Question 1

To obtain relief for negligent or innocent misrepresentation, all the remaining elements of fraud must be present and the misrepresentation must be material.

Accepted Answer

A) True 
 B)False

Question 2

Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon.
When Pat decides to sell the car and one of her friends decides to buy it, Pat is under no duty to tell the correct figure unless asked.

Accepted Answer

A) True 
 B)False

Question 3

Give an example of each of the following:
a. Unilateral mistake
b. Mistake in the meaning of a contract term.
Nancy offers to sell Sidney a certain boat. Sidney believes the boat is a valuable antique with significant collector's value. Nancy makes no misrepresentations with

Accepted Answer

The first is called physical duress and

Question 4

For a misrepresentation to be actionable as fraud in the inducement, it must be a misrepresentation of an opinion.

Accepted Answer

A) True 
 B)False

Question 5

For a misrepresentation to be fraud in the inducement, it need not be material.

Accepted Answer

A) True 
 B)False

Question 6

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. The sale:

Accepted Answer

A)  was a valid contract that should be enforced by the law. 
B)  can be voided based upon fraud in the execution. 
C)  can be voided based upon fraud in the inducement. 
D)  can be voided based upon mistake as to the identity of the subject matter. 
A)  was a valid contract that should be enforced by the law. 
B)  can be voided based upon fraud in the execution. 
C)  can be voided based upon fraud in the inducement. 
D)  can be voided based upon mistake as to the identity of the subject matter.

Question 7

Which of the following can meet the scienter requirement to establish fraud in the inducement?

Accepted Answer

A)  Actual knowledge 
B)  Lack of belief in the statement's truthfulness 
C)  Reckless indifference as to a statement's truthfulness 
D)  All of these meet the requirement. 
A)  Actual knowledge 
B)  Lack of belief in the statement's truthfulness 
C)  Reckless indifference as to a statement's truthfulness 
D)  All of these meet the requirement.

Question 8

Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al
$160,000 for it. Al is suspicious and asks her why she wants to buy the place. She says she would like to live in the country. Al then asks her if she thinks there might be valuable minerals under the land. Betty laughs and says she doubts that very much, so Al sells her the farm for $160,000. Al later realizes that the land was worth more than he was paid. Betty's statement to Al was a misrepresentation requisite for fraud.

Accepted Answer

A) True 
 B)False

Question 9

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. If, because of the threat, Kenneth signs the contract:

Accepted Answer

A)  the contract is voidable at Kenneth's option. 
B)  James has committed physical duress against Kenneth. 
C)  this is an example of economic duress. 
D)  All of these. 
A)  the contract is voidable at Kenneth's option. 
B)  James has committed physical duress against Kenneth. 
C)  this is an example of economic duress. 
D)  All of these.

Question 10

The difference between fraud and misrepresentation is that fraud involves malice while nonfraudulent misrepresentation is always innocent.

Accepted Answer

A) True 
 B)False

Question 11

Eliza was an antique expert. She went to a tea party at Grandma Jones' house and saw a magnificent Queen Anne table out on the back porch. She asked Grandma about it and was told it was in the way so they were going to store it in the barn. Eliza offered to buy it from her for $200. The next week, Grandma saw it in Eliza's store on sale for $3,000. Grandma:

Accepted Answer

A)  can get the table back because of fraudulent concealment of the value. 
B)  can get the true value, because it would not be fair otherwise. 
C)  cannot rescind the contract because Eliza did not have a duty to tell her the value of the table. 
D)  cannot rescind the contract because she did not rely on Eliza to give her a fair price. 
A)  can get the table back because of fraudulent concealment of the value. 
B)  can get the true value, because it would not be fair otherwise. 
C)  cannot rescind the contract because Eliza did not have a duty to tell her the value of the table. 
D)  cannot rescind the contract because she did not rely on Eliza to give her a fair price.

Question 12

Which of the following is NOT an element of fraud?

Accepted Answer

A)  Material misrepresentation 
B)  Competent parties 
C)  Knowledge of falsity 
D)  Justifiable reliance 
A)  Material misrepresentation 
B)  Competent parties 
C)  Knowledge of falsity 
D)  Justifiable reliance

Question 13

The test for duress is objective and the act must be classified as a tort or a crime in order to be wrongful.

Accepted Answer

A) True 
 B)False

Question 14

There are two distinct types of fraud.

Accepted Answer

A) True 
 B)False

Question 15

Name the two types of nonfraudulent misrepresentation. Identify the remedies that may be available.

Accepted Answer

Nonfraudulent misrepresentation includes

Question 16

Social coercion to enter into a contract cannot be a basis for avoidance of the contract.

Accepted Answer

A) True 
 B)False

Question 17

Tom tries to sell his classic car to Victoria for $12,000. Tom tells Victoria, "I paid $12,000 for the car in 1978 and it's worth twice that today." Tom really paid $8,000 for the car in 1978. If Victoria buys the car, basing her decision on Tom's statement, which of the following correctly states the situation?

Accepted Answer

A)  Tom's statements amount to puffing only. 
B)  Tom's statements provide grounds to set the contract aside. 
C)  Tom's statements are actionable only if negligently made. 
D)  Tom's statements amount to fraud in the execution. 
A)  Tom's statements amount to puffing only. 
B)  Tom's statements provide grounds to set the contract aside. 
C)  Tom's statements are actionable only if negligently made. 
D)  Tom's statements amount to fraud in the execution.

Question 18

Contracts induced by threats of unlawful act.

Accepted Answer

A)  civil prosecution 
B)  criminal prosecution 
C)  tortious conduct d. physical force
Are voidable, regardless of whether the coerced party has committed an 
A)  civil prosecution 
B)  criminal prosecution 
C)  tortious conduct d. physical force
Are voidable, regardless of whether the coerced party has committed an

Question 19

Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is a "standard" contract for this type of situation. Is the contract which Thomas signed binding upon him?

Accepted Answer

A)  No, because he did not read it 
B)  No, because he entered into it based upon fraud in the execution 
C)  Yes, because he has made a unilateral mistake of law 
D)  Yes, because he was negligent in not ascertaining its contents 
A)  No, because he did not read it 
B)  No, because he entered into it based upon fraud in the execution 
C)  Yes, because he has made a unilateral mistake of law 
D)  Yes, because he was negligent in not ascertaining its contents

Question 20

A misrepresentation is material if:

Accepted Answer

A)  it would likely induce a reasonable person to enter into a transaction. 
B)  it changes the price paid by the buyer. 
C)  it is made knowingly. 
D)  All of these. 
A)  it would likely induce a reasonable person to enter into a transaction. 
B)  it changes the price paid by the buyer. 
C)  it is made knowingly. 
D)  All of these.

Exam 11: Conduct Invalidating Assent

To obtain relief for negligent or innocent misrepresentation, all the remaining elements of fraud must be present and the misrepresentation must be material.

Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell the car and one of her friends decides to buy it, Pat is under no duty to tell the correct figure unless asked.

Give an example of each of the following: a. Unilateral mistake b. Mistake in the meaning of a contract term. Nancy offers to sell Sidney a certain boat. Sidney believes the boat is a valuable antique with significant collector's value. Nancy makes no misrepresentations with

For a misrepresentation to be actionable as fraud in the inducement, it must be a misrepresentation of an opinion.

For a misrepresentation to be fraud in the inducement, it need not be material.

Which of the following can meet the scienter requirement to establish fraud in the inducement?

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. If, because of the threat, Kenneth signs the contract:

The difference between fraud and misrepresentation is that fraud involves malice while nonfraudulent misrepresentation is always innocent.

Which of the following is NOT an element of fraud?

The test for duress is objective and the act must be classified as a tort or a crime in order to be wrongful.

There are two distinct types of fraud.

Name the two types of nonfraudulent misrepresentation. Identify the remedies that may be available.

Social coercion to enter into a contract cannot be a basis for avoidance of the contract.

Contracts induced by threats of unlawful act.

A misrepresentation is material if:

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

the Legal Environment of Business

Contracts

Agency

Sales

Negotiable Instruments

Unincorporated Business Associations

Corporations

Debtor and Creditor Relations

Regulation of Business

Property

Filters