Exam 11: Conduct Invalidating Assent

Which of the following results in a void, rather than voidable, agreement?

A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation. She signed a promissory note at a high but not illegal rate of interest. What result?

A basic element of fraud is a false representation or a misrepresentation.

Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store. Bob can avoid his contract with Matt because of fraudulent misrepresentation.

A famous decision involving mistake as to the meaning of contract terms is Raffles v. Wichelhaus, a case involving two ships with the same name which were confused by the two parties to the contract.

The trustee of a trust does not owe a fiduciary duty to the beneficiary of that trust.

Define undue influence and name some of the relationships that would be affected.

A unilateral mistake of fact is ordinarily grounds for avoiding a contract.

Answer the following: a. What are the two types of fraud and what is the effect of each on the contract involved? b. Give an example of each type of fraud. c. What elements need to be proved to establish each type of fraud? Fraud in the execution is a misrepresentation that deceives the other party as to _{the nature of the contract. It renders a transaction void. Fraud in the inducement is}

A seller's promise to service a sewing machine free for the next 90 days when she has no intention of doing so is actionable as a false representation of a fact if the other elements of fraud are present.

If an agreement is not voluntary and knowing, it will be either void or voidable.

A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. The goods failed to arrive on time. If the buyer sues for breach of contract:

An arm's-length transaction is one in which the parties owe each other special duties.

Marjorie has been cared for by her family physician for 35 years. She decides to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence.

Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence?

The remedies of damages and rescission are available for:

Physical compulsion and improper threats are the two basic types of duress.

The State of Florida enters into a contract with Treasure Salvors governing the salvage of a Spanish galleon that sunk in the 1600s. Under the terms of the contract, the salvagers agree to relinquish 25% of the items recovered to the State of Florida in return for the right to salvage on state lands. At the time the parties enter into the contract, they both believe that the seabed where the ship lies is state land. Subsequently, the United States Supreme Court holds that the continental shelf on which the ship rests has never been owned by Florida. The salvagers sue to rescind the contract. The contract:

Kyle wants to buy a six-passenger car. The salesperson tells him that the two-seat sports car Kyle sees on the car lot would be just perfect for six people. Kyle test drives the car and then buys it. In this case:

A fiduciary is a: