the decision of the other party, then it is said to be to the contract.

Tom buys a piece of land based on the innocent misrepresentation of a real estate agent. He can get rescission of the contract

If an incident of misrepresentation is neither fraudulent nor negligent, yet it resulted in harm, then

The doctrine of caveat emptor refers to

What remedies are available to the innocent parties if they are the victims of an innocent misrepresentation? What is the remedy if they are the victims of a fraudulent misrepresentation?

What is a material event?

Distinguish between negligent and fraudulent misrepresentation.

If innocent misrepresentation exists, the party who relied on it, upon learning the facts, should

Law and Society

The Machinery of Justice

The Law of Torts

Professional Liability

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration, and Intention to Create Legal Relations

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Impeached: Mistake

The Requirement of Writing

The Interpretation of Contracts

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

The Effect of Breach

Remedies for Breach

Sale of Goods

Leasing and Bailment

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

The Internal Affairs of Corporations

The External Responsibilities of a Corporation

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

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